Review of Nonqualified Defined-Benefit Pension Plan Costs Claimed by Pennsylvania Blue Shield for Fiscal Years 1993 Through 1997

Our objective was to determine the allowability of the nonqualified defined-benefit pension plan (NQDBP) costs Pennsylvania Blue Shield (PBS) claimed for Medicare reimbursement for fiscal years (FY) 1993 through 1997. PBS underclaimed $100,676 in allowable NQDBP costs for FYs 1993 through 1997 because it did not claim all of the allowable NQDBP costs allowed by the Cost Accounting Standards. PBS claimed NQDBP costs of $429,301 for Medicare reimbursement; however, the allowable NQDBP costs were $529,977. We recommended that PBS revise its Final Administrative Cost Proposals for FYs 1993 through 1997 or submit a claim for additional allowable NQDBP costs of $100,676. The auditee agreed with our recommendation.