oversight

Audit on Global Claims-To-Enrollment Match for Bluecross and Blueshield Plans

Published by the Office of Personnel Management, Office of Inspector General on 2011-09-08.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                                                        U.S. OFFI CE OF PER SONNEL MANAG EM ENT
                                                                              OFFICE O F Til E INSP ECTOR GE NERAL
                                                                                                  OFFI CE OF AUDITS




Final Audit Report

Subject:


                   AUDIT ON GLOBAL

             CLAIMS-TO-ENROLLMENT MATCH

          FOR BLUECROSS AND BLUESHIELD PLANS





                                                                    Report No. IA-99-00-1O-061


                                                                                 Date:s e p t e mbe r 8 , 2 0 1 1




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                         UN IT ED STATES OFFICE OF PERSONN EL MANAGEMENT
                                             w ash ington, DC. :!O·U:'i


   Offi ce or the
I n~l'C'" l"r
           GeTlC1"al




                                          A UDIT REPORT



                                Federal Employees Health Benefits Program

                                Service Benefit Plan     Contract CS 1039

                                     BlucCross BlucShield Association

                                               Plan Code 10


                                   Global C laim s-to-Enrollment Match

                                     BlueCross and BlucShicid Plans





                       REPORT NO . I A-99-00-10-06 1             DA T E: £ eptembe r   8 . 2 011




                                                                 j   rc ac    csser
                                                                 Assistant Inspector General
                                                                     for Audits




                                                                                               WWW, UUlIOOSIOW
                               UN ITE D STATES OFFICE OF PERSONNEL M ANAGEM ENT
                                                  w ashin gton, DC 204 15


  Omcc of the
Inspector Ucneral




                                          EXEC UT IVE SUMMA RY




                                     Federal Employees Health Benefits Program
                                     Service Benefit Plan       Contract CS 1039
                                          l3\ ueCross BlueShield Association
                                                     Plan Code 10

                                         Global Claims-ta -Enrollment Match

                                          BlueCross and BlueShield Plans





                            REPORT NO. 1A -99-00- 10-06 1           DA TE: Segtembe < 8 . 2 011


      Th is li nal audit report on the Federal Employee s Health Benefits Program (FEI IBP) operations
      for all B1 ucCross and Blucfihic ld (Be BS) plans questions $4,956,6 11 in health benefit charges.
      Th e B1 ucCross BlucShield Association (Association) and/or Se IlS plans agreed with $3,189,4 I4
      and disagree d with $ 1.767. 197 of the questioned charges.

      Our limit ed scope audit was conducted in acco rdance with Government Aud iting Standards. The
      audit co vered health benefit payments from July 1, 2008 through September 30, 20 I0 as reported
      in the Annual Accounti ng Statements. Specifi cally. we reviewe d claims pa id from July 1,2008
      through September 30. 20 I0 that we re potentially incurred when no patient enrollment reco rds
      existed, during gaps in patient coverage. or after termination of patient coverage with the Ilens
      Service Benefit Plan . We determ ined that the neBSplans paid 23,244 claim lines that were
      incurred when no patient enrollment reco rds existed. during gaps in patient cove rage. or after
      termination of patient co verage , resulting in overcharges of $4,956 ,6 11 to the FEHBP. These
      cla ims were paid for ineligible patients.




        ...",w ,opm .go..
                                                 CONTENTS
                                                                                                                 PAGE

       EXECUTIVE SUMMARY .............................................................................................. i

 I.    INTRODUCTION AND BACKGROUND .....................................................................1

II.    OBJECTIVE, SCOPE, AND METHODOLOGY ............................................................3

III.   AUDIT FINDING AND RECOMMENDATIONS .........................................................5

                 Claims Paid for Ineligible Patients ……………… .............................................5

IV.    MAJOR CONTRIBUTORS TO THIS REPORT ...........................................................12

V.     SCHEDULES

       A.     SUMMARY OF SAMPLE SELECTIONS BY PLAN

       B.     SUMMARY OF QUESTIONED CHARGES BY PLAN

       APPENDIX           (BlueCross BlueShield Association reply, dated February 16, 2011, 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 claims-to-enrollment match audit of all BCBS plans (Report
No. 1A-99-00-08-065, dated June 23, 2009) for contract years 2005 through June 30, 2008 are in
the process of being resolved.

Our preliminary results of the potential health benefit overcharges were presented in detail in a
draft report, dated November 5, 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 June 27, 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 patient enrollment eligibility.

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 July 1, 2008 through September 30, 2010 as
reported in the Annual Accounting Statements. Specifically, we reviewed claims paid from
July 1, 2008 through September 30, 2010 that were potentially incurred when no patient
enrollment records existed, during gaps in patient coverage, or after termination of patient
coverage with the BCBS Service Benefit Plan. Based on our claim error reports, we identified
112,328 claim lines, totaling $14,280,162 in payments, for 14,891 patients that were potentially
incurred during gaps in patient coverage or after termination of patient coverage. From this
universe of 14,891 patients, we selected and reviewed all patients with cumulative claim line
payments of $2,500 or more. Our sample included 42,919 claim lines, totaling $10,865,500 in
payments, for 884 patients. In addition, we identified 16,445 claim lines, totaling $2,121,428 in
payments, for 1,076 patients that were potentially incurred when no patient enrollment records
existed. From this universe of 1,076 patients, we selected and reviewed all patients with
cumulative claim line payments of $2,500 or more. This sample included 9,382 claim lines,
totaling $1,739,164 in payments, for 150 patients.

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 patient enrollment
eligibility. 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 patient enrollment eligibility.
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 BCBS plans. Due to time
constraints, we did not verify the reliability of the data generated by the various information



                                                  3
systems involved. However, while utilizing the computer-generated data during our audit
testing, nothing came to our attention to cause us to doubt its reliability. We believe that the data
was sufficient to achieve our audit objective.

The audit was performed at our offices in Washington, D.C.; Cranberry Township, Pennsylvania;
and Jacksonville, Florida from March 2011 through July 2011.

METHODOLOGY

To test each BCBS plan’s compliance with the FEHBP health benefit provisions related to patient
enrollment eligibility, we selected all potential ineligible patients with cumulative claim line
payments of $2,500 or more that were identified in computer searches. Specifically, we selected
for review 42,919 claim lines, totaling $10,865,500 in payments, for 884 patients (from a universe
of 112,328 claim lines, totaling $14,280,162 in payments, for 14,891 patients) that were potentially
incurred during gaps in patient coverage or after termination of patient coverage with the BCBS
Service Benefit Plan. Additionally, we selected for review 9,382 claim lines, totaling $1,739,164
in payments, for 150 patients (from a universe of 16,445 claim lines, totaling $2,121,428 in
payments, for 1,076 patients) that were potentially incurred when no patient enrollment records
existed. (See Schedule A for a summary of our sample selections by BCBS plan)

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 the disagreed responses to determine the appropriate questioned amount. We did not
project the sample results to the universe of claims that were paid for potentially ineligible
patients.

The determination of the questioned amount is based on the FEHBP contract, the Service Benefit
Plan brochure, and the Association’s FEP administrative manual.




                                                  4
                   III. AUDIT FINDING AND RECOMMENDATIONS

Claims Paid for Ineligible Patients                                                                        $4,956,611

The BCBS plans paid 23,244 claim lines that were incurred when no patient enrollment records
existed, during gaps in patient coverage, or after termination of patient coverage with the BCBS
Service Benefit Plan, resulting in overcharges of $4,956,611 to the FEHBP. These claims were
paid for ineligible patients.

Contract CS 1039, 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.” 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 diligent effort to recover an overpayment . . . .”

The following summarizes the results:

Enrollee Coverage Conflicts with Dates of Service

For the period July 1, 2008 through September 30, 2010, we performed a computer search to
identify claims paid that were potentially incurred during gaps in patient coverage or after
termination of patient coverage with the BCBS Service Benefit Plan. We identified 112,328
claim lines, totaling $14,280,162 in payments, for 14,891 patients that met this search criteria.
Our search criteria took into consideration the 31-day grace period of temporary continuing
coverage following termination of eligibility.

From this universe of 14,891 patients, we selected all patients with cumulative claim line
payments of $2,500 or more to review. Our sample included 42,919 claim lines, totaling
$10,865,500 in payments, for 884 patients (See Schedule A for a summary of our sample by
BCBS plan). Based on our review, we determined that 20,443 claim lines, totaling $4,476,890
in payments, were paid for ineligible patients. 2

Our audit disclosed the following for these questioned claim line payments:

•   For 17,448 of the claim lines questioned, the members’ enrollment data records that
    identified the patients’ eligibility status in the FEP national claims system (FEP Direct
    System) were incorrect when the claims were paid. However, after receiving the patients’
    updated enrollment data, the BCBS plans did not review and/or adjust these claims that were
    incurred after the patients’ termination dates of coverage. For these 17,448 claim lines, the
    enrollment data errors were identified on the members’ rosters or the members’ termination
    notices, which were received from the federal payroll offices, after the claims were already

2
  In addition, there were 5,745 claim lines, totaling $1,138,207 in payments, with eligibility errors that were
identified by the BCBS plans before the start of our audit (i.e., November 5, 2010) and adjusted or voided by the
Association’s original response due date (i.e., January 7, 2011) to the draft report. Since these eligibility errors were
identified by the BCBS plans before the start of our audit and adjusted or voided by the Association’s original
response due date to the draft report, we did not question these claim line payments in the final report.




                                                           5
    paid. As a result, the FEHBP was overcharged $3,836,264 in claim payments for patients
    that were not eligible for benefits.

•   For 2,111 of the claim lines questioned, the BCBS plans incorrectly paid these claim lines
    due to manual processing errors. As a result, the FEHBP was overcharged $469,879 in claim
    payments for patients that were not eligible for benefits.

•   For 884 of the claim lines questioned, the members’ enrollment data specifically noted the
    patients’ eligibility status as terminated in the FEP Direct System when the claims were
    incurred; however, the FEP Direct System inadvertently allowed these claims to be paid.
    Specifically, the claim payment errors resulted from the FEP Direct System allowing these
    claims to bypass enrollment system edits or the BCBS plans’ processors incorrectly applying
    override codes. As a result, the FEHBP was overcharged $170,747 in claim payments for
    patients that were not eligible for benefits.

Of the $4,476,890 in questioned charges, $1,256,591 (28 percent) was identified by the BCBS
plans before the start of our audit (i.e., November 5, 2011). However, since the BCBS plans had
not completed the recovery process and/or adjusted or voided these claims by the Association’s
original response due date (i.e., January 7, 2011) to the draft report, we are continuing to
question these overcharges. The remaining questioned charges of $3,220,299 (72 percent) were
identified as a result of our audit.

Patients with No Enrollment Records

For the period July 1, 2008 through September 30, 2010, we performed a computer search to
identify claims paid that were potentially incurred when no patient enrollment records existed.
We identified 16,445 claim lines, totaling $2,121,428 in payments, for 1,076 patients that met
this search criteria. Our search criteria took into consideration the 31-day grace period of
temporary continuing coverage following termination of eligibility.

From this universe of 1,076 patients, we selected all patients with cumulative claim line
payments of $2,500 or more to review. Our sample included 9,382 claim lines, totaling
$1,739,164 in payments, for 150 patients (See Schedule A for a summary of our sample by
BCBS plan). Based on our review, we determined that 2,801 claim lines, totaling $479,721 in
payments, were paid for ineligible patients.

Our audit disclosed the following for these questioned claim line payments:

•   For 1,397 of the claim lines questioned, the members’ enrollment data specifically noted the
    patients’ eligibility status as terminated in the FEP Direct System when the claims were
    incurred; however, the FEP Direct System inadvertently allowed these claims to be paid.
    Specifically, the claim payment errors resulted from the FEP Direct System allowing these
    claims to bypass enrollment system edits or the BCBS plans’ processors incorrectly applying
    override codes. As a result, the FEHBP was overcharged $212,563 in claim payments for
    patients that were not eligible for benefits.




                                                6
•   For 1,294 of the claim lines questioned, the members’ enrollment data records that identified
    the patients’ eligibility status in the FEP Direct System were incorrect when the claims were
    paid. However, after receiving the patients’ updated enrollment data, the BCBS plans did not
    review and/or adjust these claims that were incurred after the patients’ termination dates of
    coverage. For these 1,294 claim lines, the enrollment data errors were identified on the
    members’ rosters or the members’ termination notices, which were received from the federal
    payroll offices, after the claims were already paid. As a result, the FEHBP was overcharged
    $200,296 in claim payments for patients that were not eligible for benefits.

•   For 110 of the claim lines questioned, the BCBS plans incorrectly paid these claim lines due
    to manual processing errors. As a result, the FEHBP was overcharged $66,862 in claim
    payments for patients that were not eligible for benefits.

Of the $479,721 in questioned charges, $68,670 (14 percent) was identified by the BCBS plans
before the start of our audit (i.e., November 5, 2010). However, since the BCBS plans had not
completed the recovery process and/or adjusted or voided these claims by the Association’s
original response due date (i.e., January 7, 2011) to the draft report, we are continuing to
question these overcharges. The remaining questioned charges of $411,051 (86 percent) were
identified as a result of our audit.

In addition to the questioned charges, we identified the following procedural issues requiring
corrective action by the Association and/or FEP Operations Center:

•   For 11,719 claim lines in our samples (totaling $3,190,174 in payments), the Association
    and/or BCBS plans identified that the members had coverage under different “R”
    identification (ID) numbers or patient codes (e.g., due to marital status change) . However,
    we noted that the FEP Direct System processed these claim payments under terminated “R”
    ID numbers or invalid patient codes. Consequently, these claim lines were initially identified
    as being paid for potentially ineligible patients but were actually paid for eligible patients.

    During our review, we identified that a BCBS plan or the FEP Operations Center can
    combine a member’s paid claims under an old (ineligible) “R” ID number or patient code
    with the claims history of a new (eligible) “R” ID number or patient code. However, when a
    plan or the FEP Operations Center performs this change to the member’s claims history, the
    FEP Direct System allows payment of claims under the ineligible “R” ID number or patient
    code. Since we did not receive the adjusted claim records for the “R” ID number and/or
    patient code changes performed by the plans and FEP Operations Center, the preliminary
    results of our claim error reports were adversely affected. As a result, 11,719 claim lines in
    our samples were initially identified as being paid for these potentially ineligible patients;
    however, these claim lines were actually paid for eligible patients.

•   For 2,665 claim lines in our samples (totaling $321,087 in payments), the members’
    enrollment data records that identified the patients’ eligibility status in the FEP Direct
    System were incorrect when the claims were paid. However, we noted that the BCBS
    plans and/or FEP Operations Center corrected the applicable patients’ effective or
    termination dates of coverage in the FEP Direct System on or after October 1, 2010. As a




                                                 7
    result of these enrollment date corrections, the patients’ claims were actually incurred
    during effective dates of coverage.

Association's Response:

Enrollee Coverage Conflicts with Dates of Service

The Association agrees with $2,781,552 of the questioned charges. The Association states,
“These overpayments were the result of retroactive enrollment changes. Where possible,
recovery efforts have been initiated for the identified errors. The Plans will continue to pursue
these overpayments as required by CS 1039, Section 2.3 (g) . . . Thus far, the Plans have
recovered and returned to the Program a total of $437,858. . . .

These claim errors occurred as a result of the following:

•   Member termination notices were not received from the federal payroll offices until after the
    claims were already paid.

•   The Patient’s eligibility information was incorrect on the FEP Enrollment System when the
    claims were processed. The correct patient eligibility information was added prior to the
    information request issue date; however, the Plan had not reviewed and adjusted these
    claims.

•   Enrollment input errors occurred, resulting in an incorrect member roster (e.g., enrollment of
    a non-covered grandchild; incomplete enrollment data, or other dependent).

Due to the nature of the enrollment process, we will continue to receive retroactive enrollment
updates after the claim has been processed. However, our Retroactive Enrollment Report that is
generated daily to Plans is designed to identify and timely initiate recoveries on applicable
erroneous payments. We are monitoring this process to continue to promote timely recoveries.

We disagree that the remaining . . . was paid in error based upon the following reasons:

•   Recoveries were initiated and/or refunds received prior to the audit start date or before our
    response to the Draft Report was submitted.

•   The Members had coverage under another identification number (due to marital status
    change, etc) and the claims transactions were not combined.

•   The Members had coverage continued under a different option (Standard or Basic) due to
    change during Open Season.”

Patients with No Enrollment Records

The Association disagrees with the questioned charges. The Association states, “Additional
documentation to support our position will be provided . . . We have identified six primary



                                                 8
reasons why we contested that these claims were not paid incorrectly. These reasons are as
follows:

•   The Patient Code questioned was on the enrollment file.

•   Refund requests were initiated prior to the start of the audit.

•   The questioned contract identification number is still valid within the timeframe for the
    claims questioned.

•   No paid claims were on file for the questioned Patient Codes only rejected transactions.

•   The services were rendered during the grace period.

•   The questioned members were covered under another identification number.

To prevent these errors from occurring in the future:

•   We will continue to issue listings of retro enrollment termination reports to the Plans on a
    quarterly basis for their review (our System Wide Claims Review Process).

•   We will continue to evaluate the current retroactive enrollment notification process to ensure
    that notices are issued to Plans timely.

•   We have made modification to prevent the FEP Claims System from automatically adding
    new born babies to the member’s enrollment file without evidence of the coverage status of
    the newborn.

•   We are working with the Operations Center to evaluate the entire enrollment process to
    ensure that controls are in place for adding and terminating members. We expect this to be
    completed by the end of the first quarter 2012.”

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 $4,956,611 ($4,476,890 +
$479,721). If claims paid for ineligible patients were identified by the BCBS plans before the
start of our audit (i.e., November 5, 2010) and adjusted or voided by the Association’s original
response due date to the draft report (i.e., January 7, 2011), we did not question these claim
payment 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 $3,189,414 ($2,795,425 for “Enrollee
Coverage Conflicts with Dates of Service” plus $393,989 for “Patients with No Enrollment
Records”) and disagree with $1,767,197 ($1,681,465 for “Enrollee Coverage Conflicts with
Dates of Service” plus $85,732 for “Patients with No Enrollment Records”) of the revised



                                                  9
questioned charges. 3 Although the Association only agrees with $2,781,552 in its written
response, the Association/BCBS plans’ additional documentation supports concurrence with
$3,189,414.

Based on the Association’s response and/or the BCBS plans’ documentation, the contested
amount of $1,767,197 represents the following items:

Enrollee Coverage Conflicts with Dates of Service

•   $1,256,591 of the contested amount represents 20,393 claim lines paid for ineligible patients
    that were identified by the BCBS plans before the audit started. However, the plans had not
    recovered these overpayments and adjusted or voided the claims by the Association’s
    original 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.

•   $205,724 of the contested amount represents 930 claim lines that the BCBS plans agree were
    paid for ineligible patients. However, due to overpayment recovery time limitations with
    providers, the plans state that these claim payments are uncollectible. The plans did not
    provide sufficient documentation to support the overpayment recovery time limitations with
    providers or the attempted recovery efforts for these claim payments. Therefore, we are
    continuing to question this amount in the final report.

•   $140,631 of the contested amount represents 776 claim lines that the BCBS plans agree were
    paid for ineligible patients. However, since all recovery efforts have been exhausted, the
    plans state that these claim payments are uncollectible. The plans did not provide sufficient
    documentation to support that all recovery efforts have been exhausted. Therefore, we are
    continuing to question this amount in the final report.

•   $51,734 of the contested amount represents 2,993 claim lines that BCBS plans agree were
    paid for ineligible patients. However, since these claim payments were each $100 or less, the
    plans will not initiate recovery efforts for these payments. Although the plans consider claim
    payments of $100 or less as immaterial, these claims were for ineligible patients with
    cumulative claim line payments of $2,500 or more, which is material. Therefore, we are
    continuing to question this amount in the final report.

•   $26,785 of the contested amount represents 119 claims lines that the WellPoint BCBS of
    Ohio plan states were paid correctly. However, this plan did not provide sufficient
    documentation to support that these claim lines were paid for eligible patients.




3
 After providing the written response to the draft report and the BCBS plans’ spreadsheet responses and supporting
documentation for the samples in February 2011, the Association provided additional documentation on June 27,
2011, agreeing with $393,989 and disagreeing with $85,732 of the questioned charges for the claims paid where the
patients had no enrollment records.




                                                        10
Patients with No Enrollment Records

•   $68,670 of the contested amount represents 141 claim lines paid for ineligible patients that
    were identified by the BCBS plans before the audit started. However, the plans had not
    recovered these overpayments and adjusted or voided the claims by the Association’s
    original 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.

•   $17,062 of the contested amount represents 209 claim lines that the BCBS plans state were
    not charged to the FEHBP. However, the plans did not provide sufficient documentation to
    support that these claims were not charged to the FEHBP. Therefore, we are continuing to
    question this amount in the final report.

Recommendation 1

We recommend that the contracting officer disallow $4,956,611 in claim payments for ineligible
patients, and verify that the BCBS plans return all amounts recovered to the FEHBP.

Recommendation 2

We recommend that the contracting officer instruct the Association to verify if the FEP
Operations Center has implemented effective enrollment procedures. These procedures should
ensure that members’ enrollment data records, such as effective and/or termination dates of
coverage, are entered correctly and timely into the FEP Direct System and allow for timely
recovery of erroneous claim payments for ineligible patients.

Recommendation 3

We recommend that the contracting officer require the Association to have the FEP Operations
Center identify the root cause(s) why the FEP Direct System allows claims to bypass enrollment
system edits.

Recommendation 4

We recommend that the contracting officer require the Association to ensure that the BCBS
plans and/or FEP Operations Center are using the enrollment verification systems, as required in
the FEP Administrative Manual (Volume II, Chapter 21, Sections H through J).

Recommendation 5

We recommend that the contracting officer instruct the Association to have the FEP Operations
Center either discontinue combining a member’s claims paid under one “R” ID number or
patient code with the claims history of a different “R” ID number or patient code, or provide the
necessary claim adjustment records to the OIG to account for these changes.




                                                11
              IV. MAJOR CONTRIBUTORS TO THIS REPORT

Experience-Rated Audits Group

              , Lead Auditor

             , Lead Auditor
___________________________________________________________

                  , Chief

Community-Rated Audits Group

            , Chief

Information Systems Audits Group

              , Chief

                   , Information Technology Project Manager

              Senior Information Technology Specialist

                 , Senior Information Technology Specialist




                                            12
                                                                                                A....ENDIX


                                                                           8lueCross 61u eShJeld
                                                                           As'M.lcialion
                                                                           Ali A.olooe"liop nl lod"'PePdml
                                                                           Blue Crc»s &pd Blue Shield P!aPI




February 16 , 2011                                                         Federal Empl oyee Program
                                                                           U 1U G Street, s.w
                                                                           Washington. D.C. 20005
                                                                           '202.Q.42. IOOO

                       Group Chief
Experience-Rated Audits Group
Office of the Inspector General
U .S. Offi ce of Personnel Man agement
1900 E Street, Room 64 00
Washington. DC 204 15-1100

Referen ce            OPM DRAFT AUDIT REPOR T
                      Glob al Enrollme nt Audit
                      Au dit Report # 1A-99-0Cl-10-061
                      (Report date d and received 11/051 10)

Dear

T his is in respon se to the above referenced U.S Office of Person nel Managem ent
(OPM) Draft Rep ort co ncern ing the Global Enrollment Aud it for claims pa id dUring
th e period of July 1. 2008 through Septembe r 30.2010. whi ch qu estioned
$ 12 ,604,664 in potentia l paym ent errors . Ou r comments co ncerning the findings in
the report are as follows:

Blu o C ross S lue Shield A ssociation (S eSSA) Respons o:

A11 . Enrollees Cov erage Conflicts with Dates of Servic e               $10 .865 .500

Our review of the OIG Draft Aud it Report for claims paid for members that may have
had gaps in coverage ide ntified $2.781,552 in overpayments. T he se overpayments
wer e the result of retroa ctive enrollment cha nges . Wh ere possible , recovery efforts
have bee n initiated for th e identified errors . The Plans wi ll con tinue to pursue these
overpayments as req uired by CS 1039. Sectron 2.3 (g)(I) . "Anybenefit payme nts
the Plan s are unable to recover are allowable charges to the Program . In addition,
as good faith erroneous paym ent s, lost investm ent income is not applicable to these
co nfirmed overpa yments". Thu s far, the Plans have reco vered and returned to the
Program a tota l of $437 ,858 . An add itional amount of $33 ,3 18 is still und er review
by the Plan and we wil l forward the res ults when available.

These claim errors occurred as a result of the following :
Febr ua ry 16 , 20 11
Page 2 of 3

•	 M ember termination notices were not received from the federal payroll office s
   un til aft er the claims we re alread y paid .

•	 TIl e Pa tient's eligibility information was incor rect on the FEP Enrollment System
   w hen claims we re processed . T he correct patien t eligibility information was
   added prior to the info rmati on request issue date , however, the Plan had not
     re-viewed and adjusted these claims.

•	   Enrollment input errors occurred, resulting in an incorrect mem be r roster (e.g.,
     enrollmen t of a non-covered grandchild, incomple te enro llme nt data , or other
     dependent).

Due to the nat ure of the enrollment process, we will con tinue to receive retroactive
enroll me nt updates after the cla im has been processed , Howeve r, our Retroactive
Enrollment Report that is gen erated daily to Plans is designed to identify and timely
initiate recoveries on app licable erroneous payment s. We are monitoring this
process to co ntinue to promote timel y recoveries.

We disagree tha t the rema ining $8,0 50,629 was paid in error based upo n the
fo llowing reasons:

•	 Recoveries were initialed and/or refunds received prior to the aud it start date or
   before our response to the Draft Report was submitted .

•	 The Members had coverage under anothe r identification number (due to marita l
   status change, etc) and the claims transactio ns were not combined .

•	 TIl e Memb ers had coverag e continued under a different option (Standard or
   Basic) due to change during Open Seas on.

Attac:hment A , wh ich IS a sc hedule used to identify the amo unt questioned ,
co ntested, and recove red by each Plan is attached .


A12. Patients wi th No E nroll ment Rec o rd	                           $ 1 , 7 39 ,1 6 ~~


We co ntest that the entire question ed amoun t of $1,739 ,163 was not paid
incorrectly. Additiona l documentatio n to sup port ou r position will be provided to you
via the FTP site. W e have identified six primary reasons why we contested thai
these claim s were not paid incorrectly . These reasons are as follows :

•	 T he Patient Code questioned was on the enrollmen t file .

•	 Refund requests we re initiated prior to the start of the audit.
February 16, 201 1
Page 3 of 3

•	    The quest ioned co ntract identiffcation number is still valid wit hin the timeframe for
      the claims quest ioned .

•	 No paid cla ims we re on file for the questioned Patie nt Codes on ly rejected

      transacnons.


•	 T he se rvices were rendered du ring the grace period.

•	 T he q uestioned membe rs were cove red under another identification number.

T o preve nt these erro rs from occu rring in the future:

•	 We will continue to issue listings of rctro en rollmen t te rminati on reports to

   Plans on a qua rter ly basis for the ir review (our System Wide Claims

   Revi e w Process).


•	    We will co ntinue to eva luate the current retroactive enrollme nt notification

      process to ensure that notices are issued to Plans time ly.


•	 We have made mod ificatio ns to prevent the FEP Cla ims System from

   au tom atica lly adding new born babi es to the member 's enro llme nt file

   without ev idence of the cove rage stat us of the newborn ,


•	 We are work ing with the Operations Cente r to evaluate the entire

   enrollment process to ensure th at co ntrol s are in place for adding and

   te rm inating member s. We expect this to be completed by the end of the

   first quarter 20 12.


We appr eciat e the opportunity to provide ou r res ponse to this Draft Audit

Report an d request that our co mme nts be included in their entirety as part of





Executive Director

Progra m Integrity




-
Atta ch me nts

cc: