Audit of the Pension Plan at a Terminated Medicare Contractor, Wellmark, Inc.

EXECUTIVE SUMMARY:

The objectives of this audit were to evaluate Wellmark, Inc.'s (Wellmark) compliance with the pension segmentation requirements of its Medicare contract and to determine the excess assets that should be remitted to Medicare as a result of the termination of the Medicare contractual relationship effective May 31, 2000.  Wellmark was a Medicare contractor until its contract was terminated in 2000 and, as such, was allowed to claim reimbursement for its Medicare employees' pension costs.  Federal regulations and the Medicare contracts provide, however, that pension gains, which occur when a Medicare segment of a pension plan closes, be credited to the Medicare program.  Accordingly, we recommended that Wellmark remit $1,353,036 in excessive pension assets to the Medicare program.