oversight

Audit of Blue Cross BlueShield of Minnesota, Eagan, Minnesota

Published by the Office of Personnel Management, Office of Inspector General on 2010-03-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                                     U.S. OFFICE OF PERSONNEL MANAGEMENT
                                                           OFFICE OF THE INSPECTOR GENERAL
                                                                            OFFICE OF AUDITS




Final Audit Report

Subject:



    BLUECROSS BLUESHIELD OF MINNESOTA
             EAGAN, MINNESOTA



                                             Report No. lA-IO-78-10-002


                                             Date:       March 30, 2010




                                                          --CAUTION-­
This audit report has been distributed to Federal officials who are responsible for the administration of the audited program. This audit
report may contain proprietary d~ta which is protected by Fedcra! law (18 U.S.c. 1905)~ Therefore, while this audit report is available
under the Freedom of Information Act and made available to the IJUblic on the OIG webpage, caution needs to be exercised before
releasing the report to the general public as il may contain proprietary informatiou that was redacted from the publicly distributed copy.
                      UNITED STATES OFFICE OF PERSONNEL MANAGEMENT

                                         Washington, DC 20415



   Office of the
Inspector General




                                       AUDIT REPORT



                             Federal Employees Health Benefits Program

                             Service Benefit Plan     Contract CS 1039

                                  BlueCross BlueShield Association

                                            Plan Code 10



                                 BlueCross BlueShield of Minnesota

                                       Plan Codes 2201720

                                        Eagan, Minnesota





                      REPORT NO. lA-10-78-1O-002         DATE: March 30, 2010




                                                          ;;;IPgL-

                                                           Michael R. Esser
                                                           Assistant Inspector General
                                                             for Audits




        www.opm.gov                                                                      www.usajobs.goY
                           UNITED STATES OFFICE OF PERSONNEL MANAGEMENT

                                                     Washington, DC 20415


   Office of the
Inspector General




                                           EXECUTIVE SUMMARY



                                    Federal Employees Health Benefits Program

                                    Service Benefit Plan     Contract CS 1039

                                         BlueCross BlueShield Association

                                                   Plan Code 10



                                          BlueCross BlueShield of Minnesota

                                                Plan Codes 2201720

                                                 Eagan, Minnesota





                         REPORT NO. lA-1O-78-10-002                   DATE: March 30, 2010

      This final audit report on the Federal Employees Health Benefits Program (FEHBP) operations
      at BlueCross BlueShield of Minnesota (Plan), in Eagan, Minnesota, questions $33,482 in health
      benefit charges and lost investment income (LII). The BlueCross BlueShield Association agreed
      (A) with this questioned amount.

      Our limited scope audit was conducted in accordance with Government Auditing Standards. The
      audit covered claim payments from January 1,2006 through June 30, 2009, as well as
      miscellaneous payments and credits from 2004 through 2008 as reported in the Annual
      Accounting Statements.' In addition, we reviewed the Plan's cash management practices related
      to FEHBP funds for contract years 2004 through 2008. Due to errors identified during our
      review of fraud recoveries, we expanded our audit scope to also include fraud recoveries in 2009.

      Questioned items are summarized as follows:



      I For claim payments, we only performed a system review of claims paid from January 1, 2008 through June 30, 2009,
      and reviewed a listing of debarred providers to determine if any claims were inappropriately paid to these providers
      from January 1,2006 through June 30, 2009.



        www.opm.gov                                                                                         www.usajobs.gov
                            HEALTH BENEFIT CHARGES


Claim Payments

The audit disclosed no findings pertaining to claim payments. Overall, we concluded that the
claims in our system review and debarred provider samples were paid in accordance with the
FEHBP contract, the Service Benefit Plan brochure, the Plan's provider agreements, and/or the
Association's Federal Employee Program administrative manual.

Miscellaneous Payments and Credits

•   ProviderSettlements fA)                                                              $24,734

    The Plan overcharged the FEHBP for two provider settlements paid in 2007. As a result, the
    FEHBP is due $24,734, consisting of $21,932 for provider settlement overcharges and
    $2,802 for LII.

•   Fraud Recoveries and Health Benefit Refunds (A)                                        $8,748

    The Plan did not return six fraud recoveries and three health benefit refunds to the FEHBP.
    As a result, the FEHBP is due $8,748, consisting of$8,153 for recoveries and refunds not
    returned and $595 for LII.

                                 CASH MANAGEMENT

Overall, we concluded that the Plan handled FEHBP funds in accordance with Contract CS 1039
and applicable laws and regulations, except for the audit findings pertaining to cash management
notedin the "Miscellaneous Payments and Credits" section.




                                                11
                                      CONTENTS

                                                                                  PAGE

       EXECUTIVE SUMMARY          ~            ,	                                       .i


 I.    INTRODUCTION AND BACKGROUND	                                                      1


II.    OBJECTIVES, SCOPE, AND METHODOLOGy	                                               3


III.   AUDIT FINDINGS AND RECOMMENDATIONS	                                               6


       A.   HEALTIl BENEFIT CHARGES	                                                     6


            1. Claim Payments	                                                           6


            2. Miscellaneous Payments and Credits	                            ;          6


               a. Provider Settlements	                                                  6

               b. Fraud Recoveries and Health Benefit Refunds	                           7


       B.   CASH MANAGEMENT	                                                             9


 IV.   MAJOR CONTRIBUTORS TO THIS REPORT	                                               10


 V.    SCHEDULE A - HEALTH BENEFIT CHARGES AND AMOUNTS QUESTIONED

       APPENDIX	 (BlueCross BlueShield Association reply, dated February 22, 2010, 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 Minnesota (Plan). The Plan is located in Eagan, Minnesota.

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 Retirement and Benefits
Office 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 carriers.

The BlueCross BlueShield Association (Association), on behalf of participating BlueCross and
BlueShield plans, has entered into a Government-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 BlueShield plans participating in the FEHBP.

The Association has established a Federal Employee Program (FEp I ) 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 oflocal plan
payments ofFEHBP claims (using computerized system edits), maintaining a history file of all
FEHBP claims, and maintaining an accounting of all program funds.




I Throughout this report, when we refer to "FEP" we are referring to the Service Benefit Plan lines of business at the
Plan. When we refer to 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.

All findings from our prior audit of the Plan (Report No. lA-10-78-05-005, dated September 15,
2006) for contract years 1999 through 2003 were satisfactorily resolved, except for a finding
related to claim payment errors, which is in the process of being resolved.

The results of this audit were provided to the Plan in written audit inquiries; were discussed with
Plan and/or Association officials throughout the audit and at an exit conference; and were
presented in detail in a draft report, dated January 22, 2010. 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 as follows:

        Health Benefit Charges

        •	 To determine whether the Plan complied with contract provisions relative to benefit
           payments.

        •	 To determine whether miscellaneous payments charged to the FEHBP were in
           compliance with the terms of the contract.

        •	 To determine whether credits and miscellaneous income relating to FEHBP benefit
           payments were returned promptly to the FEHBP.

        Cash Management

        •	 To determine whether the Plan handled FEHBP funds in accordance with applicable
           laws and regulations concerning cash management in the FEHBP.

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 220 and 720 for contract years 2004 through 2008. During the period, the
Plan paid approximately $1.1 billion in health benefit charges (See Schedule A).

Specifically, we reviewed approximately $9 million in claim payments made from January 1,
2006 through June 30, 2009. In addition, we reviewed miscellaneous payments and credits,
such as refunds and subrogation recoveries, and cash management for 2004 through 2008. Due
to errors identified during our review of fraud recoveries, we expanded our audit scope to also
include all fraud recoveries in 2009.



2 For claim payments, we only performed a system review of claims paid from January 1,2008 through June 30, 2009,
and reviewed a listing of debarred providers to determine if any claims were inappropriately paid to these providers
from January 1,2006 through June 30, 2009.




                                                        3
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 and 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 (FAR) and Federal
Employees Health Benefits Acquisition Regulations (FEHBAR), 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 provisions.

In conducting our audit, we relied to varying degrees on computer-generated data provided by
the FEP Director's Office, the FEP Operations Center and the Plan. 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 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 the Plan's office in Eagan, Minnesota from October 12 through
October 23, 2009. Audit fieldwork was also performed at our office in Cranberry Township,
Pennsylvania.

METHODOLOGY

We obtained an understanding of the internal controls over the Plan's claims processing and
financial systems by inquiry of Plan officials.

To test the Plan's compliance with the FEHBP health benefit provisions, we selected and
reviewed a judgmental sample of 85 claims (referred to as our system review) that were paid
during the period January 1,2008 through June 30, 2009. 3 In addition, we reviewed all debarred
providers in Minnesota for the purpose of determining if any claims were inappropriately paid to


3 For this period, we identified 2,622,517 claim lines, totaling $388,210,529 in payments, using a standard criteria
based on our experience. From this universe, we selected and reviewed a judgmental sample of 85 claims
(representing 1,308 claim lines) totaling $9,185,382 in payments. We selected our sample from an OIG-generated
"Place of Service 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 judgmentally determined the number of sample items to
select from each POS stratum based on the stratum's total claim dollars paid.




                                                          4

  these providers. We used the FEHBP contract, the Service Benefit Plan brochure, the Plan's
  provider agreements, and the Association's FEP administrative manual to determine the
  allowability of benefit payments, The results of these samples were not projected to the universe
. ofc1aims.

 We interviewed Plan personnel and reviewed the Plan's policies, procedures, and accounting
 records during our audit of miscellaneous payments and credits. For contract years 2004 through
 2008, we also judgmentally selected and reviewed 56 high dollar health benefit refunds, totaling
 $3,867,317 (from a universe of 8,531 refunds, totaling $10,337,994); 10 high dollar special plan
 invoices, totaling $4,350,884 in net payments (from a universe of 110 special plan invoices,
 totaling $7,700,165 in net payments); 19 provider settlements, totaling $1,321,823 in net
 payments (from a universe of 4,034 provider settlements, totaling $5,214,826 in net payments);
 and 8 fraud cases, totaling $8,087 in recoveries (from a universe of 12 fraud cases, totaling
 $17,333 in recoveries), to determine if refunds and recoveries were promptly returned to the
 FEHBP andif miscellaneous payments were properly charged to the FEHBP.4 In addition, we
 expanded our testing of fraud recoveries to also include two recoveries, totaling $5,341, from
 2009. The results of these samples were not projected to the universe of miscellaneous payments
 and credits.

 We also reviewed the Plan's cash management to determine whether the Plan handled FEHBP
 funds in accordance with Contract CS 1039 and applicable laws and regulations.




 4See the audit findings for "Provider Settlements" (A2.a) and "Fraud Recoveries and Health Benefit Refunds" (A2.b)
 on pages 6 through 9 for specific details of our sample selection methodologies.




                                                        5

           III. AUDIT FINDINGS AND RECOMMENDATIONS


A. HEALTH BENEFIT CHARGES

  1. Claim Payments

     The audit disclosed no findings pertaining to claim payments. Overall, we concluded that
     the claims in our system review and debarred provider samples were paid in accordance
     with the FEHBP contract, the Service Benefit Plan brochure, the Plan's provider
     agreements, and/or the Association's Federal Employee Program administrative manual.

  2. Miscellaneous Payments and Credits

     a. Provider Settlements                                                             $24,734

        The Plan overcharged the FEHBP for two provider settlements paid in 2007. As a
        result, the FEHBP is due $24,734, consisting of $21 ,932 for provider settlement
        overcharges and $2,802 for lost investment income (LII).

        Contract CS 1039, Part III, section 3.2 (b)(l) states, "The Carrier may charge a cost to
        the contract for a contract term if the cost is actual, allowable, allocable, and
        reasonable."

         48 CFR 52.232-17(a) states, "all amounts that become payable by the Contractor ...
         shall bear simple interest from the date due ... The interest rate shall be the interest
         rate established by the Secretary of the Treasury as provided in Section 611 of the
         Contract Disputes Act of 1978 (Public Law 95-563); which is applicable to the period
         in which the amount becomes due, as provided in paragraph (e) of this clause, and
       . then at the rate applicable for each six-month period as fixed by the Secretary until
         the amount is paid."

        For the period 2004 through 2007, there were 4,034 provider settlements totaling
        $5,214,826 in net charges to the FEHBP. From this universe, we selected and
        reviewed a judgmental sample of 18 provider settlements, totaling $666,772 in net
        charges, for the purpose of determining whether the Plan properly charged or timely
        returned these settlements to the FEHBP. From each year, we selected settlements
        based on the following methodology: highest dollar corporate settlement credit,
        highest dollar corporate settlement charge, highest dollar FEP settlement credit,
        highest dollar FEP settlement charge, and highest FEP allocation rate. If the same
        provider settlement was selected under more than one of these methodologies, then
        we only counted that settlement as one sample item. Also, there were no provider
        settlement payments and/or recoveries in 2008.




                                              6

   In one instance, we determined that the Plan did not correctly allocate a provider
   settlement charge to FEP. Due to a clerical error made on the Plan's settlement
   allocation spreadsheet, the Plan incorrectly allocated 19.44 percent to FEP instead of
   4.4 percent, resulting in an overcharge of $11,249 to the FEHBP. As a result, we
   reviewed additional provider settlement allocations to determine whether there were
   similar errors. We found one additional settlement error, again due to a clerical error,
   where the Plan incorrectly allocated 22.98 percent to FEP instead of3.74 percent,
   resulting in an overcharge of $10,683 to the FEHBP.

   In total, the FEHBP is due $24,734, consisting of $21,932 for two provider settlement
   overcharges and $2,802 for LII on these overcharges. We calculated LII on the
   questioned provider settlement overcharges through the dates (October 21, 2009 and
   November 5, 2009) when the Plan deposited the funds into the FEP investment
   account.

   Association's Response:

   The Association agrees with this finding. The Association states that the Plan
   returned the questioned amount of $24,734 to the FEHBP on January 14,2010. In
   addition, the Association states, "The error was due to a clerical error and to reduce
   the risk of this occurring again, the Plan now uses MS Access instead of an Excel
   Spreadsheet to allocate and track provider settlements."

   Recommendation 1

   We verified that the Plan deposited a total of $21,932 into the FEP investment
   account on October 21,2009 and November 5, 2009 for these provider settlement
   overcharges. Therefore, we recommend that the contracting officer verify that the
   Plan returned these funds to the FEHBP letter of credit account (LOCA).

   Recommendation 2

   We recommend that the contracting officer verify that the Plan credited the FEHBP
   $2,802 for LII on the provider settlement overcharges.

b. Fraud Recoveries and Health Benefit Refunds                                       $8,748

   The Plan did not return six fraud recoveries and three health benefit refunds to the
   FEHBP. As a result, the FEHBP is due $8,748, consisting of $8,153 for recoveries
   and refunds not returned and $595 for LII.

   Contract CS 1039, Part II, Section 2.3 (i) states, "All health benefit refunds and
   recoveries, including erroneous payment recoveries, must be deposited into the
   working capital or investment account within 30 days and returned to or accounted
   for in the FEHBP letter of credit account within 60 days after receipt by the Carrier."




                                         7

 48 CFR 52.232-17(a) states, "all amounts that become payable by the Contractor ...
 shall bear simple interest from the date due ... The interest rate shall be the interest
 rate established by the Secretary of the Treasury as provided in Section 611 of the
 Contract Disputes Act of 1978 (Public Law 95-563), which is applicable to the period
 in which the amount becomes due, as provided in paragraph (e) of this clause, and
 then at the rate applicable for each six-month period as fixed by the Secretary until
 the amount is paid."

 Fraud Recoveries

 For the period 2004 through 2008, there were 12 fraud recoveries totaling $17,333.
 From this universe, we selected and reviewed a judgmental sample of eight fraud
 recoveries, totaling $8,087, for the purpose of determining if the Plan returned these
 recoveries to the FEHBP in a timely manner. Our sample included four recoveries
 that were judgmentally selected and four recoveries that, according to the Plan, were
 not returned to the FEHBP.

 Based on our review, we determined that the Plan did not return four fraud recoveries,
 totaling $2,001, to the FEHBP. The Plan stated that these recoveries were not
 returned to the FEHBP due to a lack of communication between the Plan's
 departments after implementing the Association's "Fraud Information Management
 System" in 2005.

 As a follow-up step, we requested the Plan to review all 2009 FEP fraud recoveries to
 determine if there were similar problems. The Plan reported two fraud recoveries,
 totaling $5,341, during this period. Based on our review of the Plan's documentation,
 we determined that the Plan did not return these two recoveries to the FEHBP.
                                                <~     "




. In total, the Plan did not return six fraud recoveries, totaling $7,342, to the FEHBP.
  We determined that the FEHBP is also due $497 for LII on these recoveries. We
  calculated LII on these questioned recoveries through the date (December 29,2009)
  when the Plan deposited the funds into the FEP investment account.

 Health Benefit Refunds

 For the period 2004 through 2008, there were 8,531 health benefit refunds (including
 subrogation recoveries) totaling $10,337,994. From this universe, we selected and
 reviewed a judgmental sample of 56 refunds, totaling $3,867,317, for the purpose of
 determining if the Plan returned refunds to the FEHBP in a timely manner. From
 each year in the audit scope, we selected all refunds greater than $20,000.

 Based on our review, we determined that the Plan did not return three health benefit
 refunds, totaling $811, to the FEHBP. Specifically, two refunds were not deposited
 into the FEP investment account and adjusted through the LOCA, and one refund was
 not adjusted through the LOCA. For the two refunds that were not deposited into the
 FEP investment account, we determined that the FEHBP is also due $98 for LII on




                                       8

         these refunds. We calculated LII on these refunds through the date (December 4,
         2009) when the Plan deposited the funds into the FEP investment account.

         Association's Response:

         The Association agrees with this finding. The Association states that the Plan
         returned the questioned amount of$8,748 to the FEHBP on January 14,2010. In
         addition, the Association states, "The Plan's process has been revised to ensure timely
       . return ofFEHBP's portion of collected fraud recoveries and health benefit refunds to
         the Program."

         Recommendation 3

         We verified that the Plan deposited a total of $8,153 into the FEP investment account
         on various dates in December 2009 for the questioned fraud recoveries and health
         benefit refunds. Therefore, we recommend that the contracting officer verify that the
         Plan returned these funds to the LOCA.

         Recommendation 4

         We recommend that the contracting officer verify that the Plan credited the FEHBP
         $595 for LII on the questioned fraud recoveries and health benefit refunds.

B. CASH MANAGEMENT

  Overall, we concluded that the Planhandled FEHBP funds in accordance with Contract CS
  1039 and applicable laws and regulations, except for the audit findings pertaining to cash
  management noted in the "Miscellaneous Payments and Credits" section.




                                              9

              IV. MAJOR CONTRIBUTORS TO THIS REPORT


Experience-Rated Audits Group

                   Auditor-In-Charge

                 Auditor

               Auditor

                Auditor


                   Chief

              Senior Team Leader




                                       10

                                                                                     V. SCHEDULE A

                                                                      BLUECROSS BLUESHIELD OF MINNESOTA
                                                                             EAGAN, MINNESOTA

                                                            HEALTH BENEFIT CHARGES AND AMOUNTS QUESTIONED



HEALTH BENEFIT CHARGES                                                   2004                2005             2006           2007            2008                        Total


A. HEALTH BENEFIT CHARGES

  PLAN CODE 220/720*                                                  $172,945,156        $190,497,897     $212,906,910   $239,670,991    $268,831,675                 $1,084,852,629
  MISCELLANEOUS PAYMENTS AND CREDITS                                       120,013             765,079           38,642      4,002,861       2,774,044                      7,700,639
                                                                                     -,


  TOTAL HEALTH BENEFIT CHARGES                                    I   $173 065,169        $191 262,976 .   $212 945 552   $243 673,852    $271,605.719                 $1,092 553 268 II



AMOUNTS QUESTIONED                                                       2004                2005             2006           2007            2008         2009           Total


A. HEALTH BENEFIT CHARGES

  1. CLAIM PAYMENTS                                                             $0                    $0             $0             $0              $0           $0                 $0

  2. MISCELLANEOUS PAYMENTS AND CREDITS
    a. PROVIDER SETTLEMENTS**                                                    0                     0              0         22,681           1,083           970             24,734
    b. FRAUD RECOVERIES AND HEALTH BENEFIT REFUNDS* *                            0                   282          2,281             479             126      5,580               8,748

B. CASH MANAGEMENT                                                              0                      0              0               0              0             0                 0

  TOTAL AMOUNTS QUESTIONED                                        I             $0                  $282        $2,281        $23,160           $1209       $6550            $33,482      ~




* We only reviewed claim payments from January 1,2006 through June 30,2009.
** This audit finding also includes lost investment income.
                                                                       ••
                                                                                         APPENDIX


                                                                        BlueCross BlueShield
                                                                        Association
                                                                        An Association of Independent
                                                                        Blue Cross and Blue Shield Plans
February 22,2010

                     Group Chief	                                       Federal Employee Program
Experience-Rated Audits Group	                                          1510 G Street, N.W.
Office of the Inspector General                                         Washington, D.C. 20005
                                                                        202.942.1000
U.S. Office of Personnel Management                                     Fax 202.942.1125
1900 E Street, Room 6400
Washington, DC 20415-1100

Reference:	         OPM DRAFT AUDIT REPORT
                    MINNESOTA BLUE CROSS BLUE SHIELD
                    Audit Report Number 1A-10-54-07-02
                    (Dated and received January 22, 2010)

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 Minnesota BlueCross BlueShield. Our
comments concerning the findings in the report are as follows:

AI 2a. Provider Settlements	                                        $24,734

We do not contest this finding. The error was due to a clerical error and to reduce
the risk of this occurring again, the Plan now uses MS Access instead of an
Excel Spreadsheet to allocate and track provider settlements.

The Plan returned $24,734 to the Program, consisting of $21,932 for two provider
settlement overcharges and $2,802 for Lost Investment Income (L1I) via wire
transfer on January 14, 2010.

A12b. Fraud Recoveries and Health Benefit Refunds                    $8,748

We do not contest this finding. The error was due to a process gap between
Plan departments. The Plan's process has been revised to ensure timely return
of FEHBP's portion of collected fraud recoveries and health benefit refunds to the
Program.

The Plan returned $8,748 to the Program, consisting of $8,153 for recoveries and
refunds not previously returned and $595 for Lost Investment Income (L1I) via
wire transfer on January 14, 2010.
aPM Draft Audit Response
February 22,2010
Page 2 of 2

We appreciate the opportunity to provide our response to each of the findings
and request that our comments be included in their entirety as part of the Final
Audit Report.




Executive Director
Program Integrity



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