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 BLUE SHIELD PLANS
Report No. lA-99-00-10-055
Date: June 8 , 2011
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UNITED STATES OFFICE OF PERSONNEL MANAGEMENT
Washington, DC 20415
Officr of the
Inspector Geneml
AUDIT REPORT
Federal Emp loyees Health Benefits Program
Service Benefit Plan Conlract CS 1039
BlueCross BlueShield Association
Plan Code 10
Global Coordination of Benefits
BlueCross and BlueShield Plans
REPORT NO. IA-99-00-IO-055 DATE : J une 8 . 2011
Assistant Inspector General
for Audits
UNITED STATES OFFICE OF PERSONNEL MANAGEMENT
Washmgton. DC 204J 5
Office of the
Inspet:lOr General
.E XECUTIVE SUMMARY
Federal Employees Health Benefits Program
Service Benefil Plan Contract CS 1039
BlueCross BlueShieid Association
Plan Code 10
Global Coordination of Benefits
BlueCross and BlueShield Plans
REPORT NO. IA-99-00-IO-055 DATE: June B, 2011
This final audit report on the Federal Employees Hea lth Benefits Program (FEHBP) operations
at all BlucCross and BlueShie1d (BeSS) plans questions $7,742.389 in health benefit charges.
The BlueCross BlueShield Association (Association) and/or BeSS plans agreed with $3,529,991
and disagreed with $4,2 12,398 of the questioned charges.
OUf limited scope audit was conducted in accordance with Govenunent Auditing Standards. The
audit covers health benefit payments from January 1, 2009 through May 31, 20 I 0 as reported in
the Annual Accounting Statements. Specifically, we identified claims incurred from October 1,
2008 through May 31, 2010 that were reimbursed from January I, 2009 through May 31, 2010
and potentially not coordinated with Medicare. We detennined that the BeSS plans did not
properly coord inate 15,409 claim line payments with Medicare as required by the FEHBP
contracl. As a result, the FEHBP was ove rcharged $7,742,389. When we notified the
Association of these errors on July 1,2010, the claims were within the Medicare timely filing
requirement and could be filed with Medicare for coord ination 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 ...........................................................11
V. SCHEDULES
A. UNIVERSE AND SAMPLE OF POTENTIALLY UNCOORDINATED CLAIM
LINES
B. SUMMARY OF QUESTIONED CHARGES
APPENDIX (BlueCross BlueShield Association reply, dated September 30, 2010 and
received on October 28, 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 Healthcare and Insurance
Office has overall responsibility for administration of the FEHBP. The provisions of the FEHB
Act are implemented by OPM through regulations, which are codified in Title 5, Chapter 1, Part
890 of the Code of Federal Regulations (CFR). Health insurance coverage is made available
through contracts with various health insurance carriers.
The BlueCross BlueShield Association (Association), on behalf of participating BCBS plans, has
entered into a Government-wide Service Benefit Plan contract (CS 1039) with OPM to provide a
health benefit plan authorized by the FEHB Act. The Association delegates authority to
participating local BCBS plans throughout the United States to process the health benefit claims
of its federal subscribers. There are approximately 63 local BCBS plans participating in the
FEHBP.
The Association has established a Federal Employee Program (FEP 1) Director’s Office in
Washington, D.C. to provide centralized management for the Service Benefit Plan. The FEP
Director’s Office coordinates the administration of the contract with the Association, member
BCBS plans, and OPM.
The Association has also established an FEP Operations Center. The activities of the FEP
Operations Center are performed by CareFirst 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 of FEHBP claims (using computerized system edits), maintaining a history file of all
FEHBP claims, and maintaining an accounting of all program funds.
Compliance with laws and regulations applicable to the FEHBP is the responsibility of the
management for the Association and each BCBS plan. Also, management of each BCBS plan is
responsible for establishing and maintaining a system of internal controls.
1
Throughout this report, when we refer to "FEP" we are referring to the Service Benefit Plan lines of business at the
Plan. When we refer to the "FEHBP" we are referring to the program that provides health benefits to federal
employees.
1
Findings from our previous global coordination of benefits audit of all BCBS plans (Report No.
1A-99-00-10-009, dated March 31, 2010) for contract year 2008 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 July 1, 2010. The Association’s comments offered in response to the draft
report were considered in preparing our final report and are included as the Appendix to this
report. Also, additional documentation provided by the Association and BCBS plans on various
dates through May 11, 2011 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 performance audit in accordance with generally accepted
government auditing standards. Those standards require that we plan and perform the audit to
obtain sufficient and appropriate evidence to provide a reasonable basis for our findings and
conclusions based on our audit objective. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our audit objective.
The audit covered health benefit payments from January 1, 2009 through May 31, 2010 as
reported in the Annual Accounting Statements. Specifically, we identified claims incurred from
October 1, 2008 through May 31, 2010 that were reimbursed from January 1, 2009 through
May 31, 2010 and potentially not coordinated with Medicare. 2 Based on our claim error reports,
we identified 959,979 claim lines, totaling $99,293,156 in payments, that potentially were not
coordinated with Medicare. From this universe, we selected and reviewed 77,652 claim lines,
totaling $33,452,198 in payments, for coordination of benefits with Medicare. When we notified
the Association of these potential errors on July 1, 2010, 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 planning and conducting our
auditing procedures. Our audit approach consisted mainly of substantive tests of transactions
and not tests of controls. Therefore, we do not express an opinion on each BCBS plan’s system
of internal controls taken as a whole.
We also conducted tests to determine whether the BCBS plans had complied with the contract
and the laws and regulations governing the FEHBP as they relate to coordination of benefits.
The results of our tests indicate that, with respect to the items tested, the BCBS plans did not
fully comply with the provisions of the contract relative to 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.
2
Our initial audit scope included claims incurred on or after October 1, 2008 that were reimbursed in 2009 and
potentially not coordinated with Medicare. However, due to a recent change with the Medicare timely filing
requirement, we changed our audit scope to include claims incurred on or after October 1, 2008 that were reimbursed
from January 1, 2009 through May 31, 2010 and potentially not coordinated with Medicare. Starting in 2010, claims
with incurred dates of service on or after January 1, 2010 that are received by Medicare more than one calendar year
after the date of service could be denied by Medicare as being past the timely filing requirement.
3
In conducting our audit, we relied to varying degrees on computer-generated data provided by
the FEP Director’s Office, the FEP Operations Center, and the BCBS plans. Due to time
constraints, we did not verify the reliability of the data generated by the various information
systems involved. However, while utilizing the computer-generated data during our audit
testing, nothing came to our attention to cause us to doubt its reliability. We believe that the data
was sufficient to achieve our audit objective.
The audit was performed at our offices in Washington, D.C.; Cranberry Township, Pennsylvania;
and Jacksonville, Florida from December 2010 through May 2011.
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 77,652 claim lines, totaling $33,452,198 in payments, from a universe of 959,979 claim
lines, totaling $99,293,156 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 determine 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 $7,742,389
The BCBS plans did not properly coordinate 15,409 claim line payments, totaling $9,661,910,
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 $7,742,389 for these claim lines.
The 2010 BlueCross and BlueShield Service Benefit Plan brochure, page 121, Primary Payer
Chart, illustrates when Medicare is the primary payer. In addition, page 24 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 determined 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, section 2.3(g) states, “If the Carrier or OPM determines
that a Member’s claim has been paid in error for any reason . . . the Carrier shall make a prompt
and diligent effort to recover the erroneous payment . . . .”
For claims incurred from October 1, 2008 through May 31, 2010 and reimbursed from January 1,
2009 through May 31, 2010, we performed a computer search and identified 959,979 claim lines,
totaling $99,293,156 in payments, that potentially were not coordinated with Medicare. From
this universe, we selected for review a sample of 77,652 claim lines, totaling $33,452,198 in
payments, to determine 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 July 1, 2010, the claims were within the Medicare timely filing
requirement and could be filed with Medicare for coordination of benefits.
Generally, Medicare Part A pays all covered costs for inpatient care in hospitals, skilled nursing
facilities and hospice care, except for deductibles and coinsurance. For each Medicare Benefit
Period, there is a one-time deductible, followed by a daily copayment beginning with the 61st
day. Beginning with the 91st 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 and/or 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 account 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 BCBS 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 15,409 claim lines, totaling $9,661,910 in payments, where the
FEHBP paid as the primary insurer when Medicare was the primary insurer. We estimate that
the FEHBP was overcharged $7,742,389 for these claim line payments. 3
3
In addition, there were 9,250 claim lines, totaling $5,212,089 in payments, with COB errors that were identified
by the BCBS plans before the start of our audit (i.e., July 1, 2010) and adjusted by the Association’s response due
date (i.e., September 30, 2010) to the draft report. Since these COB errors were identified by the BCBS plans
before the start of our audit and adjusted by the Association’s response due date to the draft report, 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
205 $3,578,502 $3,578,502
Inpatient (I/P) Facility
Category B: Medicare Part A Primary for
Skilled Nursing/Home Health Care (HHC)/ 3,362 $723,330 $723,330
Hospice Care
Category C: Medicare Part B Primary for
Certain I/P Facility Charges 125 $1,624,895 $571,380
Category D: Medicare Part B Primary for
Skilled Nursing/HHC/Hospice Care 160 $540,606 $240,833
Category E: Medicare Part B Primary for
Outpatient (O/P) Facility and Professional 9,591 $2,217,746 $1,801,172
Category F: Medicare Part B Primary for O/P
Facility and Professional (Participation Code F) 1,966 $976,831 $827,172
Total 15,409 $9,661,910 $7,742,389
Our audit disclosed the following for the COB errors:
• For 11,013 (71 percent) of the 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 4,396 (29 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 74 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.
Of the $7,742,389 in questioned charges, $3,235,975 (42 percent) was identified by the BCBS
plans before the start of our audit (i.e., July 1, 2010). However, since the BCBS plans had not
completed the recovery process and/or adjusted these claims by the Association’s response due
date (i.e., September 30, 2010) to the draft report, we are continuing to question these COB
errors. The remaining questioned charges of $4,506,414 (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 listing of
potentially uncoordinated Medicare COB claims . . . BCBSA identified $3,220,991 . . . of the
questioned amount that was not coordinated with Medicare. For the time period covered by the
audit, FEP reported Medicare savings in excess of $25 billion. To date Plans have recovered
$1,343,596 in claim payment errors. Recovery has been initiated on the remaining
overpayments and the Plans will continue to pursue these overpayments . . .
Of the $3,220,991 in claim payments that were not coordinated with Medicare, we noted the
following:
• Claims processors incorrectly overrode the Medicare deferral, missed the MSN when
processing the claim, claims system did not defer the claim for review or other various
reasons for claims totaling $2,762,293.
• Claims were not identified by the FEP Claims System retro-active enrollment reports,
Uncoordinated Medicare Application or FEP ad-hoc reports for Plan review for claims
totaling $286,682; and
• Claims were identified by the FEP Claims System retro-active enrollment reports,
Uncoordinated Medicare Application or FEP ad-hoc reports before the audit began but were
not worked by the Plan for claims totaling $547,181.
To reduce the number and frequency of uncoordinated Medicare claims, BCBSA has
implemented an action plan . . .
To timely identify uncoordinated Medicare claims before the new 12 month Medicare timely
filing limit has passed, FEP is also implementing the following:
• Increase the frequency of the Uncoordinated Medicare Application update from quarterly to
monthly by 4th quarter 2010;
• Issue ad hoc reports to Plans on a quarterly basis that identify claims that are not included in
the Uncoordinated Medicare Application;
• Update the Uncoordinated Medicare Application for claims currently included in ad hoc
reports by 2nd quarter 2011;
• Issued an Audit Alert informing the Plan of the change and the need to work with their
providers to ensure that claims are timely submitted to Medicare; and
• Evaluate whether or not the quarterly Medicare match process can be moved to monthly from
quarterly by 1st quarter 2011.
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 is not applicable to these
confirmed overpayments.
8
We contested the remaining . . . questioned uncoordinated Medicare claims as a result of the
following:
• Claims totaling $5,168,042 were either adjusted before the audit started or recovery was
initiated before the audit started and adjusted after the audit;
• Recovery was initiated before the audit started on claims totaling $2,991,200, but the
recovery process has not been completed; . . .
• Claims totaling $491,675 were identified by the FEP Uncoordinated Medicare Application
on July 7, 2010 and would have been adjusted by Plans before the Medicare timely filing
limit without the OIG audit; . . .
Documentation to support the contested amounts and the initiation of overpayment recovery
before the audit has been provided.”
OIG 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 $7,742,389. If COB errors
were identified by the BCBS plans before the start of our audit (i.e., July 1, 2010) and adjusted
by the Association’s response due date to the draft report (i.e., September 30, 2010), we did not
question these COB errors in the final report. Based on the Association’s response and the
BCBS plans’ additional documentation, we determined that the Association and/or plans agree
with $3,529,991 and disagree with $4,212,398 of the revised questioned charges.
Although the Association agrees with $3,220,991 in its response, the BCBS plans’ documentation
supports concurrence with $3,529,991. 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
BCBS plans did not take the proper action to immediately correct the overpayments, we do not
believe the BCBS plans acted in good faith to recover these overpayments.
Based on the Association’s response and/or the BCBS plans’ documentation, the contested
amount of $4,212,398 represents the following items:
• $3,235,975 of the contested amount represents COB errors where recovery efforts were
initiated by the BCBS plans before the audit started. However, the plans had not recovered
these overpayments and adjusted the claims by the Association’s response due date to the draft
report. Since these overpayments had not been recovered and returned to the FEHBP by the
Association’s response due date, we are continuing to question this amount in the final report.
• $941,968 of the contested amount represents COB errors that were identified by the FEP
Operations Center’s “FEP Uncoordinated Medicare Application” on July 7, 2010 and would
have been adjusted before the Medicare timely filing limit without the OIG audit. Since
these COB errors were identified after the audit started, we are continuing to question this
amount in the final report.
9
• $29,399 of the contested amount represents COB errors where recovery efforts were initiated
by the plans after the audit started even though the plans’ responses state that the recoveries
were initiated prior. Since the recoveries were initiated after the audit started and the
overpayments had not been recovered and returned to the FEHBP by the Association’s
response due date, we are continuing to question this amount in the final report.
• $5,056 of the contested amount represents three non-COB errors where the BCBS of
Minnesota plan agrees that these claims were duplicate payments but disagrees with the
finding because the recovery efforts were initiated prior to the start of the audit. However,
we verified that these recoveries were actually initiated after the audit started. Since the
recoveries were initiated after the audit started and the overpayments had not been recovered
and returned to the FEHBP by the Association’s response due date, we are continuing to
question this amount in the final report.
Recommendation 1
We recommend that the contracting officer disallow $7,742,389 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.
Recommendation 3
We recommend that the contracting officer require the Association to ensure that the BCBS plans
have procedures in place to review all claims incurred back to the Medicare effective dates when
updated, other party liability information is added to the FEP national claims system. When
Medicare eligibility is subsequently reported, the plans are expected to immediately determine if
previously 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 information 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
, Senior Team Leader
Information Systems Audits Group
, Chief
, Senior Information Technology Specialist
11
SCHEDULE A
V. SCHEDULES
Coordination of Benefits with Medicare
BlueCross and BlueShield Plans
Claims Reimbursed from January 1, 2009 through May 31, 2010
UNIVERSE AND SAMPLE OF POTENTIALLY UNCOORDINATED CLAIM LINES
UNIVERSE SAMPLE
Estimated
Number of Number of Number of COB Universe Sample 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
800 804 590 $10,745,414 all patients 800 804 590 $10,745,414 100% $10,745,414
Inpatient Facility
Category B: Medicare Part A Primary for patients with cumulative
7,119 22,898 2,062 $4,278,006 3,599 14,362 524 $3,495,949 100% $3,495,949
Skilled Nursing/HHC/Hospice Care claims of $1,500 or more
Category C: Medicare Part B Primary for
280 280 261 $3,342,044 all patients 280 280 261 $3,342,044 25% $835,511
Certain Inpatient Facility Charges
Category D: Medicare Part B Primary for patients with cumulative
295 531 190 $1,060,807 228 397 141 $1,033,123 25% $258,281
Skilled Nursing/HHC/Hospice Care claims of $1,500 or more
Category E: Medicare Part B Primary for patients with cumulative
18,561 36,431 5,079 $6,976,879 9,161 21,727 794 $5,355,601 80% $4,284,481
Outpatient Facility and Professional claims of $1,500 or more
Category F: Medicare Part B Primary for
patients with cumulative
Outpatient Facility and Professional 602,180 899,035 273,577 $72,890,004 15,486 40,082 896 $9,480,067 80% $7,584,054
claims of $5,000 or more
(Participation Code F)
Totals 629,235 959,979 $99,293,156 29,554 77,652 $33,452,198 $27,203,689
SCHEDULE B
Page 1 of 2
Coordination of Benefits with Medicare
BlueCross and BlueShield Plans
Claims Reimbursed from January 1, 2009 through May 31, 2010
SUMMARY OF QUESTIONED CHARGES
COB Category A COB Category B COB Category C COB Category D COB Category E COB Category F ALL COB Categories
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
003 NM BCBS of New Mexico 2 $6,189 0 $0 0 $0 0 $0 3 $761 0 $0 5 $6,950
005 GA WellPoint BCBS of Georgia 12 $174,378 36 $13,748 15 $82,339 0 $0 633 $162,081 86 $17,991 782 $450,537
006 MD CareFirst BCBS 4 $69,989 49 $11,152 8 $44,453 0 $0 121 $45,483 10 $7,320 192 $178,397
007 LA BCBS of Louisiana 5 $35,894 0 $0 0 $0 0 $0 64 $19,475 13 $10,235 82 $65,604
009 AL BCBS of Alabama 1 $13,100 0 $0 3 $6,194 0 $0 38 $61,410 78 $4,660 120 $85,364
010 ID BC of Idaho Health Service 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0
011 MA BCBS of Massachusetts 0 $0 98 $8,244 2 $15,359 0 $0 133 $16,333 1 $4,624 234 $44,560
012 NY BCBS of Western New York 0 $0 0 $0 1 $4,280 0 $0 0 $0 0 $0 1 $4,280
013 PA Highmark BCBS 0 $0 0 $0 1 $130 0 $0 26 $3,387 0 $0 27 $3,517
015 TN BCBS of Tennessee 4 $133,839 61 $15,397 1 $2,393 0 $0 322 $107,468 0 $0 388 $259,097
016 WY BCBS of Wyoming 0 $0 0 $0 0 $0 0 $0 28 $13,759 0 $0 28 $13,759
017 IL BCBS of Illinois 9 $185,004 160 $16,120 0 $0 0 $0 499 $122,057 163 $25,989 831 $349,170
021 OH WellPoint BCBS of Ohio 9 $154,302 182 $47,874 4 $11,814 23 $52,162 65 $12,034 425 $74,693 708 $352,879
024 SC BCBS of South Carolina 4 $35,899 0 $0 2 $6,130 1 $1,098 27 $10,565 0 $0 34 $53,692
027 NH WellPoint BCBS of New Hampshire 3 $30,662 0 $0 2 $7,223 9 $52,145 1 $7 0 $0 15 $90,037
028 VT BCBS of Vermont 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0
029 TX BCBS of Texas 23 $630,755 158 $13,759 17 $44,087 23 $418 1,854 $200,774 143 $33,156 2,218 $922,949
030 CO WellPoint BCBS of Colorado 6 $59,234 129 $31,123 2 $4,438 9 $11,460 104 $13,298 7 $4,612 257 $124,165
031 IA Wellmark BCBS of Iowa 0 $0 0 $0 0 $0 1 $1,521 69 $4,994 10 $166 80 $6,681
032 MI BCBS of Michigan 4 $100,776 122 $17,865 5 $10,560 14 $488 2 $1,400 5 $4,285 152 $135,374
033 NC BCBS of North Carolina 5 $70,233 423 $54,271 3 $3,657 0 $0 44 $3,751 108 $23,335 583 $155,247
034 ND BCBS of North Dakota 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0
036 PA Capital BC 3 $24,779 39 $4,194 2 $4,571 0 $0 0 $0 0 $0 44 $33,544
037 MT BCBS of Montana 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0
038 HI BCBS of Hawaii 0 $0 0 $0 1 $2,446 0 $0 0 $0 0 $0 1 $2,446
039 IN WellPoint BCBS of Indiana 2 $24,611 67 $30,513 4 $61,001 3 $19,804 106 $32,867 2 $542 184 $169,338
040 MS BCBS of Mississippi 1 $61,477 0 $0 1 $4,197 6 $3,383 131 $71,536 22 $12,518 161 $153,111
041 FL BCBS of Florida 6 $57,322 89 $30,277 0 $0 1 $618 803 $74,776 318 $332,885 1,217 $495,878
042 MO BCBS of Kansas City 1 $7,321 0 $0 2 $439 0 $0 104 $84,311 4 $8,305 111 $100,376
043 ID Regence BS of Idaho 0 $0 0 $0 0 $0 0 $0 5 $250 0 $0 5 $250
044 AR Arkansas BCBS 0 $0 0 $0 0 $0 0 $0 0 $0 1 $192 1 $192
045 KY WellPoint BCBS of Kentucky 4 $132,200 93 $7,835 0 $0 8 $10,688 0 $0 9 $7,458 114 $158,181
047 WI WellPoint BCBS United of Wisconsin 2 $74,912 66 $6,689 8 $56,795 3 $3,578 13 $3,013 86 $26,876 178 $171,863
048 NY Empire BCBS 14 $250,579 89 $9,886 9 $43,207 0 $0 769 $97,934 6 $6,463 887 $408,069
SCHEDULE B
Coordination of Benefits with Medicare Page 2 of 2
BlueCross and BlueShield Plans
Claims Reimbursed from January 1, 2009 through May 31, 2010
SUMMARY OF QUESTIONED CHARGES
COB Category A COB Category B COB Category C COB Category D COB Category E COB Category F ALL COB Categories
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
049 NJ Horizon BCBS of New Jersey 7 $56,974 273 $30,970 3 $8,874 14 $15,032 409 $104,466 19 $16,342 725 $232,658
050 CT WellPoint BCBS of Connecticut 0 $0 64 $14,825 1 $13,570 0 $0 49 $2,594 1 $114 115 $31,103
052 CA WellPoint BC of California 29 $443,162 155 $91,243 5 $27,726 4 $4,753 527 $131,230 40 $44,303 760 $742,417
053 NE BCBS of Nebraska 2 $4,126 0 $0 0 $0 0 $0 146 $13,280 11 $849 159 $18,255
054 WV Mountain State BCBS 0 $0 57 $6,446 0 $0 0 $0 17 $1,681 0 $0 74 $8,127
055 PA Independence BC 2 $79,923 72 $8,102 4 $40,198 9 $20,102 55 $16,627 0 $0 142 $164,952
056 AZ BCBS of Arizona 2 $14,253 127 $14,069 3 $2,611 4 $5,661 139 $11,162 105 $15,305 380 $63,061
058 OR Regence BCBS of Oregon 0 $0 103 $13,202 0 $0 8 $6,378 129 $11,665 0 $0 240 $31,245
059 ME WellPoint BCBS of Maine 0 $0 32 $6,018 0 $0 8 $8,355 22 $4,840 4 $721 66 $19,934
060 RI BCBS of Rhode Island 0 $0 19 $16,417 0 $0 0 $0 0 $0 0 $0 19 $16,417
061 NV WellPoint BCBS of Nevada 3 $157,318 0 $0 0 $0 2 $2,375 65 $24,011 5 $509 75 $184,213
062 VA WellPoint BCBS of Virginia 3 $60,363 55 $16,121 2 $28,340 2 $8,450 0 $0 181 $56,429 243 $169,703
064 NY Excellus BCBS Rochester 0 $0 0 $0 1 $2,195 0 $0 0 $0 0 $0 1 $2,195
066 UT Regence BCBS of Utah 0 $0 151 $28,558 0 $0 0 $0 20 $5,674 0 $0 171 $34,232
067 CA BS of California 0 $0 0 $0 0 $0 0 $0 651 $49,136 1 $48 652 $49,184
069 WA Regence BS 0 $0 0 $0 0 $0 0 $0 34 $1,991 1 $5 35 $1,996
070 AK BCBS of Alaska 0 $0 0 $0 0 $0 0 $0 100 $27,129 0 $0 100 $27,129
074 SD Wellmark BCBS of South Dakota 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0
075 WA Premera BC 5 $40,591 9 $20,654 3 $7,154 0 $0 100 $11,304 2 $59 119 $79,762
076 MO WellPoint BCBS of Missouri 3 $12,921 2 $6,182 3 $4,171 8 $12,365 52 $9,247 10 $5,641 78 $50,527
078 MN BCBS of Minnesota 1 $14,115 0 $0 0 $0 0 $0 6 $10,169 19 $25,548 26 $49,832
079 NY Excellus BCBS of Central New York 0 $0 0 $0 0 $0 0 $0 16 $1,696 1 $173 17 $1,869
082 KS BCBS of Kansas 0 $0 16 $1,208 0 $0 0 $0 0 $0 0 $0 16 $1,208
083 OK BCBS of Oklahoma 7 $61,481 0 $0 2 $1,677 0 $0 656 $99,948 30 $22,122 695 $185,228
084 NY Excellus BCBS of Utica-Watertown 0 $0 0 $0 0 $0 0 $0 168 $16,016 5 $3,062 173 $19,078
085 DC CareFirst BCBS 16 $293,982 366 $130,367 4 $18,427 0 $0 215 $70,605 34 $29,636 635 $543,017
088 PA BC of Northeastern Pennsylvania 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0
089 DE BCBS of Delaware 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0
092 DC CareFirst BCBS (Overseas) 1 $5,840 0 $0 1 $723 0 $0 51 $12,977 0 $0 53 $19,540
Totals 205 $3,578,502 3,362 $723,330 125 $571,380 160 $240,833 9,591 $1,801,172 1,966 $827,172 15,409 $7,742,389
APPENDIX
BlueOoss 81ueShieid
Association
AD As$.odaIiODof II1dependenl
Btue CI-oM .nd lltu., Sl:lleid Plan.
Federal Employee Program
Seplember 30, 2010 1:1 10 G Street, N.W.
Washington, D.C. 20005
202.942.1000
I Fax 202.942.1125
Experience-Rated Audits Grou p
Office of the Inspector Genera l
U.S. Office of Personnel Management
1900 E Slreel, Room 6400
Washington , DC 20415-1100
Reference : OPM DRAFT AUDIT REPORT
Tier X Global Coordination of Benefits
Audit Report #1 A -99-00 -1 0-055
This is in response to the above· referenced U.S. Office of Personnel Management
(OPM) Draft A udit Report concerning the Global Coordination of Benefits Aud it for
claims paid (fom January 1, 2009 throug h May 31, 2010. Our comments concerni ng
the findings in the report are as follows :
A11 . Coordination of Benefits with Medicare
Questioned Amount $27,2 03,,689
The OP M OIG submitted their sample of potential Medicare Coord ination of Benefits
errors to the Blue Cross Blue Sh ield Association (BCSS) on July 1, 2010. The
BCSS Assoc iation andfor the BCSS Plans were requested to review these potential
errors and provide response s by September 30,2010. These listings includ ed ctaims
incurred on or after October 1, 2008 and reimbu rsed from January 1, 2009 throug h
May 31,2010. OPM OIG identified 959 ,979 claim lines. tota ling $99,293 ,156 in
payme nts , which potentially were not coordinated with Med icare. From th is universe,
OPM OIG selected for re ....iew a sample of 77 ,652 claim lines, totaling $33,452 ,198 in
payments with a potential overch arge of $27 ,203,689 to the Federa l Emp loyee
Health Benefit Prog ram .
Blue Cross Blue Shield Association (BCBSA) Response :
After reviewing the DIG listing of potentially uncoordinated Medicare COB claims
totaling $27,203 ,689, BeBSA identified $3,220,991 or 11 .8 percent of the questioned
amount that was not coord inated with Medicare. For the time period covered by the
Page 2
audit, FEP reported Medicare savings in excess of $25 billion . To date Plans have
recovered $1 ,343,596 in claim payment errors. Recovery has been initiated on the
remaining overpayments and the Plans w ill continue to pursue these overpayments
as requ ired by CS 1039, Section 2.3 (g)(l).
Of the $3,220,991 in claim payments that were not coordinated with Medicare, we
noted the following:
• Claims processors incorrectly overrode the Medicare deferral, missed the MSN
when processing the claim, claims system did not defer the claim for review or
other various reasons for claims totaling $2,762,293 .
• Claims were not identifie d by the FEP Claims System retro-active enroUment
reports, Uncoordinated Medicare Application or FE? ad-hoc reports for Plan
review for claims tota ling $286,682; and
• Claims were identified by the FEP Claims System retro·active enrottment reports ,
Uncoordinated Medicare App lication or FEP ad-hoc reports before the audit
began but were not worked by the Plan for claims totaling $547 ,181,
To reduce the number and frequency of uncoordinated Medicare claims, SCBSA
has implemented an action plan that includes the following:
• Monitoring of the top 10 Plans that represent 60 percent of the uncoordinated
claims in this audit. Although some of these Plans have shown significant
improvement over the years, add itional focus will reduce the number of
uncoordinated claims in future audits;
• Causal analys is of Medicare COB errors identified during the OIG audits and
through FEP generated reports to im plement tra ining and system edits as
needed;
• Continuous monitoring and eva luation of the Medicare COB retro-active
enrollment reports to ensure that the appropriate claims are being identified for
adjustment by Plans;
• Continuous evaluation of our current COB monitoring report logic to ensure that
uncoordinated Medicare claims are time ly identified;
• Continuous mon itoring of Plans' completion of the Uncoordinated Medicare
app lication to ensure that uncoordinated Medicare claims are addressed timely ;
• Continuous review of Plan ~ disagree ~ responses to the Uncoordinated Medicare
application to ensu re that the Plans respond correctly;
• Implementation of an edit to defer all facility claims with Medicare S Revenue
Codes where the member does not have Part A but has Part S, by fourth quarter
2010. The FEP claims system currently only identifies the claim as a Wpotential
claim" that can be coord inated with Medicare Part S;
• Modification of FEP claims system edits for home health, hospice and skill
nursing facility claims to defer the claim based upon whether the member has
Page 3
Medicare, the place of service and the revenue code instead of the type of bill, by
fourth quarter 2010;
• Modification of the FEP clai ms system to requ ire Plans to specifically indicate
that facility cla ims not coo rd inated with Medicare Part A are supported by a
Medicare Denial Notice; and
• Updating of the FEP Administrative Manual 10 cla rify Medicare coordination
requirements and the use of Medicare Payment Disposition Code ~F", which
bypasses the FEP Claims System Medicare deferrals.
To timely identify uncoordina ted Medicare claims before the new 12 month Medicare
timely filing limit has passed, FEP is also implementing the following :
• Increase the frequency of the Uncoordinated Medicare Application update from
quarterly to monthly by 4th quarter 2010:
• Issue ad hoc reports to Plans on a quarterly basis thai identify claims that are not
included in the Uncoordinated Med icare Application;
• Update the Uncoordinated Medicare Application for claims currently included in
ad hoc reports by 2nd quarter 2011:
• Issued an· Audit Alert informing the Plan of the change and the need to work with
their providers to ensure that claims are timely submitted to Medicare; and
• Eva luate whether or not the quarterly Medicare match process can be moved to
monthly from quarterly by 1S1 quarter 2011 ;
To the extent that claim payment errors did occu r 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 fa ith erroneous payments,
lost investment income is not applicable to these confirmed overpayments.
We contested the remainin g $23,982,698 in questioned uncoordinated Medicare
claims as a result of the following :
• Claims totaling 55,168,042 were either adjusted before the audit started or
recovery was initiated before the audit started and adjusted after the audit;
• Recovery was initiated before the audit started on clai ms totaling $2,991 ,200, but
the recovery process has nol been completed;
• Med icare Part A or B was secondary on claims totaling $1,382 ,983;
• Services were not covered or denied by Medicare for claims totaling $8,831,414 ;
• The provider was VA, DOD, IHS or not covered by Medicare on claims totaling
$1 ,7 13,266;
• Claims totaling $4 91.675 were identified by the FEP Uncoordinated Medicare
Application on July 7, 201 0 and w ould have been adjusted by Plans before the
Medicare timely fili ng limit without the OIG audit;
Page 4
• Claims totaling 5513.1 18 were case managed or were contested for various
other reasons; and
• Claims total ing $2,891 ,675 were contested for other miscellan eous reasons .
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 ,
reaso n co ntested and amount recovered by each Plan location ,
We appreciate the opportunity to provide our response to this Draft Audit
Report and wou ld that our comments be included in their entirety as
I
Attachment
cc:
Audit on Global Coordination of Benefits For Bluecross and Blueshield Plans
Published by the Office of Personnel Management, Office of Inspector General on 2011-06-08.
Below is a raw (and likely hideous) rendition of the original report. (PDF)