Audit of the Pension Plan at a Terminated Medicare Contractor, Blue Cross Blue Shield of Minnesota

EXECUTIVE SUMMARY:

Blue Cross Blue Shield of Minnesota (BCBSM) served as a Medicare contractor until their contract was terminated in July 1999.  Federal regulations and Medicare contract provisions require pension gains, which occur when a Medicare segment of a contractor's pension plan closes, be credited to the Medicare program.  We identified $2.0 million in excess Medicare pension assets at BCBSM at the time of contract termination.  Our methodology and calculations were reviewed by the Centers for Medicare and Medicaid Services' pension actuarial staff.  We are recommending that BCBSM refund the $2.0 million to the Medicare program.