Audit of Medicare Contractor's Pension Segmentation Blue Cross Blue Shield of Tennessee

EXECUTIVE SUMMARY:

The objective of this audit was to determine the accuracy of the update of Medicare segment assets from January 1, 1993 to January 1, 2002 for Blue Cross and Blue Shield of Tennessee.  We found that Tennessee had overstated its Medicare segment pension assets by $610,201 as of January 1, 2002.  Tennessee should recognize Medicare segment pension assets of $3,348,862 as of January 1, 2002.  Additionally, Tennessee should implement controls to ensure that the Medicare segment is identified in accordance with the Medicare contract and updated in accordance with Cost Accounting Standards 412 and 413.  Tennessee agreed with our recommendations.