oversight

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)

                                                     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




                                                          --CAUTION-­

This audit rep<lrt has bfen distributed to Federal officials who are responsible for the administratioD of the audited program. This audit
rcport may contaiD proprietary data whkh is protected by Fedual law (18 U.S.c. 1905). Therdore, while this audit report is available
under Ihe Jireedom of Information Act and made available 10 Ihe public on the OIG webpage, caution needs to be exercised before
rdeasing the report to the genual public as it may contain proprietary information that was redacted from the publicty 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 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
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                                                                                            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
                                                                                                                                                                                                           Page 3 ofJ
                                                                                          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: