Audit of the Pension Plan at a Terminated Medicare Contractor, General American Life Insurance Company,

DEPARTMENT OF HEALTH & HUMAN SERVICES Office of Inspector General . Memorandum Date - SEP 2 8 ?OtIO From June Gibbs Brown Inspector Genera 0Sublecr Audit of the Pensron Plan at a Terminated Medicare Contractor, General American Life Insurance Company (A-07-00-001 09) To Nancy-Ann Min DeParle Administrator Health Care Financing Administration This memorandum ii to alert you to the issuance on Sep to&or 2 g , 2 0 0 0 of our final audit report identifying about $3.5 million in excess pension assets ai General American Life Insurance Company (General American) which should be remitted to Medicare because of the closing of General American’s Medicare segment of their pension plan. A copy is attached and copies of the report have been distributed to your staff for adjudication of the finding. General American was a Medicare Part B contractor until their contract was terminated in 1998. As part of their contract, they were allowed to claim Medicare reimbursement for their Medicare employees’ pension costs. Regulations and the contracts provide, however, that pension gains which occur when a Medicare segment of a pension plan closes should be credited to the Medicare program. Accordingly, we are recommending that General American remit about $3.5 million in excess pension assets to the Medicare program. General American agreed with our computations of the assets and liabilities. However, they reserved comment as to the correctness of ...