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 --CAUTION- Till! u di! '(porl hU brcn lIi)tribulrd to Fcdcnl officials .. ho nc rC~pI)nsihlt for th Jdminl~lraliop oflbe audited program. Thisilldi! rf(>Ort may cOll lai n propridary data wbich is protnlcd by Fftknllaw (18 U.S.c. (9115). Th Htforc, while this audit report ;8 availablt under thf Frttdom oflnformRlion Act and m~dt lVai lablt to tbe public on Ih. OIG ",cbpagt, (lutiun ntftb to'" urrtlstd bl'fo~ ••Ieuing Ih e r.portIII Iht gcnrral public u it mly cunl:!ln pruprlulry informallon that WI. rcdlCltd from tbe l'"bUrly dislrlbul.d ropy. 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. ww .... . opm.go¥ www ... saJobs.c:o'o' 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)