Review of Nonqualified Defined-Benefit Pension Plan Costs Claimed by Highmark, Inc. for Fiscal Years 1998 Through 2002

EXECUTIVE SUMMARY:

Our objective was to determine the allowability of nonqualified defined-benefit pension plan (NQDBP) costs Highmark claimed for Medicare reimbursement for fiscal years (FY) 1998 through 2002. Highmark claimed $122,780 of unallowable NQDBP costs for FYs 1998 through 2002 because it did not update the Medicare segment assets in accordance with the Medicare contract, which resulted in a difference in allocable pension costs. During FYs 1998 through 2002, the allowable NQDBP costs were $667,902; however, Highmark claimed NQDBP costs of $790,682 for Medicare reimbursement. We recommended that Highmark revise its Final Administrative Cost Proposals (FACP) for FYs 1998 through 2002 to reduce its claimed NQDBP costs by $122,780. Highmark agreed with our recommendation.