Audit of Medicare Contractor's Segmented Pension Cost, Blue Cross and Blue Shield of Texas, Inc., A-07-91-00472

4 of Inspector General Memorandum Date From Richard P. Kussero Segmented Pension Cost, Blue Audit of Medicare Contra ToHealth Care Financing Administration The auditA copy is attached. was of Blue Cross and Blue Shield of Texas, (Texas)implementation of its Medicare contract clause on pensionplan segmentation. and report pension assets and costs separatelyfor Medicare segments. compute actuarial liabilities for the Medicare segments asof 1981, actuarial liability to the plan's total actuarial as of 1981, assets as of 1986 to Medicare based on the 1981 ratioto 1990, and (5) assess whether Medicare's pension costsTexas identified four Medicare segments in 1981 using costcenters instead of responsible organizational units asmethodology understated the actuarial liability fraction.When applied to the 1986 pension assets, Texas' fractionunderstated Medicare's pension assets as of 1986 byWe are recommending that Medicare's segmentedMedicare's pension assets were understated by another$880,874 in the updating of Medicare's segmented assetsfrom 1986 to 1990. The understatement occurred becauseTexas incorrectly identified the Medicare segments and hadnot adjusted for participant transfers in and out of theWe are recommending thatTexas increase pension assets of the Medicare segmentsMedicare segments after 1986. assets be increased by $552,870.$552,870. specified in the contract. identification Texas' ...