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UNITED STATES OFFICE OF PERSONNEL MANAGEMENT
Washington, DC 20415
Office of the
Inspeclor General
AUDIT REPORT
Federal Employees Health Benefits Program
Service Benefit Plan Contract CS 1039
BlueCross BlueShield Association
Plan Code 10
BlueCross BlueShield of Nebraska
Plan Codes 260 and 760
Omaha, Nebraska
REPORT NO. lA-10-53-08-045 DATE: .Tanuary 7,2009
Michael R. Esser
Assistant Inspector General
for Audits
www.opm.gov www.usajDbs.gov
UNITED STATES OFFICE OF PERSONNEL MANAGEMENT
Washington, DC 20415
Office of the
InspeclOr General
EXECUTIVE SUMMARY
Federal Employees Health Benefits Program
Service Benefit Plan Contract CS 1039
BlueCross BlueShield Association
Plan Code 10
BlueCross BlueShield of Nebraska
Plan Codes 260 and 760
Omaha, Nebraska
REPORT NO. lA-10-53-08-045 DATE: January 7, 2009
This final audit report on the Federal Employees Health Benefits Program (FEHBP) operations at
BlueCross BlueShield of Nebraska (Plan) in Omaha, Nebraska questions $440,327 in health
benefit charges. The BlueCross BlueShield Association agreed (A) with all questioned charges.
Our limited scope audit was conducted in accordance with Government Auditing Standards. The
audit covered claim payments from 2005 through 2007 as reported in the Annual Accounting
Statements.
The questioned health benefit charges are summarized as follows:
• Omnibus Budget Reconciliation Act of 1990 Review fA) $413,408
The Plan incorrectly paid 47 claims that were priced or potentially should have been priced
under the Omnibus Budget Reconciliation Act of 1990 pricing guidelines. Specifically, the
Plan overpaid 40 claims by $441,688 and underpaid 7 claims by $28,280, resulting in net
overcharges of $413,408 to the FEHBP.
www.opm.gov www.usajobs.gov
• Claim Payment Errors (A) 526,919
The Plan incorrectly paid 76 claims, resulting in overcharges of $26,919 to the FEHBP.
11
CONTENTS
PAGE
EXECUTIVE SUMMARy i
1. INTRODUCTION AND BACKGROUND 1
II. OBJECTIVES, SCOPE, AND METHODOLOGy 3
III. AUDIT FINDINGS AND RECOMMENDAnONS 5
A. HEALTH BENEFIT CHARGES 5
1. Omnibus Budget Reconciliation Act of 1990 Review 5
2. Claim Paytnent Errors 8
IV. MAJOR CONTRIBUTORS TO THIS REPORT 11
V. SCHEDULE A - HEALTH BENEFIT CHARGES AND AMOUNTS QUESTIONED
APPENDIX (BlueCross BlueShie1d Association reply, dated December 4, 2008, to
the draft audit report)
I. INTRODUCTION AND BACKGROUND
INTRODUCTION
This final audit report details the findings, conclusions, and recommendations resulting from our
limited scope audit of the Federal Employees Health Benefits Program (FEHBP) operations at
BlueCross BlueShield of Nebraska (Plan). The Plan is located in Omaha, Nebraska.
The audit was performed by the Office of Personnel Management's (OPM) Office of the Inspector
General (OIG), as established by the Inspector General Act of 1978, as amended.
BACKGROUND
The FEHBP was established by the Federal Employees Health Benefits (FEHB) Act (Public Law
86-382), enacted on September 28, 1959. The FEHBP was created to provide health insurance
benefits for federal employees, annuitants, and dependents. OPM's Center for Retirement and
Insurance Services has overall responsibIlity for administration of the FEHBP. The provisions of
the FEHB Act are implemented by OPM through regulations, which are codified in Title 5,
Chapter 1, Part 890 of the Code of Federal Regulations (CFR). Health insurance coverage is
made available through contracts with various health insurance c.arriers.
The BlueCross BlueShield Association (Association), on behalf of participating BlueCross and
BlueShield plans, has entered into a Govenunent-wide Service Benefit Plan contract (CS 1039)
with OPM to provide a health benefit plan authorized by the FEHB Act. The Association
delegates authority to participating local BlueCross and BlueShield plans throughout the United
States to process the health benefit claims of its federal subscribers. The Plan is one of
approximately 63 local BlueCross and B1ueShield plans participating in the FEHBP.
The Association has established a Federal Employee Program (FEp l ) Director's Office in
Washington, D.C. to provide centralized management for the Service Benefit Plan. The FEP
Director's Office coordinates the administration of the contract with the Association, member
BlueCross and BlueShield plans, and OPM.
The Association has also established an FEP Operations Center. The activities of the FEP
Operations Center are performed by CareFirst BlueCross BlueShield, located in Washington,
D.C. These activities include acting as fiscal intermediary between the Association and member
plans, verifying subscriber eligibility, approving or disapproving the reimbursement of local plan
payments ofFEHBP claims (using computerized system edits), maintaining a history file of all
FEHBP claims, and maintaining an accounting of all program funds.
J Throughout this report, when we refer to "FEP" we are referring to the Service Benefit Plan lines of business at the
Phm. When we referto the "FEHBP" we are referring to the program that provides health benefits to federal employees.
1
Compliance with laws and regulations applicable to the FEHBP is the responsibility of the
Association and Plan management. Also, management of the Plan is responsible for establishing
and maintaining a system of internal controls.
The findings from our previous audit of the Plan (Report No. lA-1O-53-0l-01O, dated January 19,
2001) for contract years 1997 through 1999 have been satisfactorily resolved.
The results of this audit were provided to the Plan in written audit inquiries; were discussed with
Plan andlor Association officials throughout the audit and at an exit conference; and were
presented in detail in a draft report, dated September 17, 2008. The Association's comments
offered in response to the draft report were considered in preparing our final report and are
included as an Appendix to this report.
2
II. OBJECTIVES, SCOPE, AND METHODOLOGY
OBJECTIVES
The objectives of our audit were to determine whether the Plan charged costs to the FEHBP and
provided services to FEHBP members in accordance with the terms of the contract. Specifically,
our objectives were to determine whether the Plan complied with contract provisions relative to
health benefit payments.
SCOPE
We conducted our limited scope performance audit in accordance with generally accepted
government auditing standards. Those standards require that we plan and perform the audit to
obtain sufficient and appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our audit objectives.
We reviewed the BlueCross and BlueShield FEHBP Annual Accounting Statements as they pertain
to Plan codes 260 and 760 for contract years 2005 through 2007. During this period, the Plan paid
approximately $337 million in health benefit charges. Specifically, we reviewed $7.8 million in
claim payments made from 2005 through 2007 for proper adjudication.
In planning and conducting our audit, we obtained an understanding of the Plan's internal control
structure to help determine the nature, timing, and extent of our auditing procedures. This was
determined to be the most effective approach to select areas of audit. For those areas selected,
we primarily relied on substantive tests of transactions aild not tests of controls. Based on our
testing, we did not identify any significant matters involving the Plan's internal control structure
and its operation. However, since our audit would not necessarily disclose all significant matters
in the internal control structure, we do not express an opinion on the Plan's system of internal
controls taken as a whole.
We also conducted tests to determine whether the Plan had complied with the contract, the
applicable procurement regulations (i.e., Federal Acquisition Regulations and Federal Employees
Health Benefits Acquisition Regulations, as appropriate), and the laws and regulations governing
the FEHBP. The results of our tests indicate that, with respect to the items tested, the Plan did
not comply with all provisions of the contract and federal procurement regulations. Exceptions
noted in the areas reviewed are set forth in detail in the "Audit Findings and Recommendations"
section of this audit report. With respect to the items not tested, nothing came to our attention
that caused us to believe that the Plan had not complied, in all material respects, with those
provlslOns.
In conducting our audit, we relied to varying degrees on computer~generateddata provided by the
FEP Director's Office, the FEP Operations Center, the Plan, and the Centers for Medicare and
Medicaid Services. Due to time constraints, we did not verify the reliability ofthe data generated
by the various information systems involved. However, while utilizing the computer-generated
3
data during our audit testing) nothing came to our attention to cause us to doubt its reliability.
We believe that the data was sufficient to achieve our audit objectives.
The audit was performed at our office in Jacksonville) Florida from June 13) 2008 through
July 31) 2008.
METHODOLOGY
We obtained an understanding of the internal controls over the Plan's claims processing system
by inquiry of Plan officials.
To test the Plan's compliance with the FEHBP health benefit provisions, we selected and
reviewed samples of 553 claims. 2 We used the FEHBP contract, the Service Benefit Plan
brochure) the Plan's provider agreements, and the Association's FEP administrative manual to
detennine the allowability of benefit payments. The results of these samples were not projected
to the universe of claims.
2 See the audit findings for "Omnibus Budget Reconciliation Act of 1990 Review" (AI) and "Claim Payment
Errors" (A2) on pages 5 through 10 for specific details of our sample selection methodologies.
4
III. AUDIT FINDINGS AND RECOMMENDATIONS
A. HEALTH BENEFIT CHARGES
1. Omnibus Budget Reconciliation Act of 1990 Review $413,408
The Plan incorrectly paid 47 claims that were priced or potentially should have been
priced under the Omnibus Budget Reconciliation Act of 1990 (OBRA 90) pricing
guidelines. Specifically, the Plan overpaid 40 claims by $441,688 and underpaid 7 claims
by $28,280, resulting in net overcharges of $413,408 to the FEHBP.
Contract CS 1039, Part III, section 3.2 (b)(I) states, "The Carrier may charge a cost to
the contract for a contract term if the cost is actual, allowable, allocable, and reasonable."
Part II, section 2.3(g) states, "If the Carrier or OPM determines that a Member's claim
has been paid in error for any reason, the Carrier shall make a diligent effort to recover an
overpayment ...."
Contract CS 1039, Part II, section 2.6 states, "(a) The Carrier shall coordinate the payment
of benefits under this contract with the payment of benefits under Medicare ... (b) The
Carrier shall not pay benefits under this contract until it has determined whether it is the
~
pnmary camer . ...."
OBRA 90 limits the benefit payments for certain inpatient hospital services provided to
annuitants age 65 or older who are not covered under Medicare Part A. The FEHBP
fee-for-service plans are required to limit the claim payment to the amount equivalent to
the Medicare Part A payment.
Using a program developed by the Centers for Medicare and Medicaid Services to price
OBRA 90 claims, we recalculated the claim payment amounts for the claims in our
samples that were subject to and/or processed as OBRA 90.
The following summarizes the claim payment errors.
.oHRA 90 Claim Pricing Errors
For the period 2005 through 2007, we identified 300 claims, totaling $3,724,457 in
payments, that were subject to OBRA 90 pricing guidelines. From this universe, we
selected and reviewed a judgmental sample of 114 claims, totaling $2,556,600 in
payments, to determine if these claims were correctly priced by the FEP Operations
Center and paid by the Plan. Our sample included all OBRA 90 claims with amounts
paid of$10,000 or more.
Based on our review, we determined that 34 claims were paid incorrectly, resulting in net
overcharges of $424,788 to the FEHBP. Specifically, the Plan overpaid 31 claims by
$433,370 and underpaid 3 claims by $8,582.
5
The claim payment errors resulted from the following:
• The Plan inadvertently did not price 27 claims under OBRA 90, resulting in net
overcharges of $382,264 to the FEHBP. Specifically, the Plan overpaid 26 claims by
$387,263 and underpaid I claim by $4,999.
• The Plan did not properly coordinate two claims with Medicate Part B, resulting in
overcharges of $22,481 to the FEHBP.
• The FEP Operations Center priced one claim using the incorrect billed charges,
resulting in an overcharge of$17,473 to the FEHBP.
• The FEP Operations Center priced one claim using an incorrect Medicare Diagnostic
Related Group (DRG) code, resulting in an overcharge of $5,239 to the FEHBP.
• In one instance, the Plan paid a split claim incorrectly, resulting in an overcharge of
$914 to the FEHBP.
• The Plan paid two claims using incorrect reimbursement rates, resulting in undercharges
of$3,583 to the FEHBP.
Claims Not Priced Under OBRA 90 (Possible OBRA 90 Claims)
For the period 2005 through 2007, we identified 96 claims, totaling $508,682 in payments,
that were potentially subject to OBRA 90 pricing guidelines but appeared to be priced
under the Plan's standard pricing procedures. We selected all 96 claims and determined if
the Plan paid these claims properly.
.Based on our review, we determined that 13 claims were paid incorrectly, resulting in net
undercharges of $1] ,380 to the FEHBP. Specifically, the Plan overpaid nine claims by
$8,318 and underpaid four claims by $19,698.
The claim payment errors resulted from the following:
• The Plan incorrectly paid six split claims, resulting in overcharges of $4,823 to the
FEHBP.
• The Plan paid one claim using an incorrect local pricing amount, resulting in an
undercharge of $476 to the FEHBP.
• The Plan priced one claim using an incorrect reimbursement rate, resulting in an
undercharge of $1,263 to the FEHBP.
6
• The Plan inadvertently did not price five claims under OBRA 90, resulting in net
wldercharges of$14,464 to the FEHBP. Specifically, the Plan overpaid three claims
by $3,495 and underpaid two claims by $17,959.
Association's Response:
The Association agrees with this finding. The Association states that the Plan has initiated
recoveries on the overpayments and has already returned $393,640 ($386,831 + $6,809) to
the FEHBP. The Association also states that these payments were good faith erroneous
benefit payments and fall within the context ofCS 1039, Part II, section 2.3(g). Any
payments the Plan is unable to recover are allowable charges to the FEHBP. As good faith
erroneous payments, lost investment income does not apply to the claim payment errors
identified in this finding.
The Association states, "As a result of the audit, the Plan noted several discrepancies in
the assigning of Medicare provider numbers in the local Plan database. The Plan
immediately reviewed aU local files containing Medicare provider numbers against a
list retrieved from the local Medicare Part A contractor to ensure that the database used
to accurately price OBRA 90 claims was correct. ... Efforts will be made to
periodicaUy examine existing procedures and add additional controls where necessary."
·OIG Comments:
After reviewing the Association's response and documentation provided by the Plan, we
revised the amount questioned from the draft report to net overcharges of $413,408.
Using the FEP Direct System, we could only verify that the Plan has returned $347,127 of
the questioned overcharges to the FEHBP.
Recommendation 1
We verified that the Plan has returned $347,127 of the questioned overcharges to the
FEHBP. Therefore, no further action is required for these overpayments.
Recommendation 2
We recommend that the contracting officer disallow $94,561 ($441,688 overcharges
$347,127 amount already returned) in claim overcharges, and verify that the Plan returns
all amounts recovered to the FEHBP.
Recommendation 3
We recommend that the contracting officer allow the Plan to charge the FEHBP $28,280
if additional payments are made to the providers to correct the underpayment errors.
7
Recommendation 4
Although the Association has developed a corrective action plan to reduce OBRA 90
findings, we recommend that the contracting officer instruct the Association to ensure
that the Plan is following the corrective action plan.
2. Claim Payment Errors $26,919
The Plan incorrectly paid 76 claims, resulting in overcharges of$26,919 to the FEHBP.
As previously cited from CS 1039, costs charged to the FEHBP must be actual,
allowable, allocable, and reasonable. If errors are identified, the Plan is required to make
a diligent effort to recover the overpayments.
The following summarizes the claim payment errors.
Assistant Surgeon Review
For the period of2005 through 2007, we identified 428 assistant surgeon claim groups,
totaling $64,207 in potential overpayments, that may not have been paid in accordance
with the Plan's assistant surgeon pricing procedures. From this universe, we selected and
reviewed a judgmental sample of 172 assistant surgeon claim groups, totaling $49,888 in
potential overpayments, to detennine if the Plan paid these claims properly. Our sample
included all assistant surgeon claim groups with potential overpayments of $100 or more.
Based on our review, we detennined that 70 claims were paid incorrectly, resulting in
overcharges of $23,827 to the FEHBP.
The claim payment errors resulted from the following:
• The Plan inadvertently priced 39 claims incorrectly, resulting in overcharges of
$14,278 to the FEHBP. In each instance, the Plan paid the claim based on the assistant
surgeon pricing even though the claim did not require assistant surgeon pricing.
• The Plan incorrectly paid 18 assistant surgeon claims that were subject to Omnibus
Budget Reconciliation Act of 1993 (OBRA 93) pricing guidelines, resulting in
overcharges of $3,745 to the FEHBP. These errors were due to Palmetto (OBRA 93
pricing vendor) not recognizing the assistant surgeon pricing modifier and
erroneously calculating the assistant surgeon fee.
• The Plan paid three claims using the incorrect assistant surgeon pricing percentage,
resulting in overcharges of $2,657 to the FEHBP.
• The Plan paid six claims at incorrect allowed amounts, resulting in overcharges of
$2,569 to the FEHBP.
8
• The Plan paid four claims without applying the multiple surgery reduction, resulting
in overcharges of$578 to the FEHBP.
Amounts Paid Greater than Covered Charges
For the period 2005 through 2007, we identified 71 claims where the amounts paid were
greater than the covered charges by a total of$115,573. We selected all 71 claims and
determined if the Plan adjudicated these claims properly. Based on our review, we
identified six claim payment errors, resulting in overcharges of $3,092 to the FEHBP.
The claim payment errors resulted from the following:
• The Plan paid two claims using incorrect local pricing methods, resulting in
overcharges of $2,235 to the FEHBP.
• The Plan paid four claims using incorrect aJIowances, resulting in overcharges of
$857 to the FEHBP.
System Review
For health benefit claims reimbursed from January 1,2007 through December 31, 2007,
we identified 782,310 claim lines, totaling $99,613,703 in payments, using a standard
criteria based on our audit experience. From this universe, we selected and reviewed a
judgmental sample of 100 claims (representing 874 claim lines), totaling $4,545,554 in
payments, to determine ifthe Plan adjudicated these claims properly.3 We identified two
immaterial claim payment errors, which are not being questioned in the report.
Association's Response:
The Association agrees with this finding. The Association states that the Plan has
initiated recoveries on the overpayments and has already returned $23,069 to the FEHBP.
The Association also states that these payments were good faith erroneous benefit
payments and fall within the context ofCS 1039, Part II, section 2.3(g). Any payments
the Plan is unable to recover are allowable charges to the FEHBP. As good faith
erroneous payments, lost investment income does not apply to the claim payment errors
identified in this finding.
The Association states, "The Plan has retrained several claims auditors regarding when
and how to pay Assistant Surgeon claims. This training is ongoing and as a follow up,
additional quality is performed to ensure the training was successful.
3 We selected our sample from an DIG-generated "Place ofService Report" (SAS application) that stratified the claims
by place of service (POS), such as provider's office, and payment category, such as $50 to $99.99. We judgmentaJly
determined the number of sample items to select from each POS stratum based on the stratum's total claim dollars paid.
9
For the Assistant Surgeon claim errors noted during the audit, the FEPDO implemented
the following:
• The OBRA '93 vendor, Palmetto, corrected pricing of the Assistant Surgeon modifier
during May 2008; this should result in more accurate pricing in the future.
• A final comprehensive list that identifies all unadjusted Assistant Surgeon claims will
soon be issued so that claims can be adjusted as necessary."
In addition, the Association states, "the Plan has several methods in place to identify
overpayments. These methods include, but are not limited to the System Wide Claims
Reports (which includes a listing of Assistant Surgeon Claims), COB claims reports and
Duplicate claims reports provided by the FEP Director's Office and routine claims quality
assurance audits performed by the Plan's Internal Auditors. While these measures are not
absolute, they provide reasonable assurances that such items will be identified. Efforts
will be made to periodically examine existing procedures and add additional controls
where necessary."
OIG Comments:
Using the FEP Direct System, we could only verify that the Plan has returned $16,046 of
the questioned charges to the FEHBP.
Recommendation 5
We verified that the Plan has returned $16,046 of the questioned charges to the FEHBP.
No further action is required for these overpayments.
-~~c 'Recommendation 6
We recommend that the contracting officer disallow $10,873 ($26,919 questioned
$16,046 amount already returned) in claim overcharges, and veritY that the Plan returns all
amounts recovered to the FEHBP.
10
IV. MAJOR CONTRIBUTORS TO THIS REPORT
EX..Qerienced-Rated Audits Group
, Auditor-In-Charge
Senior Team Leader
11
, ,'
"
V. SCHEDULE A
BLUECROSS BLUESHIELD OF NEBRASKA
OMAHA, NEBRASKA
HEALTH BENEFIT CHARGES AND AMOUNTS QUESTIONED
HEALTH BENEFIT CHARGES 2005 2006 2007 TOTAL
HEALTH BENEFIT CHARGES
PLAN CODE 260 $61,672,846 $67,992,512 $72,166,774 $201,832,132
MISCELLANEOUS PAYMENTS AND CREDITS (14,481) 871,083 807,315 1,663,917
PLAN CODE 760 39,211,999 44,901,878 49,056,344 133,170,221
MISCELLANEOUS PAYMENTS AND CREDITS 0 0 0 0
TOTAL HEALTH BENEFIT CHARGES I1 ., $100,870,364
",,,,,,,,,mm'' ,,,,,,,,'' ' ' ' ' ' '
$113,765,473
"
$122,030,433
,'' ' ' ' ' ' ',,_,,,,,.'' ,,,,,.,,'' ',, .,
$336,666,270 ~
I ~
AMOUNTS QUESTIONED 2005 2006 2007 TOTAL
I. OMNIBUS BUDGET RECONCILIATION ACT OF 1990 REVIEW $205,165 $99,760 $108,483 $413,408
2. CLAIM PAYMENT ERRORS 9,568 8,008 9,343 26,919
TOTAL QUESTIONED CHARGES I $214,733
, $107,768 $117,826 $440,327 ~
'''"'''.'''''0,1, I
APPENDIX
.v
BlueCross B]ueShicld
Association
(Revised 12/4/08) An Assoda 0011 of lndependent
BIlle Cross and Blue Shield PI/lDS
November 14, 2008
Federal Employee .Prop·am
Group Chief
1510 G Slreel, N.W.
Experience-Rated Audits Group Washington, D.C. 20005
Office of the Inspector General 202.942.1000
U.S. Office of Personnel Management Fax 202.9·12.1125
1900 E Street, Room 6400
Washington. DC 20415-1100
Reference: OPM DRAFT AUDIT REPORT
BlueCross BlueShleld of Nebraska
Audit Report Number 1A-10-53-08-045
(Dated and received September 17, 2008)
Dear
This is our response to the above referenced U.S. Office of Personnel
Management (OPM) Draft Audit Report covering the Federal Employees' Health
Benefits Program (FEHBP) operations for alueCross BlueShield of Nebraska.
Our comments concerning the findings in the report are as follows:
B. HEALTH BENEFIT CHARGES
1. Omnibus Budget Reconciliation Act of 1990 $435.720
Specifically, the Plan overpaid 42 claims by $464,000 and underpaid seven
claims by $28,280 for a net of $435,720. The breakdown is as follows:
• OBRA '90 Claim Pricing Errors
There were $436,618 in overpayments and $8,582 in underpayments for a
net total of $428,036. The Plan contests four claims totaling $3,248 but does
not contest that a net $424,788 in claim payments may have been paid in
error.
The Plan has returned $386,831 to the Program through
November 11, 2008 and has initiated refund recovery on all remaining
identified overpayments.
As a result of the audit, the Plan noted several discrepancies in the assigning
of Medicare provider numbers in the local Plan database. The Plan
immediately reviewed al110cal files containing Medicare provider numbers
against a list retrieved from the local Medicare Part A contractor to ensure
.
Group Chief
OPM Draft Audit Response
November 14,2008
Page 2
that the database used to accurately price OBRA 90 claims was correct.
In addition, the Plan has several methods in place to identify overpayments.
These methods include, but are not limited to the System Wide Claims
Reports. COB claims reports and Duplicate claims reports provided by the
FEP Director's Office and routine claims quality assurance audits performed
by the Plan's Internal Auditors. While these measures are not absolute. they
provide reasonable assurances that such items will be identified. Efforts will
be made to periodically examine existing procedures and add additional
controls where necessary.
• Claims Not Priced Under OBRA t90 (Possible OBRA t90)
We do not contest an overpayment of $8,318 and an underpayment of
$19,698 for a net underpayment of $11 ,380. We do contest one clatm
(Claim Sample #26), for $10,274 because this refund was recovered and
adjusted prior to the audit. Additionally there were three claims totaling
$8,790 (Claim Sample #27,39 and 78) that when re-priced by the
Operations Center OBRA '90 pricer software resulted in a different price
than the price calculated by the CMS PC pricer. The Operations Center
OBRA '90 pricer software is the official O?M approved source for FEP
OBRA '90 pricing and must be used to determine payment. The claims
were repriced with the most up-to·date version of the Operations Center
OBRA '90 pricer software. Because the final updated version of the·
Operations Center OBRA '90 pricer was used to reprice the claims, FE?
continues to believe that the pricing differences obtained by the Operations
Center OBRA '90 Mainframe pricer software is the most accurate. Also,
.since 2005, the Operations Center updates the OBRA '90 pricing software
. - on a quarterly basis. This has minimized pricing differences.
The Plan returned $6,809 to the Program through November 11,2008 and
has init1ated refund recovery on the remaining identified overpayments.
As stated above, the Plan has several methods in place to identify
overpayments. These methods inclUde, but are not limited to the System
Wide Claims Reports, COB claims reports and Duplicate claims reports
provided by the FEP Director's Office and routine claims quality assurance
audits performed by the Plan's Internal Auditors. While these measures are
not absolute, they provide reasonable assurances that such items will be
identified. Efforts will be made to periodically examine existing procedures
and add additional controls where necessary. Accordingly, to the extent that
errors did occur, the payments are good faith erroneous benefits payments
and· fall within the context of CS 1039, Section 2.3(g). Any benefit payments
the Plan is unable to recover are allowable charges to the Program. In
addition, as good faith erroneous payments, lost investment income does not
apply to the payments identified in this finding.
Group Chief
OPM Draft Audit Response
November 14, 2008
Page 3
2. Claim Payment Errors $26,919
We do not contest this finding. The Plan reviewed the errors identified on the
Assistant Surgeon claim list and realized that these errors could be identified
as auditor errors. The Plan has retrained several claims auditors regarding
when and how to pay Assistant Surgeon claims. This training is ongoing and
as a follow up, additional quality is performed to ensure the training was
successful.
For the Assistant Surgeon claim errors noted dUring the audit, the FEPDO
implemented the following:
• The OBRA '93 vendor, Palmetto, corrected pricing" of the Assistant
Surgeon modifier during May 2008. This should result in more accurate
pricing in the future.
• A final comprehensive list that identifies aU unadjusted Assistant Surgeon
claims will soon be issued so that claims can be adjusted as necessary.
As stated above, the Plan has several methods in place to identify
overpayments. These methods include. but are not limited to the System
Wide Claims Reports (which includes a listing of Assistant Surgeon Claims),
COB claims reports and Duplicate claims reports provided by the FE?
Director's Office and routine claims quality assurance audits performed by the
Plan's Internal Auditors. While these measures are not absolute, they provide
reasonable assurances that such items will be identified. Efforts will be made
to periodically examine eXisting procedures and add additional controls where
necessary. Accordingly, to the extent that errors did occur, the payments are
good faith erroneous benefits payments and faU within the context of CS
1039, Section 2.3(g). Any benefit payments the Plan is unable to recover are
allowable charges to the Program. In addition, as good faith erroneous
payments, lost investment income does not apply to the payments identified
in this finding.
The Plan returned $23,069 to the Program through November 11, 2008 and
has initiated refund recovery on the remaining identified overpayments.
_ G r o u p Chief
~sponse
November 14.2008
Page 4
We appreciate the opportunity to provide our response to each of the findings
and request that OUf comments be included in their entirety as part of the Final
Audit Report.
Audit of the BlueCross BlueShield Of Nebraska
Published by the Office of Personnel Management, Office of Inspector General on 2009-01-07.
Below is a raw (and likely hideous) rendition of the original report. (PDF)