U.S. OFFICE OF PERSONNEL MANAGEMENT
OFFICE OF THE INSPECTOR GENERAL
OFFICE OF AUDITS
Final Audit Report
SUbject:
AUDIT ON GLOBAL
COORDINATION OF BENEFITS FOR
BLUECROSS AND BLUESHIELD PLANS
CONTRACT YEAR 2008
Report No. lA-99-00-10-009
Date: March 31, 2010
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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 Coordination of Benefits
BlueCross and BlueShield Plans
REPORT NO. lA-99-00-10-009 DATE: March 31, 2010
~~MIchael R. Esser
Assistant Inspector General
for Audits
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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 Coordinatjon of Benefits
BlueCross and BlueShield Plans
REPORT NO. lA-99-00-107009 DATE: March 31, 2010
This final audit report on the Federal Employees Health Benefits Program (FEHBP) operations
at aU BJueCross and BlueShield (BCBS) plans questions $7,417,178 in health benefit charges.
The BlueCross BIueShield Association (Association) and/or BCBS plans agreed with $4,296,158
and disagreed with $3,121,020 of the questioned charges.
Our limited scope audit was conducted in accordance with Government Auditing Standards. The
audit covered health benefit payments for contract year 2008 as reported in the Annual
Accounting Statement. Specifically, we reviewed claims incurred from October 1, 2007 through
December 31, 2008 that were reimbursed in 2008 and potentially not coordinated with Medicare.
We determined that the BCSS plans did not properly coordinate 14,773 claim line payments with
Medicare as required by the FEHBP contract. As a result, the FEHBP was overcharged
$7,417,178. When we notified the Association of these errors on October 1,2009, the claims
were within the Medicare timely filing requirement and could be filed with Medicare for
coordination of benefits.
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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
Coordination of Benefits with Medicare .................................................................... 5
IV. MAJOR CONTRIBUTORS TO THIS REPORT .......................................................... ll
V. SCHEDULES
A. UNIVERSE AND SAMPLE OF POTENTIALL Y UNCOORDINATED CLAIM
LINES
B. SUMMARY OF QUESTIONED CHARGES
APPENDIX (BlueCross BlueShield Association reply, dated January 22, 2010, to the
draft audit report)
I. INTRODUCTION AND BACKGROUND
INTRODUCTION
This final audit report details .the findings, conclusions, and recommendations resulting from our
limited scope audit of the Federal Employees Health Benefits Program (FEHBP) operations at 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 ofthe 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 Goverrunent-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 tlrroughout 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
BlueCross and BlueShield plans, and OPM.
The Association has also established an FEP Operations Center. The activities of the FEP
Operations Center are perfonned by CareFirst BCBS, 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
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.
Findings from our previous global coordination of benefits audit of all BeBS plans (Report No.
lA-99-00-09-011, dated July 20,2009) for contract year 2007 are in the process of being
resolved.
Our preliminary results of the potential coordination of benefit errors were presented in detail in
a draft report, dated October 1,2009. 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 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 BCBS plans complied with contract
provisions relative to coordination of benefits with Medicare.
SCOPE
We conducted our limited scope perfolTIlance 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 o~jective.
The audit covered health benefit payments for contract year 2008 as reported in the BlueCross
and BlueShield FEHBP Annual Accounting Statement. Specifically, we reviewed claims
incurred from October 1, 2007 through December 31, 2008 that were reimbursed in 2008 and
potentially not coordinated with Medicare. Based on our claim error reports, we identified.
565,331 claim lines, totaling $66,114,553 in payments, that potentially were not coordinated with
Medicare. From this universe, we selected and reviewed 36,421 claim lines, totaling $24,000,153
in payments, for coordination of benefits with Medicare. When we notified the Association of
these potential errors on October 1,2009, the claims were within the Medicare timely filing
requirement and could be filed with Medicare for coordination of benefits.
We did not consider each BCBS plan's: internal control structure in pi arming 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 BeBS plans had complied with the contract
and the laws and regulations governing the FEHBP as they relate to coordination of benefits.
The results of our tests indicate that, with respect to the items tested, the BeBS plans did not
fully comply with the provisions of the contract relative to coordination of benefits with
Medicare. 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.
3
The audit was performed at our offices in Washington, D.C.; Cranberry Township, Pennsylvania;
and Jacksonville, Florida from October 1, 2009 through March 5, 2010.
METHODOLOGY
To test each BCBS plan's compliance with the FEHBP health benefit provisions related to
coordination of benefits with Medicare, we selected a judgmental sample of potential
uncoordinated claim lines that were identified in a computer search. Specifically, we selected for
review 36,421 claim lines, totaling $24,000,153 in payments, from a universe of 565,331 claim
lines, totaling $66,114,553 in payments, that potentially were not coordinated with Medicare (See
Schedule A for our sample selection methodology).
The claim samples were submitted to each applicable BCBS plan for their review and response.
For each plan, we then conducted a limited review of their agreed responses and an expanded
review of their disagreed responses to deterinine the appropriate questioned amount. We did not
project the sample results to the universe of potential uncoordinated claim lines.
The determination of the questioned amount is based on the FEHBP contract, the Service Benefit
Plan brochure, the Association's FEP administrative manual, and various manuals and other
documents available from the Center for Medicare and Medicaid Services that explain Medicare
benefits.
4
III. AUDIT FINDING AND RECOMMENDATIONS
Coordination of Benefits with Medicare $7,417,178
The BCBS plans did not properly coordinate 14,773 claim line payments, totaling $8,726,668,
with Medicare as required by the FEHBP contract. As a result, the FEHBP paid as the primary
insurer for these claims when Medicare was the primary insurer. Therefore, we estimate that the
FEHBP was overcharged by $7,417,178 for these claim lines.
The 2008 BlueCross and BlueShield Service Benefit Plan brochure, page 113, Primary Payer
Chart, illustrates when Medicare is the primary payer. In addition, page 23 of that brochure
states, "We limit our payment to an amount that supplements the benefits that Medicare would
pay under Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance),
regardless of whether Medicare pays."
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 detennined whether it is the primary
carrier ...." Also, Part III, section 3.2 (b)(1) states, "The Carrier may charge a cost to the
contract for a contract term if the cost is actual, allowable, allocable, and reasonable ... [and]
on request, document and make available accounting support for the cost to justify that the cost
is actual, reasonable and necessary; and (ii) determine the cost in accordance with: (A) the
terms of this contract ...."
In addition, Contract CS 1039, Part II, ~ectjon 2.3(g) states, "If the Carrier or aPM detennines
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 ...."
For claims incurred from October 1, 2007 through December 31, 2008 and reimbursed in 2008,
we performed a computer search and identified 565,331 claim lines, totaling $66,114,553 in
payments, that potentially were not coordinated with Medicare. From this universe, we selected
for review a sample of 36,42] claim lines, totaling $24,000,153 in payments, to detennine
whether the BCBS plans complied with the contract provisions relative to coordination of
benefits (COB) with Medicare. When we submitted our sample of potential COB errors to the
Association on October 1,2009, the claims were within the Medicare timely filing requirement
and could be filed with Medicare for coordination of benefits.
GeneraIJy, Medicare Part A covers 100 percent of inpatient care in hospitals, skilled nursing
facilities and hospice care. For each Medicare Benefit Period, there is a one-time deductible,
foHowed by a daily copayment beginning with the 61 st day. Beginning with the 91 st day of the
Medicare Benefit Period, Medicare Part A benefits may be exhausted, depending on whether the
patient elects to use their Lifetime Reserve Days. For the uncoordinated Medicare Part A claims,
we estimate that the FEHBP was overcharged for the total claim payment amounts. When
applicable, we reduced the questioned amount by the Medicare deductible andlor Medicare
copayment.
5
Medicare Part B pays 80 percent of most outpatient charges and professional claims after the
calendar year deductible has been met. Also, Medicare Part B covers a portion of inpatient
facility charges for ancillary services such as medical supplies, diagnostic tests, and clinical
laboratory services. Based on our experience, ancillary items accolint for approximately 30
percent of the total inpatient claim payment. Therefore, we estimate that the FEHBP was
overcharged 25 percent for these inpatient claim lines (0.30 x 0.80 = 0.24 ~ 25 percent).
We separated the uncoordinated claims into the following six categories based on the clinical
setting and whether Medicare Part A or B should have been the primary payer.
• Categories A and B consist of inpatient claims that should have been coordinated with
Medicare Part A. In a small number of instances where the BCBS plans indicated that
Medicare Part A benefits were exhausted, we reviewed the claims to determine whether there
were any inpatient services that were payable by Medicare Part B. For these claim lines, we
only questioned the services covered by Medicare Part B.
• Categories C and D include inpatient claims with ancillary items that should have been
coordinated with Medicare Part B. When we could not reasonably determine the actual
overcharge for a claim line, we questioned 25 percent of the amount paid for these inpatient
claim lines. In a small number of instances where the BeBS plans indicated that members
had Medicare Part B only and priced the claims according to the Omnibus Budget
Reconciliation Act of 1990 pricing guidelines, we reviewed the claims to determine whether
there were any inpatient services that were payable by Medicare Part B.
• Categories E ,and F include outpatient and professional claims where Medicare Part B should
have been the primary payer. When we could not reasonably determine the actual
overcharge for a claim line, we questioned 80 percent of the amount paid for these claim
lines. "
From-these six categories, we selected for review a sample of claim lines that potentially were
not coordinated with Medicare (See Schedule A for our sample selection methodology). Based
on our review, we identified 14,773 claim lines, totaling $8,726,668 in payments, where the
FEHBP paid as the primary insurer when Medicare was the primary insurer. We estimate that
the FEHBP was overcharged $7,417,178 for these claim line payments. 2
2 In addition, there were 7,128 claim lines, totaling $3,980,789 in payments, with COB errors that were identified
by the BCBS plans before the start of our audit (Le., October 1,2009) and adjusted on or before the plans'
response due date (Le., December 31, 2009) to our audit information request. Since these COB errors were
identified by the BCBS plans before the start of our audit and adjusted by the plans' response due date to our audit
request, we did not question these COB errors in the final report.
6
The following table details the six categories of questioned uncoordinated claim lines:
Claim Amount Amount
Category . Lines Paid Questioned
Category A: Medicare Part A Primary for
234 $4,296,846 $4,296,846
Inpatient (lIP) Facility
Category B: Medicare Part A Primary for
Skilled NursingIHome Health Care (HHC)/ 4,937 $901,072 $901,072
Hospice Care
Category C: Medicare Part B Primary for
Certain lIP Facility Charges 102 $858,328 $217,875
Category D: Medicare Part B Primary for
Skilled Nursing/HHClHospice Care 65 $280,882 $77,717
Category E: Medicare Part B Primary for
Outpatient (OIP) Facility and Professional 7,688 $1,548,594 $1,246,056
Category F: Medicare Part B Primary for OIP
Facility and Professional (Participation Code F) 1,747 $840,946 $677,612
Total 14,773 $8,726,668 $7,417,178
Our audit disclosed the following for the COB errors:
• For 11,205 (76 percent) ofthe claim lines questioned, there was no special information on
the FEP national claims system to identify Medicare as the primary payer when the claims
were paid. However, when the Medicare information was subsequently added to the FEP
national claims system, the BCBS plans did not review and/or adjust the patient's prior
claims back to the Medicare effective dates.
• For 3,568 (24 percent) of the claim lines questioned, there was special information present on
the FEP national claims system to identify Medicare as the primary payer when the claims
were paid. An incorrect Medicare Payment Disposition Code was used for 90 percent of
these claims. The Medicare Payment Disposition Code identifies Medicare's responsibility
for payment on each charge line of a claim. Per the FEP Administrative Manual, the
completion of this field is required on all claims for patients who are age 65 or older. We
found that codes E, F, and N were incorrectly used. An incorrect entry in this field causes
the claim line to be excluded from coordination of benefits with Medicare.
Ofthe $7,417,178 in questioned charges, $3,121,020 (42 percent) were identified by the BeBS
plans before the start of our audit (i.e., October 1, 2009). However, since the BCBS plans had
not completed the recovery process and/or adjusted these claims by the plans' response due date
(i.e., December 31,2009) to the audit information request, we are continuing to question these
COB errors. The remaining questioned charges of$4,296,158 (58 percent) were identified as a
result of our audit.
7
Association's Response:
In response to the draft audit report, the Association states, "After reviewing the OIG Draft Audit
Report and listing of potentially uncoordinated Medicare COB claims ... there was a total of
$4,610,894 ... of the questioned amount that was not coordinated with Medicare. Ofthis
amount, $2,520,614 in claim payments were made correctly when the claim was initially paid;
however, the claim was not adjusted upon subsequent processing of Medicare coverage
infonnation. To date Plans have received $1,238,256 in claim payment errors. Recovery has
been initiated on the remaining overpayments and the Plans will co]}tinue to pursue these
overpayments ...
To the extent that claim payment errors did occur or were not identified, these payments were
good faith erroneous benefit payments and fall within the context ofCS 1039, Section 2.3 (g).
Any benefit payments the Plans are unable to recover are allowable charges to the Program. In
addition, as good faith erroneous payments, lost investment income does not apply to the
payments identified in the finding.
Our analysis of payment errors indicated the following:
• Claims were processed incorrectly because the claims examiner failed to use the Medicare
Summary Notice (MSN) submitted by the provider to process the claim correctly. This
resulted in claims being paid as 'not covered by Medicare' when the MSN indicated that
Medicare had made payments on the claims.
• Claims were processed incorrectly because the claims examiner processed a claim submitted
by the provider that did not include the MSN which documents whether Medicare denied the
services. This also resulted in claims being paid as 'l1ot covered by Medicare' or 'provider
not covered by Medicare' when the MSN indicated that Medicare had made payments on the
claims.
• Claims that were provided to the Plans on either the retroactive enrollment reports, the FEP
Director's Office on-Hne Uncoordinated Medicare application or the FEP Operations Center
generated Ad-Hoc review reports were not worked before the start of the audit.
• The FEP Operations Center Ad-Hoc reports used to identify various uncoordinated Medicare
claims ... did not identify all of the appropriate claims for Plans to review and adjust.
In order to continue to improve the FEP Program's Medicare COB processing, FEP will continue
with our current COB Action Plan, with modification as necessary ...."
8
Regarding the contested amount, the Association states that "the claims were paid correctly as
discussed below:
• Claims totaling $2,805,889 are contested because recovery had been initiated in accordance
with CS 1039,2.3 (g) but not comph;ted or were uncollectible at the time the Draft Audit
Report response was provided. The majority of these claims were also paid correctly based
upon the Medicare information that was on file at the time of initial payment ....
Documentation to support the contested amounts and the initiation of overpayment recovery
before the audit has been provided."
DIG 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 $7,417,178. Based on the
Association's response and the BCBS plans' additional documentation, we determined that the
Association and/or plans agree with $4,296,158 and disagree with $3,121,020.
Although the Association agrees with $4,610,894 in its response, the BCBS plans'
documentation only supports concurrence with $4,296,158. For these uncontested COB errors,
we disagree with the Association's comments that the payments were good faith erroneous
benefit payments. When the Medicare information was subsequently added to the claims
system, the BCBS plans did not review and/or adjust the patients' prior claims back to the
Medicare effective dates. Since the BeBS plans did not take the proper action to immediately
correct the overpayments, we do not believe the BeBS plans acted in good faith to recover these
overpayments.
Based on the Association's response andlor the BeBS plans' documentation, $3,121,020 of the
contested amount represents COB errors where recovery efforts were initiated by the plans
before the audit started. However, the BCBS plans had not recovered these overpayments and
adjusted the claims by the plans' response due date to our audit information request. Since these
overpayments had not been recovered and returned to the FEHBP by the plans' response due
date, we are continuing to question this amount in the final report.
Recommendation 1
We recommend that the contracting officer disallow $7,417,178 for uncoordinated claim
payments and verify that the BCBS plans return all amounts recovered to the FEHBP.
Recommendation 2
Although the Association has developed a corrective action plan to reduce COB findings, we
recommend that the contracting officer instruct the Association to ensure that all BCBS plans are
following the corrective action plan.
9
Recommendation 3
We recommend that the contracting officer require the Association to ensure that the BCBS plans
have procedures in place to review an claims incurred back to the Medicare effective dates when
updated, other party liability infonnation is added to the FEP national claims system. When
Medicare eligibility is subsequently reported, the plans are expected to immediately determine if
already paid claims are affected and, if so, to initiate the recovery process within 30 days.
Recommendation 4
We recommend that the contracting officer require the Association to revise and correct the
procedures regarding the input of Medicare Payment Disposition Codes. We also recommend
that the software used for handling claims received electronically be reviewed to verify that it
creates the appropriate value for Medicare Payment Disposition Codes. These corrective actions
.should ensure that the FEP system will utilize the special infonnatlon when it is present to
properly coordinate these claims.
10
IV. MAJOR CONTRIBUTORS TO THIS REPORT
Experience-Rated Audits Group
Auditor-In-Charge
Auditor-In-Charge
Chief
Infonnation Systems Audits Group
Chief
Senior InfonnationTechnology Specialist
11
SCHEDULE A
V. SCHEDULES
Coordination of Benefits with Medicare
BlueCross and BlueShield Plans
Claims Reimbursed in 2008
UNIVERSE AND SAMPLE OF POTENTlALLY UNCOORDINATED CLAIM LINES
UNIVERSE SAMPLE
Estimated
Number of Number of Number of COB Universe Sa mple Selection. Number of Number of Number of Overcharge Potential
CATEGORY Claims Claim Lines Patients Total Payments Methodology Claims Claim Lines Patients Amounts Paid Percentage Overcharge
Category A' Medicare Part A Primary for
725 726 562 $11,220,055 all patients 725 726 562 $11,220,055 100% $11,220,055
lIP Facility
Category B: Medicare Part A Primary for patients with cumulative
4,523 14,525 1,473 $2,835,753 2,578 9,924 482 $2,467,972 100% $2,467,972
Skilled NursingiHHClHospice Care claims of$I,OOO or more
Category C: Medicare Part B Primary for patients with cumulative
179 180 152 $1,844,266 170 171 143 $1,825,968 25% $456,492
Certain IIP F acHity Charges claims of $2,500 or more
Category D' Medicare Part B Primary for patients with cumulatIve
268 413 170 $354,099 167 186 110 $777,718 25% $194,430
Skilled NursingIHHClHospice Care claims of $2,500 or mOTe
Category E: Medicare Part B Primary for patients with cumulative
13,966 25,598 3,767 $4,288,791 7,375 16,016 787 $3,513,361 80% $2,810,689
Outpatient Facility and Professional claims onl,OOD or more
Category F: Medicare Part B Primary for
patients with cumulative
Outpatient Facility and Professional 402,918 523,889 218,624 145,071,589 4,704 9,398 415 14,195,080 80% $3,356,064
claims of $5.000 or mOTe
(Participation Code F)
Totals 422,579 565,331 $66,114,553 15,719 36,421 $24,000,153 $20,505,701
SCHEDULEB
Page I of 3
Coordination of Benefits with Medicare
BlueCross and BlueShield Plans
Claims Reimbursed in 2008
SUMMARY OF QUESTIONED CHARGES
COB CategoTV A COB Categorv B COB Catel(orv C COB Category D COB Category E COB Category F ALL COB Categories
Plan Clatm Amount Claim Amount Claim Amount Claim Amount Claim Amount Amount Claim Amount
Site # Plan State Plan Name Lines Questioned Lines Questioned Lines Questioned Lines Questioned Lines Questioned Claim Lines Questioned Lines Questioned
003 NM: BCBS of New Me~ico 4 $24,458 I $77 0 SO 0 $0 75 $7,810 4 S2,054 84 S34,399
005 GA WellPoint BCBS of Georgia 4 $47,972 118 $11,771 1 $768 0 SO 193 $67,451 3 $122 324 $128,084
006 MD CareFirst BCBS 3 $47,494 113 $44,418 2 $2,828 0 $0 88 $16,301 19 $9,499 225 S120,540
007 LA BCBS of Louisiana 5 $5[ 976 105 $8,590 0 SO 0 SO [82 $17,208 115 $56,5[6 407 S134,290
009 AL BCBS of Alabama 5 S50,195 1 $5,490 8 S12,489 0 $0 165 S104,977 330 $56,576 509 $229,727
010 lD BC ofldaho Health Service 1 $2,262 19 $2,901 0 SO I S978 0 SO 0 SO 21 $6,141
011 MA BCBS of Massachusetts I S 19",059 42 S3,741 1 $914 0 $0 0 SO I S964 45 $24,678
"
012 NY BCBS of Westem New York 0 $0 0 SO a $0 0 SO 12 SI,649 0 $0 12 $1,649
013 PA Highmark BCBS 0 SO 0 so 0 SO 0 SO 175 S46,634 0 $0 175 S46,634
015 TN BCBS of Tennessee 0 SO 202 S33,547 0 $0 4 S7,102 175 $32,987 30 $2,759 411 $76,395
016 WY BCBS of Wyoming I $86,450 0 $0 0 $0 0 $0 0 SO 0 SO t S86,450
017 IL BCBS of lIIinois 18 $462,561 146 $14,754 2 $4,673 0 SO 251 $29,286 164 $28,491 581 $539,765
021 OH Ohio WellPoin! BCBS II S442,481 115 $48,539 7 $11,864 13 S17,356 !3 S7,517 36 $8,775 195 $536,532
024 SC BCBS of South Carolma $0 254 S39,064 0 $0 0 $0 33 $4,735 0 $0 287 $43,799
027 NH New Hampshire WellPoint BCBS
°0 $0 5 $10,154 0 $0 I $1,050 0 SO 0 $0 6 $11,204
028 \IT BCBS of Vermont 0 $0 0 SO 0 SO 0 SO 1 SI73 5 $3,154 6 $3,327
029 TX BCBS of Texas 9 $94,672 308 535599 10 $18,425 0 $0 725 SIII,531 83 $47,523 1,135 $307,750
030 CO Colorado WellPoint BCBS 8 $364,721 208 $19,672 2 $8,947 I S1,668 174 $65.125 6 512,188 399 S472,321
031 [A Wellmark BCBS ofIowa 6 $85354 0 SO 0 $0 0 SO 2 $2,686 0 SO 8 S88,040
032 MJ BCBS of MichiJ!an 3 SI,758 12 $1,918 3 $1,986 0 $0 2 SI,189 11 55,865 31 $12,716
033 NC BCSS of North Carolina 17 $226,657 583 $61,072 9 SI9,514 0 SO 592 $76,021 0 $0 1,201 5383,264
034 ND BCBS of Nonh Dakota 0 SO [ $4,654 0 $0 0 SO 0 $0 0 $0 1 54,654
036 PA C3£ital BC 2 58,292 0 $0 I $967 1 SI,197 12 5631 0 $0 16 SII,087
037 MT BCBS of Montana I S5,912 7 $1,159 0 SO 0 50 0 $0 I $81 9 $7,152
038 Hl BCBS of Hawaii 0 $0 0 SO 0 $0 0 SO 3 $243 0 SO 3 5243
039 IN Indian~ WellPOint BCSS I $13,424 14 li2,Dt 7 $8,659 4 55,117 135 557,241 9 $7,506 170 $94,078
040 MS BCBS of MississiDDi 2 $21,410 73 $68,759 a SO 0 SO 478 $30,336 11 $357 564 5120,862
SCHEDULEB
Page 2 of3
Coordination of Benefits with Medicare
BlueCross and BlueShield Plans
Claiins Reimbursed in 2008
'SUMMARY OF QUESTIONED CHARGES
COB Category A COB Category B COB Category C COB Category D COB Category E COB Category F ALL COB Categones
Plan Claim Amount Claim Amount Claim Amount Claim Amount Claim Amount Amount Claim Amount
Site # Plan State Plan Name Lines Questioned Lines Questioned Lines Questioned Lines Questioned Lines Questioned Claim Lines Questioned Lines Questioned
041 FL BCBS ofFlonda 52 $503,283 685 S125,124 5 S7,67 I 2 SI,555 897 $104025 397 $231,635 2,038 S973 ,293
042 MO BCBS of Kansas City I S935 4 $[[,899 I $2,432 1 $655 0 $0 34 $16,186 41 S32,107
044 AR Arkansas BCBS 0 SO 0 SO 0 SO 0 SO 82 $8422 0 SO 82 $8,422
045 KY Kentucky WellPoint BCBS 2 $12,621 63 $4544 2 $2,569 4 S4,975 25 S3,096 0 SO 96 $27,805
047 WI WellPoint BCBS United of Wisconsin 0 $0 0 $0 0 SO 7 S2,274 70 $11,400 3S S21,385 ][2 S35,060
048 NY Empire BCBS II 571,328 73 $8,287 0 SO 0 $0 920 S84,786 0 SO 1,004 $164,40]
049 NJ Horizon BCBS of New Jersev I $52,395 249 S33,l46 8 S7,971 0 $0 296 $47,909 0 SO 554 $141,421
050 CT Connecticut WellPoint BCBS I S937 6 $519 I SI,883 1 SI,050 0 SO 5 S268 [4 $4 657
052 CA WeliPoint BC of California 17 S889,649 167 S23,678 9 $38,428 2 S3,294 271. S61,013 16 $32,404 483 SI,048,466
053 NE BCBS of Nebraska I S66,394 0 SO 0 $0 0 $0 18 S5,263 0 SO 19 S71,657
054 WV Mountain State BCBS 0 SO 137 S17,399 0 $0 I :&439 0 $0 0 SO 138 $17,838
055 PA Independence BC 5 S61 195 85 S9,313 5 $35,794 5 $6,103 0 SO 0 $0 100 S]]2,404
056 AZ BCBS of Arizona 2 S27,637 18 S2607 0 SO 0 $0 77 $15,240 60 S28,506 157 $73,990
058 OR Regence BCBS of Oregon 3 S35,642 149 S26,i90 0 SO 4 S4,895 22 SI,674 0 $0 178 $68,401
059 ME Maine WellPoinl BCBS 0 $0 27 $3,570 0 SO 2 S6,405 6 $],674 24 S13,503 59 $25,152
060 RI BCBS of Rhode Island 0 SO 48 $)1,067 0 $0 0 SO 0 $0 0 SO 48 S11,067
061 NY Nevada WeliPoint BCBS 3 $103276 3 $2,835 0 $0 2 S2,250 39 $4,828 0 SO 47 SI13,189
062 VA Virginia Well Point BCBS 0 SO 48 $29,448 0 SO 4 S3,120 34 $23,583 234 S32,918 320 $89,069
066 UT Regence BCBS of Utah 2 S28,096 147 S14,146 2 $1,535 2 $478 II S794 0 SO 164 $45,049
067 CA BS of California 0 $0 0 $0 0 SO 0 $0 789 S60,271 6 $641 795 $60,912
069 WA Regence BS of Washington 0 $0 0 $0 0 SO 0 SO 16 $1,751 0 SO 16 SI,751
070 AI< BCSS of Alaska I S54,743 0 SO a $0 0 SO 14 S5,042 34 S18,646 49 S78,431
075 WA Premera BC 9 $143,944 3 S5,920 0 SO 0 SO 25 S4701 35 $l6,355 72 $170,920
076 MO WeliPoint BCBS of Missouri 4 $46,802 21 $38,365 14 $25,070 0 SO -197 $38,495 0 SO 236 $148,732
078 MN BCSS of Minnesota 5 S40,534 0 $0 0 SO 0 SO 77 S31,370 18 $2,983 100 $74,887
079 NY BCSS of Central NY 4 $32,718 0 $0 0 $0 0 SO 45 $3,240 0 SO 49 $35,958
082 KS BCBS of Kansas I S6,541 30 $),298 0 $0 0 $0 2 $318 0 SO J3 S10,157
083 OK BCBS of Oklahoma ·2 $25,134 15 $1,632 0 SO 0 SO 108 S21,323 3 S4,762 128 S52851
SCHEDULEB
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Coordination of Benefils with Medicare
BlueCross and BlueShield Plans
Claims Reimbursed in 2008
SUMMARY OF QUESTIONED CHARGES
COB Catel!:orv A COB Category B COB Catel!:Orv C COB Category 0 COB Category E COB Cate!!orv F ALL COB Categories
Plan Claim Amount Claim Ameum Claim Amount Claim Amount ClaIm Amount Amount Claim Amount
Site N Plan State Plan Name Lines Questioned Lmes Questioned Lines Questioned Lines Questioned Lines Ouestioned Claim Lines Questioned Lines Questioned
084 NY BCBS ofUtica-Waterto\.\lll 0 SO 7 $679 0 SO 0 $0 44 $3,053 0 SO 51 $,3,732
085 DC CareFirsl BCBS 5 S35,934 595 S104,882 I SI,222 3 S5,756 59 $9,173 17 $14,956 680 S171,923
088 PA BC of Northeastern Pennsylvania 0 $0 0 $0 1 $1,266 a SO 0 $0 0 SO I SI,266
089 DE BCBS of Delaware 0 SO 0 $0 0 $0 0 SO a SO 0 SO a so
092 DC CareFirst BCBS (Overseas) 0 SO 30 S4,515 0 SO 0 $0 52 SII,881 1 . S33 81 $16,429
Totals 234 $4,296,846 4,937 5901,071 102 5217,875 65 S77,717 7,688 51,246,056 1,747 S677.612 14,773 57,417,178
APPENDIX
BlueCross BlueSbieJd
Association
Au Association of ludependent
Blue Cross and Hlue Shield Plon
January 22,2010
Federal Employee Program
1310 GStreet, N.W.
roup Chief
Washington, D.C. 20005
udits Group
202.942.1000
Fax 202.942.1125
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
Tier VIII Global Coordination of Benefits
Audit Report #1A-99-00-10-009
(Report dated and received 10/1/09)
Dear
This is in response to the above referenced U.S. Office of Personnel
Management (OPM) Draft Audit Report concerning the Global
Coordination of Benefits Audit for claims paid in 2008. Our comments
concerning the findings in the report are as follows:
Ali. Coordination of Benefits with Medicare
Questioned Amount - $20,505,701
The OPM OIG submitted their sample of potential Medicate Coordination
of Benefits errors to the Blue Cross Blue Shield Association (SCSS) on
October 1,2009. The SCSS Association and/or the BCBS Plans were
requested to review these potential errors and provide responses by
January 15, 2010. These listings included claims incurred from October
1, 2007 through December 31, 2008 but reimbursed in 2008. aPM OIG
identified 565,331 claim lines totaling $66,114,553 in potential
uncoordinated claims. From this universe OPM OIG selected a sample of
36,421 claim lines with a potential overcharge of $20,505,701 to the
Federal Employee Health Benefit Program .
. Blue Cross Blue Shield Association Preliminary Response:
After reviewing the OIG Draft Audit Report and listing of potentially
uncoordinated Medicare COB claims totaling $20,505,701, there was a
total of $4,610,894 or 23 percent of the questioned amount that was not
coordinated with Medicare. Of this amount, $2,520,614 in claim payments
were made correctly when the claim was initially paid; however, the claim
~
Page 2 of4
was not adjusted upon subsequent processing of Medicare coverage
information. To date Plan's have recovered $1,238,256 in claim payment
errors. Recovery has been initiated on the remaining overpayments and
the Plans will continue to pursue these overpayments as required by CS
1039, Section 2.3 (g)(I).
To the extent that claim payment errors did occur or were not identified,
these payments were good faith erroneous benefit payments and fall
within the context of CS 1039, Section 2.3 (g). Any benefit payments the
Plans are unable to recover are allowable charges to the Program. In
addition, as good faith erroneous payments, lost investment income does
not apply to the payments identified in the finding.
Our analysis of payment errors indicated the following:
• Claims were processed incorrectly because the claims examiner failed
to use the Medicare Summary Notice (MSN) submitted by the provider
to process the claim correctly. This resulted in claims being paid as
"not covered by Medicare" when the MSN indicated that Medicare had
made payments on the claims.
• Claims were processed incorrectly because the claims examiner
processed a claim submitted by the provider that did not include the
MSN which documents whether Medicare denied the services. This
also resulted in claim,S being paid as "not covered by Medicare" or
"provider not covered by Medicare" when the MSN indicated that
Medicare had made payments on the claims.
• Claims that were provided to the Plans on either the retroactive
enrollment reports, the FEP Director's Office on-line Uncoordinated
Medicare application or the FEP Operations Center generated Ad-Hoc
review reports were not worked before the start of the audit.
• The FEP Operations Center Ad-Hoc reports used to identify various
uncoordinated Medicare claims (I.e., home health, skilled nursing,
claims with incurred dates prior to the start of the member's coverage
but in effect at the time the member was discharged or claims that
were coordinated as non-covered services) did not identify all of the
appropriate claims for Plans to review and adjust.
In order to continue to improve the FEP Program's Medicare COB
processing, FEP will continue with our current COB Action Plan, with
modification as necessary, to include the following:
• Additional monitoring of Medicare COB activity for the 15 Plans with
the highest COB Medicare audit finding.
• Modification of the FEP Administrative Manual to provide better
guidance on when the Medicare Participation "F" code should be used
I!IIIII
Page 3 of 4
as well as when certain home health, skilled nursing and hospice
claims should be coordinated. .
• Causal analysis of the confirmed overpayments to identify
to
enhancements improve the current Medicare edits.
• Request a re-evaluation by the FEP Administrative Policy Group of the
development of an edit that would "defer inpatient facility claims for
members with Medicare Part A when the Medicare Participation Code
"F" is used and the amount payable is above a specific dollar threshold
for all but Veterans Administration or Department of Defense Facility
claims.
• Evaluation of the requirement to have all Plans' claims from the
Uncoordinated Medicare on-line application reported as part of their
overpayment recovery claims inventory. This will allow closer
monitoring of Plans activity by the FEP Director's Office.
• Evaluation of a new deferral that would require all claims processed as
non-covered by Medicare or as a non-covered Medicare provider to be
reviewed to ensure that the claim is only processed when the provider
has included a MSN substantiating that the service was not covered or
that the provider is not a covered provider.
• Evaluation of the current Operations Center Ad Hoc reports to
determine where improvements can be made"
With respect to the remaining $15,866,781, our review indicated that the
claims were paid correctly as discussed below:
• Claims totaling $2,805,889 are contested be"cause recovery had been
initiated in accordance with CS1039, 2.3 (g) but not completed or were
uncollectible at the time the Draft Audit Report response was provided.
The majority of these claims were also paid correctly based upon the
Medicare "information that was on file at the time of initial payment.
• Claims totaling $3,660,482 are contested because the claims were
adjusted before the response to the Draft Audit Report was submitted.
• Claims totaling $222,903 were contested because Medicare A or B is
secondary or there were no Part B charges.
• Claims totaling $226,743 did not require coordination because the
Medicare benefits were exhausted at the time of payment or Medicare
was secondary.
• Claims totaling $4,151,274 were services not covered by Medicare or
Medicare denied these charges.
• Claims totaling $465,285 are contested because the services were
provided by a non Medicare approved provider.
• Claims totaling $4,184,302 are contested for "other" reasons, including
but not limited to the fact that claim was coordinated correctly when
originally paid and no adjustment was required.
Mr. John Hirschman
January 22, 2010
Page 4 of4
Documentation to support the contested amounts and the initiation of
overpayment recovery before the audit has been provided. In addition, we
have attached a schedule listed as Attachment A that shows the amount
questioned, contested, reason contested and amount recovered by each
Plan location. The Plans will continue to pursue the remaining amounts
as required by CS 1039, Section 2.3 (g)(I). Any benefit payments the Plan
is unable to recover are allowable charges to the Program. In addition, as
good faith erroneous payments, lost investment income does not apply to
the payments identified in the finding.
We appreciate the opportunity to provide our response to this Draft Audit
Report and would request that our comments be included in their entirety
as part of the Final Audit Report.
Sincerely,
Attachment
cc:
Audit on Global Coordination of Benefits For Bluecross and Blueshield Plan Contract Year 2008
Published by the Office of Personnel Management, Office of Inspector General on 2010-03-31.
Below is a raw (and likely hideous) rendition of the original report. (PDF)