Administrative Costs Incurred Under Parts A and B of the Health Insurance for the Aged and Disabled Program - Arkansas Blue Cross and Blue Shield, Little Rock, Arkansas

EXECUTIVE SUMMARY:

The objective of this audit was to determine whether the final administrative cost proposals fairly presented the costs of program administration.  Of the $234,056,106 in administrative costs claimed by Arkansas Blue Cross Blue Shield (Blue Cross) during fiscal years 1999 - 2002, we determined that a financial adjustment of $689,546 was necessary and that an additional $70,202 needed to be set aside for lack of documentation.  We recommended that the remaining $233,296,358 be accepted for reimbursement.  Blue Cross concurred with $624,952 of our recommended financial adjustments and disagreed with all of the $70,202 of set aside costs.