oversight

Audit on Global Duplicate Claim Payments For Bluecross and Blueshield Plans

Published by the Office of Personnel Management, Office of Inspector General on 2009-10-14.

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

                                                      u.s. OFFICEOF PERSONNEL MANAGEMENT
                                                                 OFFICE OF THE INSPECTOR GENERAL
                                                                                  OFFICE. OF AUDITS




Final Audit Report .

Subject:


                ......   ..   •.· .. i·· .   AUDIT.()NGLOBAL ....                                                  ...         .
             .DUJ,>LICA.T~CLA;nviPA\'MENTS FOR··
            ·6LUECRQSS· ANDBLUESHIELDPLANS



                                              Report No. lA-:99~OO:"09-:036


                                              Datc:bctober1.4, 2009




                                                           --CAUTION-­

This audit rtporl has been distributed 10 Federal officials who are respon~ible (Dr the administration of the audited program. Tllis audit
report may containproprielary data whi.ch is protecled by Federallaw(18 U.S.C.19(lS). Therefore, while this audit report IS available
under the Freedom of Information Acl and made available ID the public on the OIG webpage, caution needs. to be exercised before
releasinglhe reporl 10 lilt general public as it may cillitllin proprietary iliformatioD thai was redacted from the publicly distributed copy.
                       UNITED STATES OFFICE OF PERSONNEL MANAGEMENT 

                                           Washington, DC 20415 


  OfficI) of flu'
InSpedor GenCl ai




                                        AUDIT REPORT 




                              Federal Employees Health Benefits Program 

                              Service Benefit Plan     Contract CS 1039 

                                   BlueCross BlueShield Association 

                                             Plan Code 10 


                                  Global Duplicate Claim Payments 

                                  BlueCross and BlueShield Plans 





                      REPORT NO. lA-99-00-09-036           DATE:' October 1.4, 2009




                                                            Michael R. Esser
                                                            Assistant Inspector General
                                                              for Audits




        www.opm.gov                                                                       www.usaJobs.goll
                        UNITED STATES OFFICE OF PERSONNEL MANAGEMENT 

                                            Washington, DC 20415 


  Office of the
Inspector General




                                    EXECUTIVE SUMMARY 




                              Federal Employees Health :eenefits Program 

                              Service Benefit Plan     Contract CS 1039 

                                   BlueCross BlueShield Association 

                                             Plan Code 10 


                                   Global Duplicate Claim Payments 

                                    BlueCross and BlueShield Plans 





                      REPORT NO. lA-99-00-09-036            DATE: october 14, 2009


      This final audit report on the Federal EPlployees Health Benefits Program (FEHBP) operations
      at all BlueCross and BlueShield (BCBS) plans questions $9,560,5 I 6 in duplicate claim
      payments. The BlueCross BlueShield Association (Association) and/or BCBS plans agreed with
      $8,620,458 and disagreed with $940,058 of the questioned charges.

      Our limited scope audit was conducted in accordance with Government Auditing Standards. The
      audit covered health benefit payments from 2006 through March 31, 2009 as reported in the
      Annual Accounting Statements. Specifically, we reviewed claims paid from January 1,2006
      through March 31,2009 for duplicate payments charged to the FEHBP. We determined that the
      BCBS plans improperly charged the FEHBP for 15,294 duplicate claim payments during this
      period. These payments were unnecessary and unallowable charges, resulting in overcharges of
      $9,560,516 to the FEHBP.




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                                                      CONTENTS 

                                                                                                                          PAGE
         EXECUTIVE SUMMARY ...... ;........................................................................................ i 


 I.      INTRODUCTION AND BACKGROUND ..................................................................... 1 


 II.     OBJECTIVE, SCOPE, AND METHODOLOGY ............................................................ 3 


III. 	   AUDIT FINDING AND RECOMMENDATIONS .................. ,...................................... 5 


             Duplicate Claim Payments .................. ~ ...................................................................... 5 


IV.      MAJOR CONTRIBUTORS TO THIS REPORT ............................................................ 9 


V.       SCHEDULES

         A. 	 QUESTIONED DUPLICATE CLAIM PAYMENTS BY PLAN
         B. 	 QUESTIONED DUPLICATE CLAIM PAYMENTS BY PLAN - BREAKDOWN
              BY BEST AND NEAR MATCHES

         APPENDIX 	 (BlueCross BlueShield Association reply, dated July 31, 2009, to the
                    draft audit report)
                          I. INTRODUCTION AND BACKGROUND 

 INTRODUCTION

 This timil audit report details the findings; conclusions, and recommendations resulting from our
 limited scope audit of the Federal Employees Health Benefits Program (FEHBP) operations at all
 BlueCross and BlueShield (BCBS) plans.

 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 heaJth 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 carriers.

 The BlueCross BlueShield Association (Association), on behalf of participating BCBS 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 BCBS plans throughout the United States to process the health benefit claims
 of its federal subscribers. There are approximately 63 local BCBS plans participating in the
 FEHBP.

 The Association has established a Federal Employee Program (FEPI) 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 BCBS, located in Washington, D.C. These
 activities include acting as fiscal intennediary between the Association and member plans,
 verifying subscriber eligibility, approving or disapproving the reimbursement of local plan
 payments of FEHBP claims (using computerized system edits), maintaining a history file of all
 FEHBP claims, and maintaining an accounting of all program funds.

 Compliance with laws and regulations applicable to the FEHBP is the responsibility of the
 management for the Association and each BCBS plan. Also, management of each BCBS plan is
 responsible for establishing and maintaining a system of internal controls.



 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

Findings from our previous global duplicate claim payments audit or all BeBS plans (Report No.
1A~99-00-08~008, dated September 11, 2008) for contract years 2004 and 2005 ate in the process
of being resolved.

Our preliminary results of the potential duplicate claim payments were presented in detail in a
draft report, dated May 1,2009. The Association's comments offered in response to the draft
report were considered in preparing olir final report and are included as the Appendix to this
report. Also, additional documentation provided by the Association and BeBS plans was
considered in preparing our final report.




                                                2

                II. OBJECTIVE, SCOPE, AND METHODOLOGY 


OBJECTIVE

The objective of this audit was to determine whether the BeBS plans complied with contract
provisions relative to duplicate claim 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 objective. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our audit objective.

The audit covered health benefit payments from 2006 through March 31, 2009 as reported in the
Annual Accounting Statements. Specifically, we reviewed claims paid from January 1,2006
through March 31, 2009 for duplicate payments charged to the FEHBP. Based on our claim error
reports, we identified],791,693 groups, totaling $78,852,500 in potential duplicate claim
payments. From this universe, we selected and reviewed 33,054 groups, totaling $27,335,369 in
potentia] duplicate claim payments.

We did not consider each BCBS plan's internal control structure in planning and conducting our
auditing procedures. Our audit approach consisted mainly of substantive tests of transactions
and not tests of controls. Therefore, we do not express an opinion on each BCBS plan's system
of internal controls taken as a whole. .

We also conducted tests to determine whether the BCBS plans had complied with the contract and
the laws and regulations governing the FEHBP as they relate to duplicate claim payments. The
results of our tests indicate that, with respect to the items tested, the BCBS plans did not fully
comply with the provisions of the contract relative to duplicate claim payments. Exceptions noted
in the areas reviewed are set forth in detail in the "Audit Finding and Recommendations" section
of this report. With respect to the items not tested, nothing came to our attention that caused us to
believe that the BCBS plans 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 BeBS plans. Due to time
constraints, we did not verify the reliability of the 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 objective.

The audit was performed at our offices in Washington, D.C.; Cranberry Township, Pennsylvania;
and Jacksonville, Florida from August 3, 2009 through September 11,2009.




                                                 3

METHODOLOGY.
To test each BeBS plan's compliance withthe FEHBP health benefit provisions related to
duplicate claim payments, we selected judgmental samples of potential duplicate claims that
were identified.in a computer search.. Specifically, we selected for review 33,054 groups,
totaling $27,335,369 (out of 1,791,693 groups, totaling $78,852,500) in potential duplicate claim
payments?

The samples were submitted to each applicable BeBS plan for their review and response. We
then conducted a limited review of the plans' agreed responses and an expanded review of their
disagreed responses to determine the appropriate questioned amount. We did not project the
sample results to the universe.

The determination of the questioned amount is based on the FEHBP contract, the Service Benefit
Plan brochure, and the Association's FEP administrative manual.




2 The sample selections included 17,126 groups, totaling $13.325, 136 (out of 370,644 groups, totaling $24,778,433)
in potential duplicate payments under our "best matches" criteria, and 15,928 groups, totaling $14,0 I 0,233 (out of
1,421,049 groups, totaling $54,074,067) in potential duplicate payments under our "near matches" criteria.




                                                         4

                  III. AUDIT FINDING AND RECOMMENDATIONS 


Duplicate Claim Payments 	                                                                               $9,560,516

The BCBS plans improperly charged the FEHBP $9,560,516 for 15,294 duplicate claim
payments from January 1,2006 through March 31, 2009. These payments were unnecessary and
unallowable charges to the FEHBP.

Contract CS 1039, Part III, section 3.2 (b)(l) states, "The Carrier may charge a cosUo 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 prompt and diligent effort to recover the
erroneous payment.

Section 6(h) of the FEHB Act provides that rates should reasonably and equitably reflect the
costs of benefits provided.

We performed a computer search for potential duplicate payments on claims paid during the
period January 1, 2006 through March 31, 2009. For all BCBS plans, we selected and reviewed
17,126 groups, totaling $13,325,136 (out of 370,644 groups, totaling $24,778,433) in potential
duplicate payments, under our "best matches" criteria. We also selected and reviewed] 5,928
groups, totaling $14,010,233 (out of 1,421,049 groups, totaling $54,074,067) in potential
duplicate payments, under our "near matches" criteria. Our samples included all groups with
potential duplicate payments of $250 or more under the "best matches" criteria and $400 or more
under the "near matches" criteria.

Based on our review, we determined that 1 ] ,339 claim payments in our "best matches" sample
were duplicates, resulting in overcharges of $6,738,616 to the FEHBP. Also, we determined that
3,955 claim payments in our "near matches" sample were duplicates, resulting in overcharges of
$2,821,900 to the FEHBP. In total, 63 BeBS plans overcharged the FEHBP $9,560,516 for these
15,294 duplicate claim payments from January 1, 2006 through March 31, 2009 (See Schedule A
for a summary of the questioned duplicate claim payments by BCBS plan and Schedule B for a
breakdown of the questioned duplicate claim payments by "best matches" and "near matches,,).3

These duplicate claim payments resulted from the following:

• 	 For 9,991 (65 percent) of the duplicate payments, the claims were not deferred on the claims
    system as potential duplicates for review by the processors.




3In addition, there were 2,062 duplicate claim payments, totaling $1,768,245, that were identified by the BCBS
plans before the start of the audit (i.e., April 24,2009) and adjusted or voided by the Association's response date
(Le., July 31,2009) to the draft report. Since these duplicate claim payments were identified by the BCBS plans
before the start of our audit and adjusted or voided by the Association's response to the draft report, we did not
question these duplicate payments in the final report.




                                                           5

• 	 For 5,303 (35 percent) of the duplicate payments, the claims were deferred as potential
    duplicates on the claims system, but were overridden by    the
                                                                processors.

Ofthe $9;560,516 in questioned duplicate payments, $930,034 (10 percent) were identified by
the BeBS plans before the start of our audit (i.e., April 24, 2009). However, since the BeBS
plans had not completed the recovery process andlor adjusted or voided these duplicate claims by
the Association's response date (i.e., July 31, 2009) to the draft report, we are continuing to
question these overcharges. The remaining questioned duplicate payments of $8,630,482 (90
percent) were identified as a result of our audit.

Association's Response:

The Association agrees with $8,542,354 of the questioned duplicate claim payments. The
Associations states that the BeBS plans have recovered $1,470,162 ofthese duplicate payments
as of July 24, 2009. The Association also states that the duplicate payments were good faith
erroneous benefit payments and fall within the context of CS 1039, Part II, section 2.3(g). The
BCBS plans will continue pursuing the overpayments as required by the FEHBP contract. Any
duplicate payments the plans are unable to recover, where due diligence is demonstrated, are
allowable charges to the FEHBP. As good faith erroneous payments, lost investment income
does not apply to the duplicate payments identified in this finding.

The Association states, "Further analysis of the ... two primary reasons for duplicate payments
identified the following:

   • 	 Duplicate claim payments totaling $3,397,043 were made because the processor 

       incorrectly overrode the duplicate deferral. 

   • 	 Duplicate claim payments totaling $5,145,311 were made because the FEP claims system
       did not defer the c1aim for evaluation by processors."

Regarding the contested amount, the Association states that the recoveries of the dupJicate
payments were initiated prior to the start of the audit (i.e., April 24, 2009), but the recovery
process has not been completed.

The Association states, "The FEP Director's Office continues to evaluate ways to improve the
prevention and detection of duplicate claim payments. In order to reduce the number of
duplicate payments, prior to this audit, the FEP Program implemented the following:

    • 	 Modified the FEPExpress System on January 1, 2009 to defer claims with the same
        modifier or modifiers that have similar meaning.
    • 	 Updated the FEP Administrative Manual on January 1, 2009 to provide additional 

        instructions on the resolution of duplicate claim edits. 





                                                  6

In addition, FEP will perform the following:

   • 	 Provide Plan training on the proper duplicate edit resoluti"ori process. . .     __
   • 	 Increase duplicates included on the FEP quarterly duplicate post-payment Plan reports by
       removing the criteria to match on allowed charges and match on all provider fields ....
   • 	 Modify our current duplicate reporting process to require Plans to submit the results of
       their review of the Quarterly Duplicate Claims Reports·to the FEP Director's Office for
       review and analysis ....
   • 	 Expand the FEPExpress duplicate edit criteria to defer claims if there is a match on two
       ofthe five provider fields. Currently all provider fields must match in order for the claim
       to defer as a possible duplicate ....
   • 	 Expand the FEPExpress duplicate claim reporting to generate monthly summary reports of
       all duplicate claim edits overridden by processors for further Plan management review.
       The FEP Director's Office will also receive a copy of the Plans' monthly summary
       override reports for monitoring ....
   • 	 Remove the criteria for a match on covered charges from the duplicate edit criteria....
   • 	 Modify the FEPExpress System to prevent Plan Approved claims from by-passing the
       duplicate edit logic."

OIG Comments:

After reviewing the Association's response and additional documentation provided by the BeBS
plans, we revised the questioned charges from our draft report to $9,560,516. Based on the
Association's response and the BCBS plans' additional documentation, we determined that the
Association and/or plans agree with $8,620,458 and disagree with $940,058 of the questioned
duplicate claim payments. Although the Association only agrees with $8,542,354 in its
response, the BCBS plans' documentation supports concurrence with $8,620,458.

Based on the Association's response andlor the BCBS plans' documentation, the contested.
amount of $940,058 represents the following items:

• 	 $930,034 of the contested amount represents 1,069 duplicate claim payments where recovery
    efforts were initiated by 31 BCBS plans before the audit started. However, the plans had not
    recovered these duplicate payments and adjusted or voided the claims by the Association's
    response date to the draft report. Since these duplicate payments had not been recovered and
    returned to the FEHBP by the Association's response date, we are continuing to question this
    amount in the final report.

• 	 $10,024 of the contested amount represents 22 duplicate payments where the Alaska and
    Highmark BCBS plans did not provide sufficient documentation to support these contested
    items.

Recommendation 1

We recommend that the contracting officer disallow $9,560,516 for duplicate claim payments
charged to the FEHBP, and have the BCBS plans return all amounts recovered to the FEHBP.



                                               7

Recommendation 2

We recommend that the contracting officer ensure that the Association's corrective actions for
improving the prevention and detection of duplicate claim payments are· being implemented.




                                                8

               IV. MAJOR CONTRIBUTORS TO THIS REPORT

Exp~ti~!lce-Rated   Audits Group

                    Auditor-In-Charge

                       Auditor

                  Auditor

                  Auditor


                               Chief


Information Systems Audits Group

                 Chief

              .., .... ll1Vl   Information Technology Specialist




                                                       9

                                                                                                                                                                                                                                          SCHEDULE'A
                                                                                                                                                                                                                                             Page 1 of3


                                                                                                   GLOBAL DUPLICATE CLAIM PAYMENTS
                                                                                                   , BLUECROSS AND BLUESHIELD PLANS
                                                                                                            January 1,2006 - Much 31, 2009


                                                                                             QUESTIONED DUPLICATE CLAIM PAYMENTS BY PLAN

Pion                                                                                                                                                                                                                                                                  Plan
                                                      Number of   Number of      Number of                    Reasons for the Dupliute Paymenls                              Amounts Que.tionecl by Year                          Total              Pia.
Site   ~                 PI.n No",.           St.te    DUPS       Plan Aeroes   Pia.   Disa~r_   Roason I     R..son 2    Rooson 3     Reason 4   Ruso-n 5       ZOO6             2007           ZOOS            2009           QUelI/ia.ed         A2I'CCS        Di..!!r....

 003       BCBS of N.w M.x.ico                NM        107           83               24          51            9           0            18        29       S    54,474      S    17,145    S    33,797    S     54,617    $       (60,032    $     100,522   $       59,510

 005       W.I1Point BCBS of Georgi.          GA        J09           98               11          43           17           0            0         49       S    15,428      S    22,915    $    26,860    $     11,742    $        76,945    $      66,965   $        9,980

 006       C"",Firsl BCBS (MD Service Ar••)   MD        636          636                0          374          11           4            0         247      S    16,991      $    83,289    $   126,257    S     38,241    $       324,778    S 324,778 S                   ·
 007       BCBS of LouIS","a                   LA       503          503                0          372          !8           0            0         113      S    49,417      $    60,036    $   134,355    $     15,931    S       259,739    $     259,739   $             -
 009       BCBS of Alabama                     AL        105         IDS                0          35           20           0            0         50       S    25,910      $    10,054    S    13,022    $      1,578    $        50,563    $      50,563   $             ·
 010       BCBS of ldalto Health Service       lD        26           24                2           2            0           0            0         24       $                $     2,475    $     9,902    $           .   $         12,377   S      11,681   $           697

 011       BCBS of Massachusetts              MA         30           30                0           13          17           0            0          0       S       419      S     2,984    $     1,421    $     10,351    S         15,175   $      15,175   S             -
 012       BCBS oeWestem New York             NY         54           54                            0            0           0           54          0       S     4,563      S     5,362    $     4,808    S        .      $         14,732   S      14,732   S             ·
 013       Highmari< BCBS                      PA
                                                                                        °
                                                                                       18                                    4                      183      S    51,5113     $    73,376    $    58,112    S     16,117    $        199,188   S     196,532   S        2,657

015        BCBS of Tennessee                  1N
                                                        266

                                                        628
                                                                     248

                                                                     628                0
                                                                                                   36

                                                                                                   124
                                                                                                                43

                                                                                                                 0           0
                                                                                                                                          °
                                                                                                                                          0         504      $    54,399      $    90,707    $   171,614    S     16,473    S       339,193    S 339,193       S             ·
 016       BCBS of Wyorrung                   WY                                        0                                    0                       2       $     J,29S      $     2,946    S    67,289    S       376     $        7l,9Q6    S      71,9Q6   S             ·
 0]7       BCaS of Illinois                    IL
                                                         54

                                                        493
                                                                      54

                                                                     354               139
                                                                                                    0

                                                                                                   250
                                                                                                                52

                                                                                                                 3           0
                                                                                                                                          °
                                                                                                                                          0         240      S    66,689      S   103,213    $   144,612    S     12,481    $       326,99:;   $     213,854   $      113,142

 021       WellPoint BCBS of Ohio             OH        943          923               20          190          70           I            0         682      S    91,101      S   189,583'   $   236,846    S.    30,247    $       547,777    S 532,625       S       IS,iS2

 024       BCBS of South Carolina              SC        37           37                0           9           14           10           0          4       $       340      $     2,779    S    10,348    S      5,045    S         18,512   S      18,512   S             -
 021       WellPoint BCBS of New Hampshire    NH        132          (2S                7          56            0           0            0         76       $    13,416      S    22,806    $    34,753    $      2,497    $        73,532    S      68,860   S        4,672

 028       BCBS ofVennont                     VT         33           29                4          26            3           0            0          4       S       324      $     3,995    S     5,733    S      4,064    $       . 14,116   $.     11,796   S        2,321

 029       BCBS of Texas                      TX        1,003        750               253         573          40          '0            0         390      $   116,988      S   150,258    S 3S7,520      $     73,736    $       698,502    $     520,401   $      178, 101

 030       WeliPoinl BCBS of Colorado         CO        566          439               127         153           8           0           228        177      S    80,974      $   146,092    S   191,342    $     26,180    $       444,588    S 358,150       S       86,438

0] I       Wellmark BCBS of Iowa               lA        37           37                0           S           22           0            0          7       S          48    S    33,470    $     1,684    $      1,352    $        36,554    $      36,554   S             ·
032        BeBS of Michigan                    Ml       255          246                9          119          12           I           91         32       $     8,758      $    19,562    $    64,113    S      7,166    S        99,599    $      94,977   S        4,622

033        BCSS of North Carolina             NC        670          624               46          136           9           0           200        32S      $    ]0,546      $    69,058    S 216,702      S     47,S28 J          363,834    S 338,216       $       25,618

034        BCBS of North Dakota               ND         4            4                 0           0            0           0            0          4       $       515      $     1,069    $          .   $               S          1,584   $       1,584   S

036        Capitlll BC                         PA        9            9                 0           5            4           0            0          0       $          .     S      479     $     5,705    S      2,870    $          9,053   $       9,053   $

037        BeBS of MontJUla                   MT         3            3                 0           I            0           0            0          2       S       550      $              $      265     S       844     S          1,659   $        1,659 'S             ·
OJa        BCBS of Hawaii                      HI        ]3           33                0          16            5           0            0         12       S     1,739      S     3,093    S     9,506    S      3,380    $        17,719    $     '17,719   $             ·
039        WellPornt BCSS of Indiana           IN       787          781                6          158          26           0           428        175      $    75,281      S    54,522    $   170,632    $     44,128    S       344,563    $     342,674   $         1,889,

040        BCBS of Mississippi                MS        247          241                6          116          57           0            0         74       S    43,579      S   264,061    S    36,092    $      3,137    S       346,868    $     344,088   $        2,780

041        BCBS of Florida                     FL      2096         203S               61         1083          920          0            0         93       $   111 382      $   38879$     $   383681     $     94,713    $       978575     $     903316    $       75259
                                                                                                                                                                                                                                                  SCHEDULE A
                                                                                                                                                                                                                                                     Page 2 of3


                                                                                                     GLOBAL DUPLICATE CLAIM PAYMENTS
                                                                                                          BLUECROSS AND BLUESHIELD PLANS
                                                                                                              January 1,2006 - March 31, 2009


                                                                                              QUESTIONED DUPLICATE CLAIM PAYMENTS BY PLAN

Plan                                                                                                                                                                                                                                                                        Pia.
                                                    Number of       Number of        Number of                  R.a.ons for the Dupliute Payme.ts                               Amounts Questioned by Y.ar                             Total              Pia.
Sitoll                Pia. N.me             SCate    DUPS           Plan   A~r...   Plan Di••u _   Re.,on I     Reoson 2    Reason 3     Reason 4   Reason S         2006             looi            lOOS           2009            Question'"          Aerees           Disaerees
 042     BCBS of Kansas City                MO        119              119               0           17           32           0           70         a        s       8,202     S     14,119    S     44,096   $     19,774    $         86,191    $      86,191   S              -
 043     Regenee BS ofldaho                  ID        I                   I             0            I            0           0            0          0       S                 S           -   S              S      1,136    S          1,136    S       1,136 S
 044     Arkan.as BCBS                      AR        149              149               0                         0           0            0         149      S      19,522     S     16,649    $     26,963   $     13,832   $          76,966    $      76,966   S
 045     WellPDinl BCBS of Kentucky         KY        456              456               0
                                                                                                      °
                                                                                                     81           19           S           255        96       $      68,645     S     63,902    $    106,616   S     33,031   S         272,194    S 272,194 $                 -
 047     W.IIPoinc BCBS of Wi"",nsin         WI       295              280               15          41            9           0           175        70       S      16,090     $     40,473' S      113,227   S     20,383   $         190,174    $     171,610   S        18,564

 048     Empire BCBS                        NY         50                  26           24           14            3           6            0         27       $       7,761     S     17,157    $     35,625   S      5,550   $          66,093    $      35,45~   $        30,643

 049     Horizon BCBS of New Je",ey          NJ       274              269               5           189          44           0            10        31       $      85,717     $    208,805    S    130,192   $     10,333   $         435,048    $     433,23~   S         1,813

 050     WeUPomt BCBS of Connecticut         CT       135              135               0            0            2           0            0         133      !£     13,905     $     12,532    :£    40,544   S     11,596   $          78,577    $      78,577   $              -
 052     Well Point BC of California        CA         62                  56            6           [2            2           0           42          6       S       1.946     S     19,399    :£    59,976   $     13,092   $.         94,413    $      43,166   S        51,247

 OS3     BeBS of Nebraska                   NE        145              133              [2           53           17           0           52         23       :£     16,299     :£    52,430    $     30,460   $      5,485   $         104,674 '$        96,737   :£        7,936
 054     MOWltain State BCBS                WV         32                  32            a           24            0           0            a          8       S      12,121     S      6,285    $      3,834   $        -     '$         22,239    :£     22,239   :£             -
 055     Independence BC                     PA        33                  33            0            5           13           0            3         12       :£     21,860     :£    17,052    S      2,844   :£    10,420   :£         52,177    :£     52,177   $              -
 056     BeBS of ArizOna                     AZ       198              150              48           117          32           0            0         49       S      20,602     :£    40,110    S     50,569   $     11,405   $         122,687    S.     90,065   :£       32,622

 058     Regence BCBS DfOregon              OR         92                  92            0           36           29           I            5         21       S       9,730     :£    22,957    $     61,294   S      9,915   :£        103,897    :£    103,897 $

 059     WellPoint BCBS of Maine            ME        [36              133               3            0            a           0            a         [36      $       6,J43     :£    32,206    S     55,938   :£     5,665    :£        99,953    :£     98,414   $         1,539

 060     BCBS of Rhode Island                Rl       29               29                0            3            5           0            13        8        S       6,564     :£    10,310    :£     3,766   :£      560     :£        21,200    $      21,200   S              -
 061     WellPoinl BCBS or Nevada           NV        334              ][5               19          16           66           0           232        20       S      11,084     $     42,348    S     63,453   :£    16,245 $           133,130    $:    122,799   $        10,331

 062     WellPDint BCBS of Virginia         VA        686              671              15           27           436          0            1         222      S      32,373     $     87,703    S    184,121   :£    37,545   $:        342,342    $:    334,839   $         7,503

064      Excellus BCBS "fthe Rochester      NY         10                  10            0            2            0           0            8          0       $        454      $      1,518    :£     2,563   :£     1,002   S           5,536    S       5,536   $

 066     Regenc. BCBS of U<alJ              UT        164              [62               2           [9            2           0           135         8       S      18,372     $     32,188    S     45,537   S      8,229 $           104,326    :£    102,762   $         1,564

 067     BS of California                   CA        123                  73           50           62            0           0            4         57       S      17,549     :£    31,267    $     27,603   :£    17,333   :£         93,752    S      51,064   S        42,688

 069     Regence   as of Washington         WA        125              124               1           120           I           0            0          4       $       6,929     $     13,027    $     35,466   $     13,lIJ   S          68,532    S      67,004   S         1,528

 070     BCBS of Alaska                     AK         78                  74            4           18            0           0            25        35       :I;     S,HI      $     15,592    $     32,285   $      5,421   $          61,609    S      54,242   $         7,368

 074     Wei!mark BCBS of South Dokola       SD        13                  13            0            g            I           0            3          1       $            -    :£      278     $      9,861   :£      704    S          10,842    $      10,842 $                .
 075     l',ern.ra BC ofWoshington          WA        107              105               2            2            0           0            7         98       $      15,490     $      9,555    $     30,501   S     10,013    S         65,558    $      59,446   $         6,113

 076     WeUPoint BCBS of Missouri          MO        322              252              70           53           15           0           171        83       5       3,4%      $     24,600    :£   150,154   $      9,269   $         187,519    $     120,749   $        66,770

 078     BCBS ofMiMesota                    MN         26                  26            0            a            0           a            a         26       S       4,578     :£      314     S      8,812   :£     6,306    S         20,008    :£     20,008   :£             -
 079     Excellus BCBS ofCentroi New York   NY         36       I          36            0           18            I           3            J4         0       $      16,868     $      1.055    $      7,856   $      1024     S         26802     S      26802    :I;            -
                                                                                                                                                                                                                                                            SCHEDULE A
                                                                                                                                                                                                                                                               Page 3 of3


                                                                                                          GLOBAL DUPUCATE CLAIM PAYMENTS
                                                                                                          . BLUECROSS AND BLUESHIELD PLANS
                                                                                                                    January 1,2006 - March 31, 2009


                                                                                                   QUESTIONED DUPLICATE CLAIM PAYMENTS BY PLAN

Plan
                                                          Number of   Number of      Numbe. of                         Rusons for Ibe Duplicate Payments                                       Amounts Questio.ed by Year                        Total             Plan            Plan
Sit.1I                 Plan Name                 SUte      DUPS       PI•• Aerees   Plan   Dis.~rees   Reason 1       Reason 2          Reason}        Reason 4      Reason 5       2006            lOO7          1008          1009           Questioned         Afrees         Disa2rees
 082     SCSS of Kansas                           KS         !3           13                0              I               0                0              7            5       S     2,n7      s     2,666   S     3,581   S      322     S         8,896    S      8,896   S
 083     BCBS or Oklahoma                        OK         35 I         285                66           207               10              0               5           129      S    52,424     $    74,946   S    94,646   S    34,613    S       256,629    S 203,175      S      53,454

084      Exc.llus   eees of Utica-Watertown      NY          32           32                a             II               2                6             II            2       $     2,506     $     5,345   $     8,932   S      810     $        17,593    S     17,593   $            -
 OB5     Cor.First SCSS ( DC Servi"" Area)       DC         665          65B                 7            189             51               a             254           171      S   100,531     $    74,673   $   130,721   S    50,834    $       356,760    S    352,284   S       4,476

088      se of Northeastern Pennsylvania          PA         IS           15                0              I               0                0             14            0       S          -    S     5,486   S    10,430   S          -   S        15,916    $     15,916 $           -
 089     sess oC Delaware                         DE         19           19                0              5               10               0             0             4       S     4,107     $     2,842   S     7,093   S     1,954    $        IS,99S    S     IS,99S $           -
 on      CareFirst SCSS (Overse..)                          103          94                 9              2               9                0             7S           17       $     8S43      $    34,461   S    41938    $     7248     S        92490     $     81428    S      11 062



                         Total.                            15,294                          1,091         5,303          2.191              41            2,610        5,149     S 1,598,119     S 2,8S8,377   S 4,185,06B   S   918,952    $     9,560,516    S 8,620,458    S     940,058


                                                                                                                       In(.o.:rr'k.t                  Noc Deferred
                                  Plan Sites Reviewed =      63                                        Ovtrridden     Chllim Info      Keying Error    or f"ended     Other

          Plan Sites with Duplicate Claim Payment.! •        63

                                                                                                                                                      Reason 1 ­
                                                                                                                                   SCHEDULEB
                                                                                                                                      Page 1 of3

                                            GLOBAL DUPLICATECLAIM PAYMENTS 

                                            BLUE CROSS AND BLUESHIELD PLANS 

                                                January 1, 2006 - March 31, 2009 



          QUESTIONED DUPLICATE CLAIM PAYMENTS BY PLAN - BREAKDOWN BY BEST AND NEAR MATCHES


                                                             Best Matches Questioned     Near Matches Questioned                Total
Plan
                                                             Number of    Questioned     Number of    Questioned       Number of    Questioned
Site #                                              State
                              Plan Name                        DUPS          Charges      DUPS           Charges        DUPS            Charges
 003     BCBS of New Mexico                         NM          90       $     121,270      17       $      38,762       107       $      160,032
 005     WellPoint BCBS of Georgia                  GA          72       $      43,991      37       $      32,954       109       $       76,945
 006     CareFirst BCBS (MD Service Area)           MD         469       $     201,357     167       $     123,422       636       $      324,779
 007     BCEIS of Louisiana                          LA        471       $     214,258      32       $      45,482       503       $      259,740
 009     BCBS of Alabama                             AL         59       $      31,053      46       $      19,511       105       $       50,564
 oro     BCBS of Idaho Health Service                ID         24       $      10,725      2        $       1,652        26       $      ·12,377
 OIl     BCBS of Massachusetts                      MA          26       $      13,186      4        $       1,989        30       $       15,175
 012     BCSS of Western New York                   NY          47       $       8,906      7        $       5,826        54       $       14,732
 013     Highmark BCBS                               PA         129      $      74,428     137       $     124,760       266       $      199,188
 015     BCBS of Tennessee                          TN         501       $     227,928     127       $     111,265       628       $      339,193
 016     BCBS of Wyoming                            WY          7        $       4,524      47       $      67,383        54       $       71,907
 017     BCBS of Illinois                            IL        389       $     243,479     104       $      83,516       493       $      326,995
021      WellPoint BCSS of Ohio                     OH         827       $     434,065     116       $     1 [3,712      943       $      547,777
024      BCBS of South Carolina                      SC         29       $      15,247      8        $       3,265        37       $       18;512
 027     WellPoint BCBS of New Hampshire            NH          122      $      68,095      10       $       5,437       132       $       73,532
 028     BCBS of Vermont                             VT         28       $      11,129     .5        $       2,987        33       $       14,116
 029     BCBS of Texas                              TX         674       $     426,087     329       $     272,415      1,003      $      698,502
 030     WellPoint BCBS of Colorado                 CO         471       $     375,115      95       $      69,473       566       $      444,588
 031     Wellmark BCBS ofIowa                        lA         24       $      20,390      13       $      16,164        37       $       36,554
 032     BCBS of Michigan                            MI        228       $      67,910      27       $      31,690       255       $       99,600
 033     BCBS of North Carolina                     NC         632       $     336,759      38       $      27,075       670       $      363,834
 034     BCBS of North Dakota                       ND          4        $       1,584      0        $             .      4        $        1,584
                                                                                                                                         SCHEDULEB
                                                                                                                                            Page 20f3

                                           GLOBAL DUPLICATE CLAIM PAYMENTS 

                                            BLUECROSS AND BLUE SHIELD PLANS 

                                               January    1~   2006 - March   31~   2009 


          QUESTIONED DUPLICATE CLAIM PAYMENTS BY PLAN - BREAKDOWN BY BEST AND NEAR MA TeHES


                                                                 Best Matches Questioned'      Near Matches Questioned                Total
Plan
                                                                Number of     Questioned       Number of    Questioned       Number of    Questioned
Site #                                            State
                               Plan Name                          DUPS            Charges       DUPS           Charges        DUPS            Charges
 036     Capital BC                                PA               5         $       4,678       4        $       4,376        9        $        9,054
037      BCSS of Montana                           MT               3         $       \,659       0        $             .      3        $        1,659
·038     BCBS of Hawaii                            HI               22        $      11,129       11       $       6,590        33       $       17,719
 039     WellPoint BCBS ofIndiana                  rN              669        $     229,985      118       $     114,578       787       $      344,563
 040     BCBS of Mississippi                       MS              202        $     312,131       45       $      34,737       247       $      346,868
 041     BCSS of Florida                           FL              894        $     546,993      1,202     $     431,582      2,096      $      978,575
 042     BCBS of Kansas City                       MO               78        $      38,797       41       $      47,394       119       $       86,191
 043     Regence BS ofIdaho                        ID                1        $       1, 136      0        $             "      1        $        1,136
 044     Arkansas BCBS                             AR              129        $      62,475       20       $      14,491       149       $       76,966
 045     WellPoint BCBS of Kentucky                KY              376        $     202,866       80       $      69,328       456       $      272,194
 047     WellPoint BCBS of Wisconsin               WI              252        $     143,534       43       $      46,640       295       $      190,174
048      Empire BCSS                               NY               22        $      18,254       28       $      47,840        50       $       66,094
049      Horizon BCBS of New Jersey                NJ              204        $     368,726       70       $      66,321       274       $      435,047
050      WellPoint BCBS of Connecticut             CT              116        $      59,979       19       $      18,598       135       $       78,577
052      WellPoint Be of California                CA               53        $      83,141       9        $      11,272        62       $       94,413
053      BCBS of Nebraska                          NE              118        $      83,114       27       $      21,559       145       $      104,673
054      Mountain State BeBS                       WV               15        $       8,392       17       $      13,847        32       $       22,239
055      Independence BC                           PA               22        $      40,936       11       $      11,240        33       $       52,176
056      BCBS of Arizona                           AZ              161        $      94,169       37       $      28,518       198       $      122,687
058      Regence BeBS of Oregon                    OR               64        $      82,178       28       $      21,718        92       $      103,896
059      WellPoint BCBS of Maine                   ME              109        $      77,747       27       $      22,206       136       $        99,953
060      BCBS of Rhode Island                      RI               22        $      13,374       7        $       7,827        29       $      . 21,201
                                                                                                                                     SCHEDULEB
                                                                                                                                       Page 3 of3

                                             GLOBAL DUPLICATE CLAIM PAYMENTS 

                                             BLUECROSS AND BLUESHIELD PLANS 

                                                 January 1, 2006 - March 31, 2009 



          QUESTIONED DUPLICATE CLAIM PAYMENTS BY PLAN - BREAKDOWN BY BEST AND NEAR MATCHES


                                                              Best Matches Questioned     Near Matches Questioned                 Total
Plan
                                                              Number of    Questioned     Number of    Questioned       Number of     Questioned
Site #                                               State
                             Plan Name                          DUPS          Charges       DUPS          Charges        DUPS             Charges
 061     WellPoint BCBS of Nevada                    NV         297       $     107,650      37       $      25,481       334        $      133,131
 062     WellPoint BCBS ofVirginla                   VA         577       $     287,101     109       $      55,241       686        $      342,342
 064     Excellus BCBS of the Rochester              NY           5       $       3,150      5        $       2,386        10        $        5,536
 066     Regence BCBS of Utah                        UT         tl7       $      66,038      47       $      38,289       164        $      104,327
 067     BS of California                            CA          90       $      66,036      33       $      27,716       123        $       93,752
 069     Regence BS of Washington                    WA          [ 11     $      54,406      14       $      [4,126       125        $       68,532
 070     BCBS of Alaska                              AK          54       $      43,298      24       $      18,312        78        $       61,610
 074     WeJImark BCBS of South Dakota                SD         8        $       4,312      5        $       6,530        13        S       10,842
 075     Premera BC of Washington                    WA          98       $      60,411      9        $       5,147       107        $       65,558
 076     WellPoint BCBS of Missouri                  MO         273       $     149,681      49       $      37,838       322        $      187,519
 078     BCBS of Minnesota                           MN          26       $      20,008      0        $             .      26        $       20,008
 079     Excellus BCBS of Central New York           NY          31       $      23,472      5        $       3,331        36        $       26,803
 082     BCBS of Kansas                               KS          2       $        786       11       $       8,110        13        $        8,896
 083     BCBS of Oklahoma                            OK         218       $     141,724      133      $     114,904       351        $      256,628
 084     Excellus BCBS of Utica-Watertown            NY          26       $      11,510      6        $       6,084        32        $       17,594
 085     CareFirst BCBS (DC Service Area)            DC         497       $     228,082      168      $     128,678       665        $      356,760
 088     BC of Northeastern Pennsylvania              PA          9       $       6,004      6        $       9,912        15        $       15,916
 089     BCBS of Delaware                             DE          6       $       3,978      13       $      12,017        19        $       15,995
 092     CareFirst BCBS (Overseas)                               34       $      24,089      69       $      68,396       103        $       92,485


                                Totals                         11,339     $ 6,738,616      3,955      $ 2,821,900        15,294      $ 9,560,516
                                                                    .,               APPENDIX


                                                                      BlueCOO88 BlueSw.eld
                                                                      Association
                                                                      An Assocla!lon. oflndepelldem
                                                                      mue Cross and Blue ShIeld Plans



                                                                      Federal Employee Program
                                                                      1510 G Street, N.W.
                                                                      Washington. D.C. 20005
                                                                      202.942.1000
July 31 2009
       t
                                                                      Fax 202.042.1125




Experience-Rated Audits Group
Office of the Inspector General
U.S. Office of Personnel Management
1900 E. Street, N.W., Room 6400
Washington, D.C. 20415

Reference: 	       OPM DRAFT AUDIT REPORT
                   Global Duplicate Claim Payments Audit
                   Audit Report 1A-99-00-09-036



This is our preliminary response to the above referenced U.S. Office of
Personnel Management (OPM) Draft Audit Report concerning the Global
Duplicate Claim Payments Audit. Our final draft response will be submitted
to your office by July 31, 2009. Our comments concerning the findings in
the report are as f o l l o w s : '

Duplicate Claim Payments 	                              $27.335.369

The OPM Office of Inspector General (OIG) conducted the Duplicate Claims
Payment Audit in May 2009 through June 31, 2009. For the period
January 1, 2006 through March 31, 2009, OPM OIG selected and reviewed
17,126 groups, totaling $13,325,136 (out of 370,644 groups, totafing $24,778,433)
in potential duplicate payments, under its "best matches" criteria. OPM OIG also
selected and reviewed 15,928 groups, totaling $14,010,233 (out of 1,421,049
groups, totaling $54,074,067) in potential duplicate payments, under its "near
matches" criteria. OPM OIG samples included all groups with potential duplicate
payments of $250 or more under the ~best matches" criteria and $400 or more
under the "near matches" criteria.                                    .
July 31,2009
Page 2


We do not contest that $ 8,542,354 in duplicate claim payments may have been
made in error. The overpayment represents .0002 percent of total medical claims
paid for the period under audit (for the period of January 1, 2006 through
March 31, 2009, the FEP Program paid $45,708,183,006 in medical claims).
As 6f July 24, 2009, we have recovered $1,470,162. Attachment A identifies total
confirmed duplicates and the amount recovered by each Plan location.

Further analysis of the Plan's two primary reasons for duplicate payments
identified the following:

   • 	 Duplicate claim payments totaling $3,397,043 were made because the
       processor incorrectly overrode the duplicate deferral.

   • 	 Duplicate claim payments totaling $5,145,311 were made because the FEP
       claims system did not defer the claim for evaluation by processors.

We contest $18,793,015 in duplicate claim payments for the following reasons:

   • 	 The duplicate claim was voided or adjusted prior to April 24, 2009 (the start
       of the audit).

   • 	 Recovery of the duplicate claim was initiated prior to April 24, 2009 and the
       claim was adjusted or voided on or after April 24, 2009.

   • 	 Recovery of the duplicate claim was initiated prior to April 24, 2009 but the
       recovery process has not been completed.

   • 	 The claims were for a provider who provided different multiple procedures to
       the same patient.

   • 	 The claims were for confirmed repeated procedures, multiple births, round
       trip ambulance services, team surgery and medication doses more than
       once a day.

   • 	 The claims were for procedures preformed on different body parts or on
       different family members.

   • 	 The claims were for additional payments necessary to correct a prior 

       payment. 


The FEP Director's Office continues to evaluate ways to improve the prevention
and detection of duplicate claim payments. In order to reduce the number of
duplicate payments, prior to this audit, the FEP Program implemented the
following:
July 31,2009
Page 3



   • 	 Modified the FEPExpress System on January 1, 2009 to defer claims with
       the same modifier or modifiers that have similar meaning.

   • 	 Updated the FEP Administrative Manual on January 1, 2009 to provide
       additional instructions on the resolution of duplicate claim edits.

In addition, FEP will perform the following:

   ., 	Provide Plan training on the proper duplicate edit resolution process by the
       end of 4th quarter 2009.                            .

   • 	 Increase duplicates included on the FEP quarterly duplicate post-payment
       Plan reports by removing the criteria to match on allowed charges and
       match on a/l provider fields. This change will be implemented by the end of
       4th Quarter 2009.


   • 	 Modify our current duplicate reporting·process to require Plans to submit the
       results of their review of the Quarterly Duplicate Claims Reports to the FEP
       Director's Office for review and analysis. This change will be implemented
       with the 4th Quarter 2009 reports.

   • 	 Expand the FEPExpress duplicate edit criteria to defer claims if there is a
       match on two of the five provider fields. Currently all provider fields must
       match in order for the claim to defer as aposslble duplicate. This
       modification will be implemented by the end of 2 nd Quarter 2010.

   • 	 Expand the FEPExpress duplicate claim reporting to generate monthly
       summary reports of all duplicate claim edits overridden by processors for
       further Plan management review. The FEP Directors Office wifl also
       receive a copy of the Plans' monthly summary override reports for
       monitoring. This modification will be implemented by the end of
       2nd Quarter 2010.

   • 	 Remove the criteria for a match on covered charges from the duplicate edit
       criteria. This modification will be implemented by the end of
       2 nd Quarter 2010.                     .

   • 	 Modify the FEPExpress System to prevent Plan Approved claims from by­
       passing the duplicate edit logic. This modification will be implemented by the
       end of 2 nd Quarter 2010.
To the extent that there were duplicate payment errorS, the payments were good
faith erroneous benefit payments and fall within the context of CS 1039, Section
2.3 (g). The Plans will continue to pursue the overpayment amounts as required
by CS 1039, Section 2.3 (9)(1). Any benefit payments the Plans are unable to
recover and where due diligence was demonstrated are allowable charges to the
Program. In addition, as good faith erroneous payments, lost investment income
does not apply to the payments identified in the finding.

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




Executive Director
Program Integrity

Attachment

cc: