Review of Pension Costs Claimed for Medicare Reimbursement by Blue Cross Blue Shield of Florida for Fiscal Years 1994 Through 2003

Our objective was to determine the allowability of pension costs that Florida claimed for Medicare reimbursement for fiscal years (FYs) 1994 through 2003. We found that Florida overclaimed $780,087 of Medicare pension costs for FYs 1994 through 2003 because it understated the Medicare segment's pension assets and did not account for a reorganization of the segment in 2002. Florida claimed pension costs of $24,296,727 for Medicare reimbursement; however, allowable Medicare pension costs were $23,516,640. We recommend that Florida: (1) revise its Final Administrative Cost Proposals (FACP) for FYs 1994 through 2003 to reduce its claimed Cost Accounting Standards (CAS) pension costs by $780,087, (2) update its Medicare segment assets in accordance with CAS 412 and 413, and (3) ensure that reorganizations to its Medicare segment are accounted for in accordance with the Medicare contract. Florida agreed with our report findings. Florida's comments are presented in Appendix B to this report.