Review of Pension Costs Claimed by Blue Cross Blue Shield of Tennessee

EXECUTIVE SUMMARY:

The objective of this audit was to determine the allowability of pension costs claimed for Medicare reimbursement for Fiscal Years 1994 through 2002.  We found that Tennessee had claimed $684,551 of unallowable pension costs.  The overclaim occurred because Tennessee did not correctly identify the Medicare segment according to the Medicare contract.  Tennessee should revise its Final Administrative Cost Proposals to eliminate unallowable pension costs of $684,551.  Tennessee agreed with our recommendation.