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 ...........................................................12
V. SCHEDULES
A. UNIVERSE AND SAMPLE OF POTENTIALLY UNCOORDINATED CLAIM
LINES
B. SUMMARY OF QUESTIONED CHARGES
APPENDIX (BlueCross BlueShield Association reply, dated October 14, 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 coordination of benefits audit of all BCBS plans (Report No.
1A-99-00-10-055, dated June 8, 2011) for claims reimbursed from January 1, 2009 through
May 31, 2010 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 June 21, 2011. 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 December 29, 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 July 11, 2010 through April 30, 2011 as reported
in the Annual Accounting Statements. Using our data warehouse, we performed a computer
search on the BCBS claims database to identify claims that were reimbursed from July 11, 2010
through April 30, 2011 and potentially not coordinated with Medicare. Based on our claim error
reports, we identified 318,990 claim lines, totaling $47,137,654 in payments, that potentially were
not coordinated with Medicare. From this universe, we selected and reviewed 30,933 claim lines,
totaling $19,420,185 in payments, for coordination of benefits with Medicare. When we notified
the Association of these potential errors on June 15, 2011, the claims were within the Medicare
timely filing requirement and could be filed with Medicare for coordination of benefits. 2
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.
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
2
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
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 June 2011 through January 2012.
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 30,933 claim lines, totaling $19,420,185 in payments, from a universe of 318,990 claim
lines, totaling $47,137,654 in payments, that potentially were not coordinated with Medicare (See
Schedule A for our sample selection methodology).
The claim sample selections 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 potentially 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 $8,898,131
The BCBS plans did not properly coordinate 13,447 claim line payments, totaling $10,936,392,
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 $8,898,131 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 reimbursed from July 11, 2010 through April 30, 2011, we performed a computer
search and identified 318,990 claim lines, totaling $47,137,654 in payments, that potentially
were not coordinated with Medicare. From this universe, we selected for review a sample of
30,933 claim lines, totaling $19,420,185 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 June 15, 2011, 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 the ancillary items, 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 determined that 57 of the 63 BCBS plan sites did not properly coordinate
claim charges with Medicare. Specifically, we identified 13,447 claim lines, totaling
$10,936,392 in payments, where the FEHBP paid as the primary insurer when Medicare was the
primary insurer. We estimate that the FEHBP was overcharged $8,898,131 for these claim line
payments.
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
290 $4,947,945 $4,947,945
Inpatient (I/P) Facility
Category B: Medicare Part A Primary for
Skilled Nursing/Home Health Care (HHC)/ 2,354 $595,529 $595,529
Hospice Care
Category C: Medicare Part B Primary for
Certain I/P Facility Charges 127 $1,704,124 $426,031
Category D: Medicare Part B Primary for
Skilled Nursing/HHC/Hospice Care 19 $40,743 $10,186
Category E: Medicare Part B Primary for
Outpatient (O/P) Facility and Professional 8,343 $2,587,361 $2,069,888
Category F: Medicare Part B Primary for O/P
Facility and Professional (Participation Code F) 2,314 $1,060,690 $848,552
Total 13,447 $10,936,392 $8,898,131
Our audit disclosed the following for the COB errors:
• For 5,517 (41 percent) of the claim lines questioned, the BCBS plans incorrectly paid these
claims due to retroactive adjustments. Specifically, there was no special information present
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
claim(s) back to the Medicare effective dates. As a result, we estimate that the FEHBP was
overcharged $3,887,806 for these COB errors.
• For 3,891 (29 percent) of the claim lines questioned, the BCBS plans incorrectly paid these
claims due to systematic processing errors. Specifically, the claims were not deferred on the
FEP national claims system for Medicare COB review by the processors. As a result, the
FEHBP was overcharged $2,555,838 for these COB errors.
• For 3,623 (27 percent) of the claim lines questioned, the BCBS plans incorrectly paid these
claims due to manual processing errors. In most cases, there was special information present
on the FEP national claims system to identify Medicare as the primary payer when these
claims were paid. However, an incorrect Medicare Payment Disposition Code was used to
override the FEP national claims system’s deferral of these claims. The Medicare Payment
Disposition Code identifies Medicare’s responsibility for payment on each charge line of a
claim. According to 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
7
incorrectly used. An incorrect entry in this field causes the claim line to be excluded from
coordination of benefits with Medicare. As a result, we estimate that the FEHBP was
overcharged $2,122,621 for these COB errors.
• For 380 (3 percent) of the claim lines questioned, we could not determine the specific reasons
why these claims were not coordinated with Medicare. We estimate that these COB errors
totaled $318,983.
• For 36 (0.3 percent) of the claim lines questioned, the BCBS plans incorrectly paid these
claims due to provider billing errors. As a result, we estimate that the FEHBP was
overcharged $12,883 for these COB errors.
Of the $8,898,131 in questioned charges, $6,791,225 (76 percent), representing 8,539 claim line
overpayments, were identified by the BCBS plans before receiving our audit request (i.e., sample
of potential COB errors) on June 15, 2011. However, since the BCBS plans had not completed
the recovery process and/or adjusted these claims by the end of our audit scope (i.e., by April 30,
2011), we are continuing to question these COB errors. 3 The remaining questioned charges of
$2,106,906 (24 percent), representing 4,908 claim line overpayments, were identified as a result
of our audit.
Association's Response:
In response to the draft report, the Association states, “After reviewing the OIG listing of
potentially uncoordinated Medicare COB claims . . . BCBSA identified $8,066,089 in claims that
were paid correctly and $6,655,154 that . . . initially paid incorrectly but the error was identified
and corrected before the response was due to OPM in the amount of $5,721,351, or the error was
identified and recovery was initiated before the audit started in the amount of $993,803 but was
still uncollected when the response was due to OPM. We agree that $1,334,355 . . . of the
questioned amount was paid in error and the error was not identified by the start of the audit.”
The Association disagrees with $14,781,248 of the questioned charges in the draft report. For
$8,066,089 of the contested amount, the Association states that the claims were paid correctly for
various reasons. For the remaining contested amount of $6,715,159, the Association states,
“$3,853,508 were initially paid correct, however subsequent Medicare updates were received.
Once the updates were processed on the FEP system, the Plans initiated recovery before the audit
started. Of this amount, $843,023 was recovered before the audit started or the report response
was due to the OIG.
For claims totaling $2,861,651, the Plans initially paid the claims incorrectly because:
• Missed EOB during processing of FEP Direct didn’t defer
• FEP edits were overridden
• Processor errors
3
Of these questioned COB errors, $3,878,274, representing 4,905 claim line overpayments, were identified by the
BCBS plans after the Association received our audit notification letter, dated March 2, 2011.
8
However, before the audit started, through post payments review controls implemented by the
Plans and BCBSA; the Plans identified the incorrect payments and initiated recovery and/or
returned the funds to the Program. As of September 30, 2011, the Plans have returned
$5,721,351 to the FEHBP.”
For the uncontested amount of $1,334,355, the Association states that “the Plans agreed that
these were claim payment errors identified as a result of this audit . . . The Plans will continue to
pursue the remaining overpayments . . . .”
Regarding corrective actions, the Association states, “The Association’s Action Plan includes
oversight and governance procedures to assure all BCBS Plans are following the corrective
action plans. To reduce the number and frequency of uncoordinated Medicare claims, the
BCBSA has implemented additional steps to our action plan . . .
To ensure that Plans review all claims incurred back to the Medicare effective date:
• The FEP Operations Center produces the Retroactive Enrollment reports daily, which
identifies individuals who are eligible for Medicare A and/or B. This file is reviewed daily
by the Plans, who are required to go back and review all claims for this member.
• FEP updated the Plan Administrative Manual to instruct the Plans on what to do with the
Retroactive Enrollment Report.”
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 $8,898,131. If the BCBS plans
identified and adjusted the COB errors by April 30, 2011, which was the end of our audit scope,
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 $1,529,042 and disagree with $7,369,089 of the revised questioned charges.
Although the Association agrees with $1,334,355 in its response, the BCBS plans’
documentation supports concurrence with $1,529,042.
Based on the Association’s response and/or the BCBS plans’ documentation, the contested
amount of $7,369,089 represents the following items:
• $5,809,617 of the contested amount represents COB errors where the BCBS plans initiated
recovery efforts before receiving our audit request (i.e., June 15, 2011), and recovered the
overpayments and adjusted the claims by the response due date to the audit request (i.e.,
September 16, 2011). However, since these overpayments had not been recovered and
returned to the FEHBP by the end of the audit scope (i.e., April 30, 2011), we are continuing to
question this amount in the final report.
• $981,608 of the contested amount represents COB errors where the BCBS plans initiated
recovery efforts before receiving our audit request, but have not recovered the overpayments
and adjusted the claims. Since these overpayments had not been recovered and returned to the
9
FEHBP by the end of the audit scope, we are continuing to question this amount in the final
report.
• $407,977 of the contested amount represents COB errors where the BCBS plans initiated
recovery efforts for the overpayments. However, when responding to our audit request, the
BCBS plans state that these claims were paid correctly. Since the BCBS plans did not provide
sufficient documentation to support these contested items, we are continuing to question this
amount in the final report.
• $169,887 of the contested amount represents COB errors where Medicare rejected claims
because providers did not bill Medicare correctly for covered services. As a result, the FEHBP
paid primary for these services instead of Medicare. The BCBS plans state that these claims
were paid correctly, since the member’s Medicare Explanation of Benefits included a rejection
code for these services. Since the BCBS plans did not provide sufficient documentation to
support that the FEHBP should have paid these claims as the primary insurer, instead of as
secondary insurer, we are continuing to question this amount in the final report.
Recommendation 1
We recommend that the contracting officer disallow $8,898,131 for uncoordinated claim
payments and verify that the BCBS plans return all amounts recovered to the FEHBP (See
Schedule B for a summary of these questioned uncoordinated claim payments by BCBS plan).
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. We also recommend that the contracting officer ensure that
the Association’s additional corrective actions for improving the prevention and detection of
uncoordinated claim payments are being implemented. These additional corrective actions are
included in the Association’s response to the draft report.
Recommendation 3
Since the highest percentage of the COB errors resulted from retroactive adjustments, we
recommend that the contracting officer require the Association to ensure that the BCBS plans are
reviewing all claims incurred back to the Medicare effective dates when the other party liability
information is updated in 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.
10
Recommendation 4
Due to the significant number of retroactive COB adjustments, we recommend that the
contracting officer require the Association to ensure that the FEP Operations Center is utilizing
the Medicare Data Exchange Agreement that requires a quarterly exchange of enrollment data
between Medicare and the FEHBP. We also recommend that the contracting officer require the
Association to ensure that the enrollment data provided by Medicare is updated in a timely
manner in the FEP national claims system.
Recommendation 5
Due to the significant number of manual processing errors, we recommend that the contracting
officer require the Association to direct the FEP Operation Center to input a field(s) in the FEP
national claims system to collect Remittance Advice Remark Codes (RARC) and Claim
Adjustment Reason Codes (CARC) from the BCBS plans. These Medicare generated codes
(RARC and CARC) provide the reason Medicare denied a claim payment. The Association
should also have the FEP Operations Center and BCBS plans utilize the RARC and CARC
field(s) when implementing the Medicare Disposition Code corrective actions.
Recommendation 6
We recommend that the contracting officer require the Association to have the FEP Operations
Center identify the reason(s) why the FEP national claims system continues to allow claims that
require Medicare COB to bypass COB edits. After identifying the reason(s) why, the FEP
Operations Center should implement corrective edits in the system.
11
IV. MAJOR CONTRIBUTORS TO THIS REPORT
Experience-Rated Audits Group
, Lead Auditor
, Auditor
, Auditor
, Auditor
_______________________________________________________
, Chief
Information Systems Audits Group
, Chief
, Information Technology Project Manager
, Senior Information Technology Specialist
12
V. SCHEDULES SCHEDULE A
Coordination of Benefits with Medicare
BlueCross and BlueShield Plans
Claims Reimbursed from July 11, 2010 through April 30, 2011
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
467 471 383 $6,811,362 all patients selected 467 471 383 $6,811,362 100% $6,811,362
Inpatient Facility
Category B: Medicare Part A Primary for Skilled patients with cumulative claims
3,000 9,883 1,050 $2,069,713 1,266 5,493 248 $1,662,392 100% $1,662,392
Nursing/HHC/Hospice Care of $1,500 or more
Category C: Medicare Part B Primary for Certain
139 139 121 $1,807,196 all patients selected 139 139 121 $1,807,196 25% $451,799
Inpatient Facility Charges
Category D: Medicare Part B Primary for Skilled patients with cumulative claims
87 150 59 $248,229 48 55 29 $220,624 25% $55,156
Nursing/HHC/Hospice Care of $2,500 or more
Category E: Medicare Part B Primary for patients with cumulative claims
9,709 16,595 3,132 $4,135,592 of $1,500 or more
4,468 9,596 514 $3,077,717 80% $2,462,174
Outpatient Facility and Professional
Category F: Medicare Part B Primary for
patients with cumulative claims
Outpatient Facility and Professional (Participation 212,078 291,752 114,202 $32,065,562 6,291 15,179 636 $5,840,894 80% $4,672,715
of $4,000 or more
Code F)
Totals 225,480 318,990 $47,137,654 12,679 30,933 $19,420,185 $16,115,598
Coordination of Benefits with Medicare SCHEDULE B
BlueCross and BlueShield Plans Page 1 of 2
Claims Reimbursed from July 11, 2010 through April 30, 2011
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 Site Plan m Amount Claim Amount m Amount m Amount Claim Amount Claim Amount Claim Amount
Number State Plan Name Lines Questioned Lines Questioned Lines Questioned Lines Questioned Lines Questioned Lines Questioned Lines Questioned
003 NM BCBS of New Mexico 4 $39,402 1 $4,200 1 $1,598 0 $0 45 $21,299 3 $1,145 54 $67,643
005 GA WellPoint BCBS of Georgia 17 $275,234 68 $20,571 2 $4,504 10 $328 745 $135,942 44 $15,859 886 $452,438
006 MD CareFirst BCBS 3 $13,601 38 $9,210 3 $16,193 0 $0 19 $21,826 5 $4,009 68 $64,839
007 LA BCBS of Louisiana 16 $138,350 28 $8,181 4 $11,719 0 $0 439 $72,145 44 $104,793 531 $335,187
009 AL BCBS of Alabama 5 $60,192 1 $1,765 3 $5,061 0 $0 41 $76,992 17 $15,878 67 $159,889
010 ID BC of Idaho Health Service 1 $39,650 0 $0 0 $0 0 $0 28 $5,312 0 $0 29 $44,962
011 MA BCBS of Massachusetts 1 $15,915 60 $4,918 1 $2,663 0 $0 71 $8,086 0 $0 133 $31,582
012 NY BCBS of Western New York 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0
013 PA Highmark BCBS 2 $88,396 0 $0 4 $6,748 0 $0 329 $57,707 11 $24,293 346 $177,144
015 TN BCBS of Tennessee 3 $32,351 0 $0 0 $0 0 $0 143 $30,071 109 $28,915 255 $91,336
016 WY BCBS of Wyoming 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0
017 IL BCBS of Illinois 23 $220,611 100 $10,381 7 $22,598 0 $0 664 $159,116 4 $5,433 798 $418,140
021 OH WellPoint BCBS of Ohio 2 $6,721 2 $10,200 5 $15,115 6 $6,347 15 $4,353 121 $28,128 151 $70,864
024 SC BCBS of South Carolina 9 $74,541 1 $1,890 2 $36,801 0 $0 227 $33,275 0 $0 239 $146,508
027 NH WellPoint BCBS of New Hampshire 0 $0 16 $1,787 2 $10,341 0 $0 0 $0 11 $9,264 29 $21,392
028 VT BCBS of Vermont 1 $10,584 0 $0 0 $0 0 $0 0 $0 0 $0 1 $10,584
029 TX BCBS of Texas 56 $1,147,609 256 $30,437 22 $82,867 0 $0 1,423 $394,181 220 $92,085 1,977 $1,747,178
030 CO WellPoint BCBS of Colorado 7 $101,754 22 $2,281 5 $7,659 0 $0 373 $87,891 33 $6,689 440 $206,274
031 IA Wellmark BCBS of Iowa 0 $0 14 $1,629 1 $2,365 0 $0 2 $1,644 3 $5,031 20 $10,669
032 MI BCBS of Michigan 1 $3,427 44 $5,552 4 $9,602 0 $0 0 $0 25 $21,736 74 $40,317
033 NC BCBS of North Carolina 5 $137,845 124 $18,147 8 $20,565 0 $0 344 $66,886 30 $21,449 511 $264,892
034 ND BCBS of North Dakota 0 $0 0 $0 0 $0 0 $0 8 $26,061 0 $0 8 $26,061
036 PA Capital BC 1 $26,611 0 $0 4 $8,401 0 $0 0 $0 0 $0 5 $35,012
037 MT BCBS of Montana 1 $12,484 0 $0 0 $0 0 $0 0 $0 0 $0 1 $12,484
038 HI BCBS of Hawaii 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0
039 IN WellPoint BCBS of Indiana 4 $193,336 18 $29,779 0 $0 1 $825 235 $76,269 0 $0 258 $300,210
040 MS BCBS of Mississippi 1 $3,285 152 $14,025 0 $0 0 $0 4 $4,254 214 $70,698 371 $92,263
041 FL BCBS of Florida 1 $21,603 237 $30,796 4 $7,621 0 $0 115 $18,659 362 $111,499 719 $190,178
042 MO BCBS of Kansas City 0 $0 0 $0 0 $0 0 $0 0 $0 4 $4,990 4 $4,990
043 ID Regence BS of Idaho 0 $0 0 $0 0 $0 0 $0 2 $561 0 $0 2 $561
044 AR Arkansas BCBS 0 $0 39 $3,999 4 $4,688 0 $0 22 $4,043 2 $17,392 67 $30,122
045 KY WellPoint BCBS of Kentucky 4 $34,187 65 $14,742 2 $3,651 0 $0 46 $11,946 58 $22,906 175 $87,432
047 WI WellPoint BCBS United of Wisconsin 6 $63,404 1 $2,600 1 $3,743 0 $0 275 $96,867 95 $21,106 378 $187,720
048 NY Empire BCBS 20 $361,247 73 $29,471 3 $6,568 0 $0 239 $46,430 128 $9,216 463 $452,932
049 NJ Horizon BCBS of New Jersey 0 $0 66 $3,230 5 $37,123 0 $0 60 $14,501 387 $26,354 518 $81,207
Coordination of Benefits with Medicare SCHEDULE B
BlueCross and BlueShield Plans Page 2 of 2
Claims Reimbursed from July 11, 2010 through April 30, 2011
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 Site Plan m Amount Claim Amount m Amount m Amount Claim Amount Claim Amount Claim Amount
Number State Plan Name Lines Questioned Lines Questioned Lines Questioned Lines Questioned Lines Questioned Lines Questioned Lines Questioned
050 CT WellPoint BCBS of Connecticut 0 $0 2 $11,780 0 $0 0 $0 14 $2,160 47 $17,177 63 $31,116
052 CA WellPoint BC of California 15 $389,630 89 $46,071 10 $58,572 0 $0 270 $85,873 3 $4,171 387 $584,317
053 NE BCBS of Nebraska 0 $0 42 $4,491 0 $0 0 $0 21 $1,233 0 $0 63 $5,724
054 WV Mountain State BCBS 3 $10,510 0 $0 1 $1,532 0 $0 8 $9,549 0 $0 12 $21,592
055 PA Independence BC 9 $237,623 154 $17,752 0 $0 0 $0 109 $63,957 0 $0 272 $319,332
056 AZ BCBS of Arizona 5 $74,662 126 $19,865 0 $0 0 $0 0 $0 1 $4,094 132 $98,621
058 OR Regence BCBS of Oregon 1 $42,599 82 $10,140 1 $1,115 1 $2,061 16 $5,438 60 $18,185 161 $79,539
059 ME WellPoint BCBS of Maine 0 $0 0 $0 2 $7,125 0 $0 17 $2,793 8 $3,096 27 $13,014
060 RI BCBS of Rhode Island 0 $0 142 $18,517 0 $0 0 $0 0 $0 0 $0 142 $18,517
061 NV WellPoint BCBS of Nevada 2 $14,658 0 $0 0 $0 0 $0 9 $1,335 5 $1,321 16 $17,314
062 VA WellPoint BCBS of Virginia 1 $21,042 0 $0 5 $7,873 0 $0 40 $13,469 1 $43 47 $42,427
064 NY Excellus BCBS Rochester 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0
066 UT Regence BCBS of Utah 3 $19,812 13 $703 0 $0 0 $0 64 $8,994 7 $9,941 87 $39,450
067 CA BS of California 0 $0 0 $0 0 $0 0 $0 902 $102,766 86 $4,174 988 $106,939
069 WA Regence BS 0 $0 0 $0 0 $0 0 $0 1 $116 8 $2,569 9 $2,684
070 AK BCBS of Alaska 1 $21,425 0 $0 0 $0 0 $0 48 $11,078 13 $3,655 62 $36,158
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 12 $141,036 2 $5,400 1 $2,500 1 $626 204 $76,597 6 $8,447 226 $234,608
076 MO WellPoint BCBS of Missouri 24 $516,694 53 $86,145 2 $2,882 0 $0 99 $21,767 0 $0 178 $627,488
078 MN BCBS of Minnesota 4 $103,605 31 $4,419 0 $0 0 $0 41 $11,493 34 $18,351 110 $137,867
079 NY Excellus BCBS of Central New York 0 $0 0 $0 0 $0 0 $0 0 $0 1 $18 1 $18
082 KS BCBS of Kansas 2 $32,049 0 $0 0 $0 0 $0 17 $2,891 0 $0 19 $34,939
083 OK BCBS of Oklahoma 4 $22,816 32 $2,967 2 $6,391 0 $0 356 $56,799 0 $0 394 $88,972
084 NY Excellus BCBS of Utica-Watertown 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0
085 DC CareFirst BCBS 7 $142,730 75 $48,282 5 $9,326 0 $0 80 $98,438 62 $75,847 229 $374,622
088 PA BC of Northeastern Pennsylvania 0 $0 2 $13,512 0 $0 0 $0 0 $0 0 $0 2 $13,512
089 DE BCBS of Delaware 3 $34,711 65 $43,865 0 $0 0 $0 22 $2,850 0 $0 90 $81,426
092 DC CareFirst BCBS (Overseas) 0 $0 18 $1,830 1 $520 0 $0 91 $13,979 42 $8,596 152 $24,926
TOTALS 290 $4,947,945 2,354 $595,529 127 $426,031 19 $10,186 8,343 $2,069,888 2,314 $848,552 13,447 $8,898,131
October 14, 2011
Page 2
Blue Cross Blue Shield Association (BCBSA) Response to Recommendation 1
and 3:
After reviewing the OIG listing of potentially uncoordinated Medicare COB claims
totaling $16,115,598, BCBSA identified $8,066,089 in claims that were paid correctly
and $6,655,154 that was either; initially paid incorrectly but the error was identified
and corrected before the response was due to OPM in the amount of $5,721,351, or
the error was identified and recovery was initiated before the audit started in the
amount of $993,803 but was still uncollected when the response was due to OPM.
We agree that $1,334,355 or 8 percent of the questioned amount was paid in error
and the error was not identified by the start of the audit.
We disagree with $14,781,248 in improper claim payments. For claims totaling
$8,066,089, the initial payment was correct based on the following reasons:
Medicare Part A was secondary for claim payments totaling $375,808;
Medicare Part B was secondary for claim payments totaling $75,551;
Medicare Part A was exhausted for claim payments totaling $82,668;
There were no Medicare Part B charges for claim payments totaling $53,618;
The Provider opted out of Medicare pricing for claim payments totaling $119,548;
Medicare benefits were exhausted and the member has used all available
services during a benefit period for outpatient services for claim payments
totaling $105,419;
Medicare denied the charges for claim payments totaling $4,515,986;
Services were provided by a non covered Medicare Home Health or Long Term
Care provider for claim payments totaling $84,706;
Services were provided by a government facility not paid by Medicare (VA; DOD,
UHSFP) for claim payments totaling $524,204;
Services were provided by a non-covered Indian Health Service (IHS) facilities
for claim payments totaling $1,208;
Services were provided by a non-covered Medicare provider for claim payments
totaling $491,448;
The claim was coordinated with Medicare; however the claim line identified in the
sample was not covered for claim payments totaling $480,768;
The claim was priced according to Case Management guidelines for claim
payments totaling $63,019;
FEP paid the member’s Medicare cost sharing (coinsurance or deductible) for
claim payments totaling $88,420; and
The claim was paid correctly for other reasons for claim payments totaling
$1,003,718.
For the remaining $6,715,159 claims, $3,853,508 were initially, paid correct,
however subsequent Medicare updates were received. Once the updates were
October 14, 2011
Page 3
processed on the FEP system the Plans initiated recovery before the audit started.
Of this amount $843,023 was recovered before the audit started or the report
response was due to the OIG.
For claims totaling, $2,861,651, the Plans initially paid the claims incorrectly
because:
Missed EOB During processing or FEP Direct didn’t defer
FEP edits were overridden
Processor errors
However, before the audit started, through post payments review controls
implemented by the Plans and BCBSA; the Plans identified the incorrect payments
and initiated recovery and/or returned the funds to the Program. As of September
30, 2011, the Plans have returned $5,721,351 to the FEHBP.
For the remaining $1,334,355 questioned in the draft report the Plans agreed that
these were claim payment errors identified as a result of this audit. The errors
resulted from the following reasons:
$341,713 of these claims were paid incorrectly because the claims processor did
not use the Medicare Summary Notice submitted by the provider to process the
claim correctly;
$13,403 of these claims were paid incorrectly because the claim was not worked
timely from the retroactive enrollment report or the FEP on-line uncoordinated
Medicare application;
$96,288 of these claims were paid incorrectly because the claim was not
included on the retroactive enrollment report, FEP on-line uncoordinated
Medicare application or FEP adhoc reports, and therefore the Plan was not
aware that the claim needed to be adjusted;
$36,487 of these claims were paid incorrectly because the Medicare EOB was
missed when processing the claim;
$63,302 of these claims were paid incorrectly because the processor incorrectly
overrode the Medicare deferral;
$244,258 of these claims were paid incorrectly because of manual coding errors;
$101,599 of these claims were paid incorrectly because a system coding error
caused claim to pay incorrectly;
$155,746 of these claims were paid incorrectly because the FEP claims system
did not defer the claim;
$33,468 were paid incorrectly because the appropriate documentation was not
available at the time of processing; and
$248,091 in claim payments were paid incorrectly for other reasons.
The Plans will continue to pursue the remaining overpayments as required by CS
1039, Section 2.3(g) (l).
October 14, 2011
Page 4
`
The Association’s Action Plan includes oversight and governance procedures to
assure all BCBS Plans are following the corrective action plans. In addition, to
reduce the number and frequency of uncoordinated Medicare claims, BCBSA has
implemented additional steps to our action plan that includes the following:
Work with top 10 poor performing Plans to develop and implement an action plan
to improve performance. We expect to be on target to have the action plans in
place by fourth quarter 2011.
Modify FEP post payment review processes to match with OIG global audit
claims listings where appropriate. We have completed the analysis of the OIG
and are on target to update the current FEP Uncoordinated Medicare application
by second quarter 2012.
Identify new Medicare COB pre-payment edits to implement in the FEP Claims
System. Two additional system modifications have been identified that would
also reduce the Medicare COB findings that deal with inpatient facility Part B
charges as well as changes related to payment of Home Health and Skill Nursing
Facility Medicare claims. All new edits are to be completed by fourth quarter
2012.
Enhance pre-payment editing of Home Health claims with no Medicare A
coordination that may be eligible for Medicare B coordination to be completed by
January 2012.
Modify existing pre-payment compatibility editing to increase clarity around
Medicare Payment Disposition usage to be completed by January 2012.
Provide additional Plan guidance on mapping data from Medicare crossover
claims to the correct Medicare Payment Disposition to be completed by January
2012.
Create new Explanation of Benefit Remarks to more accurately explain denials
due to no Medicare coordination to be completed by January 2012.
Recommendation 2:
OPM OIG recommended that BCBSA provide support for each COB error that is
identified during the audit (even if identified and/or adjusted prior to this audit by the
BCBS Association and/or a BCBS Plan).
BCBSA Response:
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, and
agreed by each Plan location.
Audit on Global Coordination of Benefits for Bluecross and Blueshield Plans
Published by the Office of Personnel Management, Office of Inspector General on 2012-03-28.
Below is a raw (and likely hideous) rendition of the original report. (PDF)