Review of Medicare Contractor's Pension Segmentation Requirements at Anthem Insurance Companies, Inc. for the Period January 1, 1991, to January 1, 2003

EXECUTIVE SUMMARY:

Our objectives were to determine if Anthem complied with the Medicare contracts' pension segmentation requirements while updating AdminaStar's Medicare segment assets from January 1, 1991, to January 1, 2003, and Maine's Medicare segment assets from December 31, 2000, to January 1, 2003.  Anthem did not comply with the Medicare contracts' pension segmentation requirements while updating AdminaStar's and Maine'sMedicare segment assets.  As a result, Anthem overstated AdminaStar's Medicare segment assets by $440,294 from January 1, 1991, to January 1, 2003, and Maine's Medicare segment assets by $192,694 from December 31, 2000, to January 1, 2003.   

We recommended that Anthem: (1) decrease AdminaStar's Medicare segment pension assets by $440,294 as of January 1, 2003; (2) decrease Maine's Medicare segment pension assets by $192,694 as of January 1, 2003; and (3) implement controls to ensure that it updates the Medicare segments' assets in accordance with the Medicare contracts.  Anthem agreed with our report findings.  Anthem also provided information that we used to clarify the report background.