Blue Cross and Blue Shield of Texas Pension Segment Closing Audit

EXECUTIVE SUMMARY:

Until its Medicare contracts were terminated in 1999, Texas Blue Cross and Blue Shield (BCBS) was allowed to claim reimbursement for its Medicare employees' pension costs.  According to Federal regulations and the Medicare contracts, pension gains that occur when a Medicare segment of a pension plan closes must be credited to the Medicare program.  We found that Texas BCBS originally identified excess Medicare pension assets of $10,753,575.  However, Texas BCBS revised its calculation and indicated that the correct figure was $11,152,093.  We determined that the revised figure was materially correct and recommended that Texas BCBS remit $11,152,093 to the Federal Government for excess Medicare pension assets.