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EXECUTIVE SUMMARY:
The objective of this review was to determine the allowability of pension costs claimed for Medicare reimbursement for Fiscal Years (FY) 1992 through 1997. We found that Pennsylvania Blue Shield (PBS) did not incur nor claim pension costs for FYs 1992 and 1993. However, PBS underclaimed allowable Medicare pension costs for FYs 1994 through 1997. During this period, the allowable Medicare pension costs were $8,271,992. However, PBS claimed pension costs of $4,978,167 for Medicare reimbursement. The underclaim occurred because PBS did not correctly identify its Medicare segment in accordance with its Medicare contract. As a result, PBS did not claim $3,293,825 of allowable pension costs. We recommended that PBS revise its Final Administrative Cost Proposals (FACP) to claim allowable CAS pension costs of $3,293,825 for FY 1994 through 1997.