Review of Medicare Contractor's Pension Segmentation, Rocky Mountain Health Care Corporation

EXECUTIVE SUMMARY:

This report provides the results of our review titled Review of Medicare Contractor's Pension Segmentation, Rocky Mountain Health Care Corporation . The purpose of our review was to evaluate Rocky Mountain Health Care Corporation's (Rocky Mountain) compliance with the pension segmentation requirements of its Medicare contracts.

Our review showed that Rocky Mountain correctly identified Medicare segment pension assets of $2,993,217 as of 1986. However, Rocky Mountain's update of the Medicare segment assets from Plan Year 1986 to Plan Year 1995 understated segment assets by $2,743,438. This understatement primarily occurred because Rocky Mountain omitted certain benefit payments and misidentified plan participants.

In 1989 Blue Cross and Blue Shield of Colorado (Colorado), Blue Cross and Blue Shield of New Mexico (New Mexico), and Blue Cross and Blue Shield of Nevada (Nevada) merged into the Rocky Mountain Health Care Corporation. Our review included Colorado's compliance with segmentation requirements prior to the merger. For clarity, we used the current name of Rocky Mountain in this report for referring to the company prior to 1989. We reviewed New Mexico's compliance with Medicare segmentation requirements prior to the merger in a separate audit (CIN: A-07-96-01195).

We recommend that Rocky Mountain increase the January 1, 1995 assets of the Medicare segment by $2,743,438. The Auditee was unable to provide a definitive response to our report within the 75 days granted to them for providing a response (30 initial days plus a 45 day extension).