TrailBlazer Health Enterprises, LLC, Claimed Unallowable Medicare Part B Termination Costs

TrailBlazer Health Enterprises, LLC (TrailBlazer), was the Medicare Part B carrier responsible for processing claims for Virginia, Maryland, Delaware, and the District of Columbia. CMS terminated TrailBlazer's Medicare Part B contracts in 2008 and 2011.

Of the nearly $4 million in Medicare Part B termination costs that we reviewed, $2.7 million was reasonable, allocable, and otherwise allowable in accordance with part 31 of the Federal Acquisition Regulation (FAR) and the Medicare contract. The remaining $1.3 million consisted of $138,000 in unsupported costs and travel costs in excess of the allowable per diem rates and $1.2 million in potentially unallowable termination costs for severance pay.

TrailBlazer claimed these unsupported costs and travel costs in excess of allowable per diem rates because it did not have adequate internal control procedures to ensure that it claimed costs in accordance with the regulations set forth in the FAR and the Medicare contract.

We recommended that BlueCross BlueShield of South Carolina (BlueCross), the successor to TrailBlazer, (1) refund to the Federal Government $138,000 for unsupported costs and travel costs and (2) work with CMS to determine the allowability of $1.2 million in termination costs for severance pay that we set aside and refund to the Federal Government any amount determined to be unallowable. BlueCross concurred with our recommendations.