oversight

Audit of Global Assistant Surgeon Claim Overpayments for BlueCross and BlueShields Plans

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:


             AUDIT ON GLOBAL
  ASSISTANT SURGEON CLAIM OVERPAYMENTS
   FOR BLUECROSS AND BLUESHIELD PLANS




                                             Report No. lA-99-00-09-061


                                             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 data which is protected by federal law (18 U.S.c. 1905). Therefore, while this audit repnrt is available
under the Freedom oflnformation Act and made available 10 the public on the OIG webpage, caution needs to be exercised before
releasing the report to the general public as it rna)' contain proprietary information 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


                             Global Assistant Surgeon Claim Overpayments

                                    BlueCross and BlueShield Plans





                      REPORT NO. IA-99-00-09-061           DATE: March 30, 2010




                                                          ~~-
                                                            Assistant Inspector General
                                                              for Audits




        www.opm.goY                                                                       www.usa)obs.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


                             Global Assistant Surgeon Claim Overpayments

                                    BlueCross and BlueShield Plans





                      REPORT NO. 1A-99-00-09-061            DATE: March 30, 2010


     This final audit report on the Federal Employees Health Benefits Program (FEHBP) operations
     at an BlueCross and BlueShield (BeBS) plans questions $1,806,296 in health benefit charges.
     The BlueCross BlueShield Association (Association) and/or BCBS plans agreed with $1,604,611
     and disagreed with $201,685 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 July 31, 2009 as reported in the
     Annual Accounting Statements. Specifically, we reviewed claims paid from January 1,2006
     through July 31,2009 that potentially were not paid in accordance with the BeBS plans'
     assistant surgeon pricing procedures. We determined that the BCBS plans incorrectly paid 3,061
     claim lines, resulting in net overcharges of$I,806,296 to the FEHBP. Specifically, the BCBS
     plans overpaid 3,018 claim lines by $1,827,187 and underpaid 43 claim lines by $20,891.




        www.opm.gov                                                                      WWW.llsaJobs.gov
                                      CONTENTS

                                                                                    PAGE
       EXECUTIVE SUMMARy          '                                                       j

 I.    INTRODUCTION AND BACKGROUND                 "                                     1

II.    OBJECTIVE, SCOPE, AND METHODOLOGy                                                 3

III.   AUDIT FINDING AND RECOMMENDATIONS                                        ,        5
         Assistant Surgeon Claim Payment Errors                                          5

IV.    MAJOR CONTRIBUTORS TO THIS REPORT                                                 10

V.     SCHEDULES

       A. UNIVERSE AND SAMPLE OF POTENTIAL ASSISTANT SURGEON CLAIM
          OVERPAYMENTS BY PLAN

       B. QUESTIONED CHARGES BY PLAN

       APPENDIX    (BlueCross BlueShield Association reply, dated December 7, 2009, 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 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 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 I, Part
890 of the Code of Federal Regulations (CFR). Health insurance coverage is made available
through contracts with various health insurance carriers.

The B1ueCross B1ueShield 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 (FEp l ) Director's Office in
Washington, D.C. to provide centralized management for the Service Benefit Plan. The FEP
Director's Office coordinates the administration of the contract with the Association, member
BCBS plans, and OPM.

The Association has also established an FEP Operations Center. The activities of the FEP
Operations Center are performed by CareFirst B1ueCross Blueflhield, located in Washington,
D.C. These activities include acting as fiscal intermediary between the Association and member
plans, verifying subscriber eligibility, approving or disapproving the reimbursement of local plan
payments ofFEHBP claims (using computerized system edits), maintaining a history file of all
FEHBP claims, and maintaining an accounting of all program funds.

Compliance with laws and regulations applicable to the FEHBP is the responsibility of the
Association and each BCBS plan's management. 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.
This is our first global assistant surgeon overpayment audit on the BCBS plans. Our preliminary
results of the potential assistant surgeon claim overpayments were presented in detail in a draft
report, dated September 2,2009. The Association's comments offered in response to the draft
report were considered in preparing our final report and are included as the Appendix to this
report. Also, additional documentation provided by the Association and BCBS plans on various
dates through February 26, 2010, was considered in preparing our final report.




                                                2

                   II. OBJECTIVE, SCOPE, AND METHODOLOGY


OBJECTIVE


The objective of this audit was to determine whether the BCBS plans complied with contract
provisions relative to assistant surgeon claim payments, which should be paid in accordance with
the BCBS plans' assistant surgeon pricing procedures.

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 July 31, 2009 as reported in the
Annual Accounting Statements. Specifically, we reviewed claims paid from January 1,2006
through July 31,2009 that potentially were not paid in accordance with the BCBS plans'
assistant surgeon pricing procedures. Based on our claim error reports, we identified 62,844
assistant surgeon claim groups, totaling $10,058,532 in potential overpayments, that may not
have been paid in accordance with the BCBS plans' assistant surgeon pricing procedures.i From
this universe, we selected and reviewed all assistant surgeon claim groups with potential
overpayments of $250 or more. Our sample included 10,305 assistant surgeon claim groups,
totaling $5,929,609 in potential overpayments, for 58 of the 63 plans (See Schedule A for the
universe and sample of potential assistant surgeon claim overpayments by plan).

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 assistant surgeon 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 assistant surgeon claim
payments. Exceptions noted in the areas reviewed are set forth in detail in the "Audit Finding
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 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 BCBS plans. Due to time
constraints, we did not verify the reliability of the data generated by the various information

2This universe excludes the assistant surgeon claim groups for the BCBS plans' years that were previously audited
by the OIG.




                                                        3

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 December 2009 through February 2010.

METHODOLOGY

To test each BCSS plan's compliance with the FEHBP health benefit provisions related to
assistant surgeon claim payments, we selected all assistant surgeon claim groups with potential
overpayments of$250 or more that were identified in a computer search. Specifically, we
selected for review a judgmental sample of 10,305 assistant surgeon claim groups, totaling
$5,929,609 (out of 62,844 groups, totaling $10,058,532) in potential overpayments, that may not
have been paid in accordance with the BCBS plans' assistant surgeon pricing procedures.

The sample groups were submitted to each applicable BCBS 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.




                                                 4

                  III. AUDIT FINDING AND RECOMMENDATIONS

Assistant Surgeon Claim Payment Errors                                                                  $1,806,296

The BCBS plans incorrectly paid 3,061 assistant surgeon claim lines, resulting in net
overcharges of $1,806,296 to the FEHBP. Specifically, the BCBS plans overpaid 3,018 claim
lines by $1,827,187 and underpaid 43 claim lines by $20,891.

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:' Part II,
section 2.3(g) states, "If the Carrier or aPM 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 ...."

Contract CS 1039, Part II, section 2.6 states, "(a) The Carrier shall coordinate the payment of
benefits under this contract with the payment of benefits under Medicare ... (b) The Carrier shall
not pay benefits under this contract until it has determined whether it is the primary carrier ...."

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 to identify claims that potentially were not paid in accordance
with the BCBS plans' assistant surgeon pricing procedures. For the period January 1,2006
through July 31, 2009, we identified 62,844 assistant surgeon claim groups, totaling $10,058,532
in potential overpayments that met this search criteria. From this universe, we selected and
reviewed all assistant surgeon claim groups with potential overpayments of $250 or more, and
determined if the BeBS plans paid these claims properly. Our sample included 10,305 assistant
surgeon claim groups (representing 28,090 claim lines), totaling $5,929,609 in potential
overpayments, for 58 of the 63 plans (See Schedule A for the universe and sample of potential
assistant surgeon claim overpayments by plan). The majority ofthese claim groups contained at
least one primary surgeon and one assistant surgeon claim line.

Based on our review, we determined that 3,061 assistant surgeon claim lines were paid incorrectly,
resulting in net overcharges of $1,806,296 to the FEHBP. 3 Specifically, the BCBS plans overpaid
3,018 claim lines by $1,827,187 and underpaid 43 claim lines by $20,891 (See Schedule B for a
summary of the assistant surgeon claim payment errors by plan).




J In addition, there were 77 assistant surgeon claim overpayments, totaling $56,163, that were identified by the
BCBS plans before the start ofthe audit (i.e., September I, 2009 ) and adjusted or voided by the Association's
response due date (i.e., November 30,2009) to the draft report. Since these overpayments were identified by the
BCBS plans before the start of our audit and adjusted or voided by the Association's response due date to the draft
report, we did not question these overpayments in the final report.




                                                          5

These assistant surgeon claim payment errors resulted from the following:

•	 The BCBS plans paid 1,060 claim lines using incorrect Medicare or plan procedure
   allowances, resulting in net. overcharges of $572,907 to the FEHBP. Specifically, the BCBS
   plans overpaid 1,035 claim lilies by $585,094 and underpaid 25 claim lines by $12,187.

•	 The BCBS plans incorrectly paid 756 claim lines due to the plans' local claim systems
   improperly identifying the assistant surgeon modifiers. Consequently, the BCBS plans
   overpaid 755 claim lines by $413,891 and underpaid 1 claim line by $200, resulting in net
   overcharges of$413,691 to the FEHBP.

•	 The BCBS plans incorrectly paid 305 claim lines due to manual processing errors, such as
   incorrect coding, overriding system edits, and using incorrect allowances. Consequently, the
   BCES plans overpaid 300 claim lines by $265,662 and underpaid 5 claim lines by $3,346,
   resulting in net overcharges of $262,316 to the FEHBP.

•	 The BCBS plans incorrectly paid 344 claim lines that were subject to Omnibus Budget
   Reconciliation Act of 1993 (OBRA 93) pricing guidelines. These errors were due to
   Palmetto (an OBRA 93 pricing vendor) not recognizing the assistant surgeon pricing
   modifier and erroneously calculating the assistant surgeon fee. Consequently, the BCBS
   plans overpaid 341 claim lines by $203,995 and underpaid 3 claim lines by $1,142, resulting
   in net overcharges of $202,853 to the FEHBP.

•	 The BeBS plans paid 175 claim lines using the billed charges instead of the Medicare or plan
   procedure allowances, resulting in net overcharges of $111,113 to the FEHBP. Specifically,
   the BCBS plans overpaid 173 claim lines by $111,425 and underpaid 2 claim lines by $312.

•	 The BeBS plans incorrectly priced 104 claim lines due to provider billing errors, resulting in
   net overcharges of $41,624 to the FEHBP. Specifically, the BCBS plans overpaid 101 claim
   Jines by $44,609 and underpaid 3 claim lines by $2,985.

•	 The BeBS plans paid 64 claim lines even though the procedures were not medically
   necessary or the surgical assistants were not required for the surgeries, resulting in
   overcharges of $30,995 to the FEHBP.

•	 The BeBS plans inadvertently paid 40 claim lines twice, resulting in duplicate charges of
   $17,823 to the FEHBP.

•	 The BeRS plans incorrectly paid 26 claim lines due to errors in the calculation ofthe
   assistant surgeon fee, which should have been priced at the applicable plan's percentage of
   the procedure allowance. Consequently, the BCBS plans overpaid 22 claim lines by $13,579
   and underpaid 4 claim lines by $719, resulting in net overcharges of$12,860 to the FEHBP.

•	 The BCBS plans inadvertently paid 21 claim lines for surgical assistants without support for
   the surgeons' claims or operative reports, resulting in overcharges of $6,83 3 to the FEHBP.




                                                6

•	 The BCBS plans did not properly coordinate five claim lines with Medicare or the patient's
   primary insurance carrier, resulting in overcharges of $2,024 to the FEHBP.

•	 In one instance, a BeBS plan paid a.claim that was incurred after termination of the patient's
   coverage, resulting in an overcharge of $317 to the FEHBP.

Of the $1,806,296 in questioned charges, $130,940 (seven percent) were identified by the BCBS
plans before the start of our audit (i.e., September 1, 2009). However, since the BCBS plans had
not completed the recovery process and/or adjusted or voided these claim payment errors by the
Association's response due date (i.e., November 30,2009) to the draft report, we are continuing
to question these overcharges. The remaining questioned charges of$I,675,356 (93 percent)
were identified as a result of our audit.

Association's Response:

The Association agrees with $1,556,704 of the questioned overcharges and states that the BCBS
plans have recovered $445,463 of the overpayments as of December 7,2009.

The Association completed a preliminary root causal analysis for the BCBS plans with large
dollar findings. The Association states, "Results from this analysis identified the following:

   •	 Human Errors - where processors are responsible for pricing the assistant surgeon claims
      manually.
   •	 We only send the first three modifiers for OHRA 93 pricing. However, if the assistant
      surgeon modifier is in the fourth position it will not be sent to Palmetto for OBRA 93 pricing.

We will complete our final root cause analysis for all Plans by March 31,2010 to determine any
future system enhancements, policy changes and/or training opportunities."

Regarding the contested amount, the Association disagrees with these questioned overcharges for
the following reasons:

   •	 The claim payments were voided and/or adjusted prior to the start of the audit.
   •	 The claim payments were processed correctly in accordance with Medicare requirements
      and/or the Plan's provider contracts.

Regarding corrective actions, the Association states, "The Association has or is in the process of
taking the following actions:

•	 Have Plans educate providers on the correct method for submitting charges for Assistant
   Surgeon services by 2nd Quarter 2010.




                                                7

•	 Instruct Plans to use these confirmed errors as training tools to ensure that examiners know
   the proper coding requirements for the adjudication of Assistant Surgeon Claims by 2nd
   Quarter 2010.

•	 Continue to include these claims in the FEP periodic System-Wide Claim Review Process ....

•	 During 2010, we will develop and implement an edit that will defer claims with Assistant
   Surgeon modifiers when there is no discount applied to the allowance submitted....

•	 Update the FEP Administrative Manual ... with more specific coding details to include
   actual examples for each of the Assistant Surgeon Modifiers on how these claims should be
   submitted to the Operations Center for adjudication.

•	 Add this Assistant Surgeon coding training to the Micro Regional Meetings provided by the
   Operations Center to Plans to ensure the Plans have face-to-face training.

•	 During the ... Control and Performance of Palmetto, we will evaluate Palmetto's internal
   controls for generating pricing data for the Assistant Surgeon Modifiers to ensure compliance
   with Medicare pricing guidelines."

GIG Comments:

After reviewing the Association's response and additional documentation provided by the BCBS
plans, we revised the questioned charges from our draft report to $1,806,296. Based on the
Association's response and the BCBS plans' additional documentation, we determined that the
Association and/or plans agree with $1,604,611 and disagree with $201,685 of the questioned
charges. Although the Association only agrees with $1,556,704 in its written response, the
BCBS plans' documentation supports concurrence with $1,604,611.

Based on the Association's response and/or the BCBS plans' documentation, the contested
amount of $201,685 represents the following items:

•	 $130,940 of the contested amount represents 160 claim lines where recovery efforts were
   initiated by 11 BCBS plans before the audit started. However, the plans had not recovered
   these assistant surgeon claim overpayments and adjusted or voided the claims by the
   Association's response due date to the draft report. Since these overpayments had not been
   recovered and returned to the FEHBP by the Association's response due date, we are
   continuing to question this amount in the final report.

•	 $70,745 of the contested amount represents 103 claim lines, which were subject to OBRA 93
   pricing, where the BCBS plans did not pay the claims using the applicable Medicare
   procedure allowances and/or percentages. The Association and/or BCBS plans did not
   provide documentation to support why these claim lines were not paid in accordance with
   OBRA 93 pricing.




                                                8

Recommendation 1

We recommend that the contracting officer disallow $1,827,187 for claim overcharges and verify
that the BeBS plans return all amounts recovered to the FEHBP.

Recommendation 2

We recommend that the contracting officer allow the BeBS plans to charge the FEHBP $20,891
if additional payments are made to the providers to correct the underpayments.

Recommendation 3

Although the Association has developed a corrective action plan to reduce assistant surgeon
claim overpayments, we recommend that the contracting officer instruct the Association to
ensure that the BeBS plans are following the corrective action plan. Also, we recommend that
the contracting officer verify that the additional corrective actions included in the Association's
response are implemented.




                                                 9

              IV. MAJOR CONTRIBUTORS TO THIS REPORT

Experience-Rated Audits Group

                Auditor-In-Charge

               Auditor- In-Charge


                    Chie_

Information Systems Audits Group

               Chief

              Senior Information Technology Specialist

                    Information Systems Auditor




                                            10

                                                                                                                                                      SCHEDULE A
                                                                                                                                                       Page 1 of2
                                                                           V. SCHEDULES

                                                   GLOBAL ASSISTANT SURGEON CLAIM OVERPAYMENTS
                                                          BLUECROSS AND BLUESHIELD PLANS

                            UNIVERSE AND SAMPLE OF POTENTIAL ASSISTANT SURGEON CLAIM OVERPAYMENTS BY PLAN

                                                                                    UNIVERSE                                                    SAMPLE
 Site                                            Assistant Surgeon
      Potential                    Period Subject               Assistant Surgeon    Potential
Number               Plan Name
         State     Claim Groups
        Overpayments                      to Audit                   Claim Groups      Overpayments
 003
    BCBS of New Mexico
            NM              282
          $        51,117     January 1,2006 through July 31,2009              78 .      $        33,065
 005
    WellPoint BCBS of Georgia
     GA             4,707
         $       606,424     January 1,2006 through July 31,2009             509        $      200,278
 006
    CareFirst BCBS
                rvrn            652
          $        96,753    November 1, 2008 through July 31, 2009            79        $       41,431
 007
    BCBS of Louisiana
              LA
            279
          $       139,906     January 1,2007 through July 3 1,2009            145        $      121,636
 009
    BCBS of Alabama
                AL
           1,596
         $     -'342,814     January 1,2006 through July 31, 2009            468        $      219,686
 010
    BC ofIdaho Health Service
     ill             332
          $        46,599     January 1, 2006 through July 31, 2009            47        $       21,543
 011
    BCBS of Massachusetts
         MA              440
          $        77,483     January 1,2006 through July31, 2009             105        $       41,733
 012
    BCBS of Westem New York        NY              92            $        21,651     January 1,2006 through July 31, 2009             26        $        15,531
 013     Highmark BCBS
                  PA             974           $        66,248     January 1,2008 through Iuly 31,2009              77        $       43,125
 015
    BCBS of Tennessee
             TN              201           $       106,523     January I, 2008 through July 31, 2009            89        $       96,297
 016
    BCBS of Wyoming
               WY
             151           $        30,051     January 1,2006 through July 31, 2009             40        $       20,002
 017
    BCBS of Illinois
               II..
          746           $       224,015     January 1,2007 through July 31, 2009            264        $      171,759
 021
    Ohio WellPoint BCBS
           OH             3,165          $       260,872     January 1, 2006 through July 31, 2009·          162        $        88,957
 024
    BCBS of South Carolina
        SC              895           $       148,999     January 1,2006 through July 3 I, 2009           117        $       45,659
 027
    New Hampshire WellPoint BCBS   NH              310           $        48,932     January 1, 2008 through July 31, 2009            40        $       21,112
 028     BCBS ofVennont
                VI               24           $         7,872     January 1,2008 through July 31,2009              12        $         6,593
 029
    BCBS of Texas
                 IX             6,142          $       859,551     January 1,2007 through July 31, 2009            834        $      499,106
 030
    Colorado WellPoint BCBS
       CO             3,267          s       187,171     January 1,2006 through July 31,2009             184        $      102,794
 031
    Wellmark BeBS ofIowa
           IA             353           $        62,829     January I, 2006 through July 31, 2009            93        $       41,777
 032
    BCBS of Michigan
              tv1I            409           $        53,17 I    I anuary 1, 2006 through July 31, 2009           66        $       25,173
 033
    BCBS of North Carolina
        NC             1,671          $       348,665     January 1,2006 through July 31,2009             417        $      218,346
 034
    BCBS of North Dakota
          ND               83           $         8,576     January 1,2006 through July 31,2009               3        $            809
 037
    BCBS of Montana
               MT              422           $        39,130     January 1,2006 through July 31,2009              25        $        11,706
 038
    BCBS of Hawaii
                ill              21           $         4,707     January 1,2006 through July 31, 2009             4         $         3,521
 039
    Indiana WellPoint BCBS
         fN            3,572          $       378,695     January 1,2006 through July 3 1,2009            236        $        93,878
 040
    BCBS of Mississippi
           MS              417           $       113,077     January I, 2007 through July 31, 2009           186        $       91,354
 041
    BCBS of Florida
               FL             4,665          $       824,365     January 1, 2006 through July 31, 2009           721        $      462,574
 042
    BCBS of Kansas City
           MO              441           $        39,360     January I, 2006 through July 31, 2009            23        $        15,032
 043
    Regence BS ofIdaho             ill             148           $        35,905     January 1,2006 through July 31, 2009             49         s      26,474
                                                                                                                                                     SCHEDULE A
                                                                                                                                                      Page 2 of2
                                                                          V. SCHEDULES

                                                   GLOBAL ASSISTANT SURGEON CLAIM OVERPAYMENTS
                                                          BLVECROSS AND BLUESHIELD PLANS

                             UNIVERSE AND SAMPLE OF POTENTIAL ASSISTANT SURGEON CLAIM OVERPAYMENTS BY PLAN

                                                                                    UNIVERSE                                                   SAMPLE
 Site                                            Assistant Surgeon
      Potential                   Period Subject               Assistant Surgeon    Potential
Number               Plan Name
          State    Claim Groups
        Overpayments                     to Audit                   Claim Groups      Overpayments
 044
    Arkansas BCBS
                   AR             108
         s        12,887     January 1,2008 through July 31,2009              16       $         5,690
 045
    Kentucky WellPoint BCBS
         KY            4,848
        $       317,452     January 1,2006 through July 31, 2009            112       $        50,219
 047
    WellPoint BCBS of Wisconsin      WI             935
         s       317,980     January 1, 2006 through July 31, 2009           421       $       255,192
 048     Empire BCBS
                    NY              605
         $        63,610     January 1,2007 through July 31, 2009             36       s        20,035
 049
    Horizon BCBS of New Jersey       NJ             149
         $        21,935    November 1,2008 through July 31, 2009             25       $        1l,249
 050     Connecticut WellPoint BCBS       CT             143
         $        28,716     January I, 2008 through July 3 1,2009            31       $        14,719
 053     BCBS of Nebraska
                NE             281
         $        31,968     January 1,2008 through July 31,2009              28       $        12,316
 054
    Mountain State BCB S
           WV
              87
         $        13,683     January 1,2007 through July 31, 2009             20       $         6,776
 056
    BCBS of Arizona
                AZ
             597
         $        79,332     January 1,2007 through July 31, 2009             87       $        39,133
 058
    RegenceBCBS of Oregon
          OR
             674
         $       100,555     January 1,2006 through July 31, 2009            121       $        57,546
 059
    Maine WeliPoint BCBS
           ME              157
         $        15,873     January 1,2008 through July 31, 2009             17       $         6,104
 060
    BCBS of Rhode Island
           RI              191
         $        30,500     January I, 2006 through July 31, 2009            32       $        15,852
 061
    Nevada WellPoint BeBS
          NY             1,091
        $       138,883     January 1, 2006 through July 31, 2009           153       $       108,870
 062
    Virginia WeliPoint BeBS
        VA              441
         $,       51,633     January 1, 2008 through July 31, 2009            44       $        21,273
 064
    BC BS of Rochester
             NY               25
         $         4,407     January 1,2006 through July 31, 2009              4       $         2,009
 066
    Regence BCBS of Utah
           UT             1,952
        $       235,944     January 1, 2006 through July 31, 2009           264       $       132,385
 067
    BS of California
               CA            2,445
         $       331,412     January I, 2006 through July 31, 2009           342       $       162,230
 069
    Regence BS of Washington
       WA            3,734
         s       409,708     January 1,2006 through July 31, 2009            314       $       134,547
 070
    BCBS of Alaska
                 AK             1,508
        $     1,042,028     January 1, 2006 through July 31, 2009          1,153      $       997,124
 074
    Wellmark BCBS of South Dakota   SD              370
         $        75,934     January 1,2006 through July 31, 2009            107       $        45,766
 075     Prernera BC
                    WA              659
         $        99,516     January I, 2006 through July 31, 2009            84       $        40,356
 076
    WellPoint BCBS of Missouri
     MO             1,249
        $       213,675     January 1,2006 through July 31, 2009            194       $       104,433
 078
    BCBS of Minnesota
              MN            2,250
         $       850,753     January 1,2006 through July 31,2009           1,225       $       720,809
 079
    BCES of Central NY
             NY              136
         $        35,015     January I, 2006 through July 31, 2009            53       $        26,042
 082
    BCBS of Kansas
                 KS              264
         $        60,645     January 1,2006 through July 31, 2009             96       $        42,999
 083
    BCBS of Oklahoma
               OK              920
         $       126,765     January 1,2008 through July 31, 2009             95       $        44,383
 084
    BCBS of Utica-Watertown
        NY               73
         $        16,844     January 1,2007 through July 31, 2009             23       $        12,234
 085
    CareFirst BCBS
                 DC              357
         $        61,801    November 1,2008 through July 31, 2009             77       $        30,640
 089
    BCBS of Delaware                DE              138
         $        37,617     January 1, 2006 through July 31, 2009            32       $        27,724
                   Total                               62,844
        $    10,058,532                                                   10,305      $     5,929,609
                                                                                                                                                     SCHEDULEB
                                                                                                                                                      Page I of2

                                              GLOBAL ASSISTANT SURGEON CLAIM OVERPAYMENTS
                                                     BLUECROSS AND BLUESHIELD PLANS

                                                        QUESTIONED CHARGES BY PLAN

 Site                                                  Total Questioned                     Amounts Questioned by Year                   Plan            Plan

Number               Plan Name        State     Claim Lines     Total Charges        2006       2007         2008        2009           Agrees         Disagrees

 003   BCBS of New Mexico             N"M            18
        $       10,190   $       952 $     3,421 $      5,233 $      584    $        2,689   $       7,501

 005
  WellPoint BCBS of Georgia      GA            114         $       47,485   $     6,761 $   13,464 $      16,968 $   10,292    $       41,860   $       5,625

 006   CareFirst BCBS                 MD             26
        $       20,117   $       - $         . $          396 s   19,721    $       20,117   $         ­
 007
  BCBS of Louisiana              LA             29
        $       47,140   s       -   $     1,390  $    13,038  $  32,713    s       47,140   $         ·
 009
  BCBS of Alabama                AL             21
        $       15,653   $     6,881 $     6,160 $      1,235 $    1,378    $       14,845   $         808
 010
  BC ofIdaho Health Service      ill             7
        $        4,826   $     1,659 s     1,370 $        105 $    1,692    $        4,826   $         -
 011
  BCB S of Massachusetts         MA             13
        $     , 7,255    $     2,169 $     1,749 $        829 $    2,508    $        7,255   $         ·
 012
  BCBS of Westem New York        NY             12
        $        8,920   $     2,382 $       562 $      5,589 $      386    $        8,920   s             -
 013
  Highmark BeBS                  PA             23
        $       15,709   $       - $         . $        9,085 $    6,624    $       15,709   $             -
 015
  BeBS of Tennessee               TN           63
         $       60,374   $       - $         -    $    16,050 s 44,324      $       57,135   $       3,239
 016
  BeBS of Wyoming                WY              I         $        1,189   $          -$     1,189 $        -    $      -     $          -,    $       1,189
 017   BeES of Illinois               IL             45
        $       43,750   $       . $ 11,551 $ 23,573 $ 8,625                $      27,357    $      16,393
 021
  Ohio WellPoint BeBS            OH             69
        $       43,844   $    13,715 $   17,719 $       5,056 $    7,354    $      42,767    $       1,077
 024
  BeBS of South Carolina         se             13
        $        4,293   $     1,871 $     1,189 $      1,407 $     (173)   $       4,293    $             ­
 027
  New Hampshire WelIPoint BCBS   NH             10
        s        7,879   s        -     s    -    $     6,897 $      982    $       7,879    $         ­
 028
  BCB S of Vermont               VT              I         $          278   $       -    $      -    $       278 $       -     $         278    $         ·
 029   BCBS of Texas                  TX            205
        $     194,407    $        -     s37,405   $    92,396  $  64,606    $     175,380    $      19,027
 030
  Colorado WellPoint BCBS        CO            154         $       89,795   $    24,710 $   27,770 $      12,561 $   24,755    $      89,795    $             ­
 031   Wellmark BCBS ofIowa           IA             21
        $       10,524   $     5,577  $    2,939  $     1,344  $     664    $       4,738    $       5,786
 032
  BCBS of Michigan               MI             28
        $       10,761   $     1,539 $     1,572  $     2,941  $   4,709    $      10,761    $             ­
 033
  BCBS of North Carolina         NC            171         $       86,830   $    45,243 $   11,274 $      16,138 $   14,175    $      82,075    $       4,754
 034   BCBS of North Dakota           ND              0
        $           .    $       . $          -   s       - $        -      $          -     $             ­
 037
  BCBS of Montana                MT              7
        $        3,951   $     1,288 s     1,158 $      1,505 $       -     $        3,951   $         ·
 038
  BCBS of Hawaii                 HI              3
        $        2,612   $          -   s    255 $       -     $   2,357    $        2,612   $         ­
 039
  Indiana WellPoint BCBS         IN             83
        $       34,731   $     8,738 $    13,758  s     9,502 $    2,732    $       34,731   $         ·
 040
  BCBS of Mississippi            MS            121         $       63,625   $        -   $    5,143 $     11,287 $   47,196    s       63,625   $             ­
 041   BCBS of Florida                FL            405
        $     235,472    $    51,902 $   43,293 $      98,355 $   41,922    $      132,301   $     103,172
 042
  BCBS of Kansas City            MO             14
        $        9,496   $     6,397 $       293 $      1,995 $      812    $        9,496   $                 ­
 043
  Regence BS of Idaho            ill            41         $       19,525   $    12,603 $     1,626 $      4,203 $    1,094    $       19,525   $             ­
                                                                                                                                                       SCHEDULEB
                                                                                                                                                        Page 2 of2

                                                 GLOBAL ASSISTANT SURGEON CLAIM OVERPAYMENTS

                                                        BLUECROSS AND BLUESHIELD PLANS


                                                           QUESTIONED CHARGES BY PLAN


 Site                                                    Total Questioned                     Amounts Questioned by Year                   Plan
             Plan

Number                 Plan Name         State     Claim Lines    Total Charges        2006       2007         2008        2009           Agrees
          Disagrees

 044     Arkansas BCBS                   AR             3         $          754   $       - $         -    $       754 $       -     $          754   $           -
 045     Kentucky WellPoint BCBS         KY            56         $       27,664   $     9,645 $     8,791 $      7,917 $    1,310    $       27,620   $               43
 047     WellPoint BeBS of Wisconsin     WI            185        $       84,113   $    34,570 $   33,988 $       9,336 $    6,219    $       84,113   $           -
 048     Empire BeBS                     NY             9         $        6,993   $          - $      · $        6,116 $      877    $        1,516   $         5,477
 049     Horizon BeBS of New Jersey      NJ             6         $        2,824   $          -$       - $         -     $   2,824    $        1,876   $           949
 050     Connecticut WeI/Point BCBS       CT            2         $          640   $       -   $       · $         .361 $      280    $          640   $           ~




 053     BeBS of Nebraska                NE             7         $        3,056   $        - $        -    $      -     $   3,056    $        3,056   $           -
 054     Mountain State BCBS             WV              1        $          265   $       - $         -    $      -     $     265    $          265   $           -
 056     BCBS of Arizona                 AZ            20 .       $        9,839   $       - $       1,412 $      5,289 $    3,138    $        9,839   $           -
 058     Regence BCBS of Oregon          OR            76         $       44,215   $    14,639 $   15,750 $       5,513 $    8,313    $       44,215   $           -
 059     Maine WellPoint BCBS            ME             2         $          440   $       -    $      ·    $       440  $      -     $          440   $           -
 060     BCBS of Rhode Island            RI             16        $       lO,310   $     4,281 $       274 s      5,347 $      408    $        9,124   $         1,186
 061     Nevada WellPoint BCBS           NY            163        $      112,498   s    46,228 $   26,656   s   22,494 $    17,121    $      112,261   $           237
 062     Virginia WellPoint BCBS         VA             14        $       1l,961   $       314 $       -    $     9,750 $    1,897    $       10,995   $           967
 064     BC BS of Rochester              NY             8         $        3,242   $        -   $      407  $     1,111  $   1,723    $        3,231   $            11
 066     Regence BeBS of Utah            UT            193        s       88,603   $    32,871 $   14,633   $   26,087  s   15,012    $       88,369   $           234
 067     BS of California                CA            117        $       55,804   $    34,604 $    lO,922 $      6,643 $    3,635    $       55,804   $           -
 069     Regence BS of Washington        WA            135        $       58,813   $    16,955 $   11,443 $      13,731 $   16,684    $       54,503   $         4,310
 070     BCBS of Alaska                  AK             4         $          212   $        - $        -    $       370 $     (158)   $          212   $           ·
 074     Wellmark BCBS of South Dakota   SD             14        $        8,445   $     4,059 $     1,615 $      1,687 $    1,083    $        8,445   $           -
 075     PremeraBC                       WA            25         $       13,171   s     5,210    s  4,598 $        499 $    2,865    $        9,564   s         3,607
 076     WellPoint BeBS of Missouri      MO            153        s       79,572   s    24,209 $   18,801 $     22,095 $    14,467    $       79,572   $           ·
 078     BCBS of Minnesota               MN"            7         s        6,800   $       429 s       732 $       -     $   5,640    $          ­     $         6,800
 079     BCBS of Central NY              NY            42         $       19,003   $     6,997 $     5,594 $      5,647 $      765    $       18,949   $            53
 082     BCBS of Kansas                  KS             2         s        2,027   $     2,027 $       -    s       -    $      -     $        2,027   $           -
 083     BCBS of Oklahoma                OK            34         $       17,212   $          -$       -    $     8,247 $    8,965    $       13,109   $         4,103
 084     BCBS of Utica-Watertown         NY             17        $        8,302   $        -   $    2,408 $      4,229 $    1,666    s        8,302   $           -
 085     CareFirst BCBS                  DC             9         $        5,744   $       -    $      -    $     2,097 $    3,647    $        5,744   $           ·
 089     BeBS of Delaware                DE            23         $       23,140   $     4,902 $     3,341 $     10,224 s    4,673    s       18,004   s         5,136
                          Total                       3,061       $    1,806,296   $   436,330 $ 367,615 $ 533,946 $ 468,405          s    1,604,611   $       201,685
                                                                    ••
                                                                                        APPENDIX


                                                                      BlueCross Blue8hield
                                                                      Association
                                                                      An Association of Independent
                                                                      Blue Cross and Blue Shield Plans




                                                                      Federal Employee Program
                                                                      1510 G Street, N.W.
                                                                      Washington, D.C. 20005
December 7,2009                                                       202.942.1000
                                                                      Fax 202.942.1125
                    I Group Chief
 xpenence- ate       udits Group
Office of the Inspector General
U.S. Office of Personnel Management
1900 E Street, Room 6400
Washington,' DC 20415-1100

Reference:	         OPM DRAFT AUDIT REPORT
                    Global Assistant Surgeon
                    Audit Report #1A-99-00-09-061
                    (Report dated and received 9/2/2009)

Dear

This is in response to the above referenced U.S. Office of Personnel
Management (OPM) Draft Audit Report concerning the Global Assistant
Surgeon Audit for claims paid from January 1, 2006 through July 31, 2009,
with potential overpayments totaling $5,929,609. Our comments
concerning the findings in this report are as follows:

Recommendation 1

The OPM DIG auditors recommended that the contracting officer disallow
$5,929,609 for assistant surgeon overpayments charged to the FEHBP and have
the BCSS Plans return all amounts recovered to the FEHBP.

Response to Recommendation 1:

After reviewing the listings of potential Assistant Surgeon overpayments totaling
$5,929,609, the Association does not contest that $ 1,556,704 in Assistant
Surgeon claim payments are confirmed overpayments. As of December 7,2009,
we have recovered $445,463.

We contest the remaining $3,890,229 in Assistant Surgeon claim payments for
the following reasons:

   •	 $261,698 in claim payments were voided and/or adjusted prior to the start

      of the audit (September 1, 2009).

December 7 r 2009
Page 2 of 4

   •	 $3,628,531 in claim payments were processed correctly in accordance
      with Medicare requirements and/or the Plan's provider contracts.

Additionally, there is $482,976 in potential overpayments that are still under
investigation by the Plans.

Recommendation 2

The DIG Auditors recommended that BCSSA provide the support for each
payment error disagreed to that was identified in this audit finding (even if
identified and/or adjustedlvoided prior to this audit by BCSS Association and/or a
BCBS Plan).

Response to Recommendation 2:

The claim support for each of the confirmed overpayments has been submitted.

Recommendation 3

The DIG Auditors recommended that the contracting officer instruct the
Association to have the BCSS Plans identify the root cause(s) of the claim
payment errors and implement corrective actions/procedures to prevent these
types of errors in the future.

Response to Recommendation 3:

Based on our review of the Plan's results, we confirmed the following list of
reasons why these claim errors occurred:

•	 Manual errors (to include but not limited to incorrect coding/overriding system
   edits/using the incorrect allowances) by claim processors at the Plans
   resulting in an overpayment of $227,296;

•	 Plan's local system did not properly identify the assistant surgeon modifiers;
   therefore the correct allowances were not provided resulting in an
   overpayment of $310,307;


•	 The appropriate Medicare Percentage used in pricing the OBRA 93 claims
   was incorrect causing an overpayment of $168,905;

•	 The Plans incorrectly submitted to the Operations Center the billed charges
   as opposed to the correct allowance for the assistant surgery services
   causing an overpayment of $107,962;
-

Page 3 of 4


•	 The Plans incorrectly applied the wrong Medicare or Plan allowances for
   claims resulting in an overpayment of $412,654; and

•	 Other various reasons, including but not limited too, surgical assistant not
   usually required for the type of surgery performed, causing an overpayment of
   $314,878.


In addition, we have completed our preliminary root causal analysis with Plans
who had large dollar findings. Results from this analysis identified the following:

   •	 Human Errors - where processors are responsible for pricing the assistant
      surgeon claims manually.
   •	 We only send the first three modifiers for OBRA 93 pricing. However, if
      the assistant surgeon modifier is in the fourth position it will not be sent to
      Palmetto for OBRA 93 pricing.


We will complete our final root cause analysis for all Plans by March 31    J


2010 to determine any future system enhancements, policy changes
and/or training opportunities.                .


Corrective Actions:

The Association has or is in the process of taking the following actions:

•	 Have Plans educate providers on the correct method for submitting
   charges for Assistant Surgeon services by 2nd Quarter 2010.   .

•	 Instruct Plans to use these confirmed errors as training tools to ensure
   that examiners know the proper coding requirements for the
   adjudication of Assistant Surgeon Claims by 2 nd Quarter 2010.

•	 Continue to include these claims in the FEP .periodic System-Wide
   Claim Review Process. We will also evaluate the impact on Plans'
   workload of reducing the audit review threshold amount from $1,000 to
   $500 by 2nd Quarter 2010.

•	 During 2010, we will develop and implement an edit that will defer
   claims with Assistant Surgeon modifiers when there is no discount
   applied to the allowance submitted. Plans will then confirm that they
   actually performed the calculations and is sending the correct
   allowance or submit the applicable discount so that FEPExpress can
December 7, 2009
Page 4 of 4

      determine the correct FEP allowance.

•	 Update the FEP Administrative Manual Volume II by 2 nd Quarter 2010
   with more specific coding details to include actual examples for each of
   the Assistant Surgeon Modifiers on how these claims should be
   submitted to the Operations Center for adjudication.

•	 Add this Assistant Surgeon coding training to the Micro Regional
   Meetings provided by the Operations Center to Plans to ensure the
   Plans have face-to-face training.

•	 During the 1st Quarter 2010 Control and Performance of Palmetto, we
   will evaluate Palmetto's internal controls for generating pricing data for
   the Assistant Surgeon Modifiers to ensure compliance with Medicare
   pricing guidelines.




Executive Director, Program Integrity
Federal Employee Program

Attachment

cc: