Review of Excess Plan Costs Claimed by Blue Cross Blue Shield of South Carolina for Medicare Reimbursement for Fiscal Years 1996'2004

Blue Cross Blue Shield of South Carolina (South Carolina) administers Medicare Part A and Part B operations in its Palmetto Government Benefit Administrators (Palmetto) and TrailBlazer Health Enterprises (TrailBlazer) subsidiaries under cost reimbursement contracts with the Centers for Medicare & Medicaid Services.  Our objective was to determine the allowability of the Excess Plan costs that South Carolina claimed for Medicare reimbursement for fiscal years (FY) 1996'2004.  We found that South Carolina overclaimed $1,847,056 in accrued Excess Plan costs for FYs 1996'2004 because it improperly determined costs based on accrual accounting.

We recommended that South Carolina revise its Final Administrative Cost Proposals for FYs 1996'2004 for Palmetto and FYs 2000'2004 for TrailBlazer to reduce claimed Excess Plan costs by $1,847,056.  In written comments on our draft report, South Carolina did not directly address our recommendation.