u.s. OFFICE OF PERSONNEL MANAGEMENT OFFICE OF THE INSPECTOR GENERAL OFFICE OF AUDITS Final Audit Report Subject: AUDIT ON GLOBAL COORDINAnON OF BENEFITS FOR BLUECROSS AND BLUESHIELD PLANS Report 1\"0. IA-99-00-I2-029 Date: March 20, 2013 --CAUTIO:"-- Thi, aud it ....port ha s b....n di ,tri bulHl to F~ dHa l officia l. who n e .... spon. ib l~ for th~ a d m in istratio n of th~ audit..d p r ogram. This audit r ..p ort rna }"co nta in p r opriet a r y da ta whic h i. protect ..d b y F ed er al la w ( 18 L".S .c. 11105). T her ..fore , whi le this a ud it report i . a ibbl.. und..r the Fr....d om oflnformation Act a nd m ad.. 3\-ailahl .. to tt... p ubli c on the DIG we bpage, cautio n ......d. to be n ,uci,ed b..fo .... r elu sin g th e report t o th e g......ral p ubli c 3 S it may con ta in propri..' a r }"inf ormati on that was rtodac ted from tbo- p ublicly d i, lrib ut ..d r opy . AUDIT REPORT Federal Employees Health Benefits Program Service Benefit Plan Contract CS 1039 BlueCross BlueShield Association Plan Code 10 Global Coordination of Benefits BlueCross and BlueShield Plans REPORT NO. 1A-99-00-12-029 DATE: 03/20/13 Michael R. Esser Assistant Inspector General for Audits --CAUTION-- This audit report has been distributed to Federal officials who are responsible for the administration of the audited program. This audit report may contain proprietary data which is protected by Federal law (18 U.S.C. 1905). Therefore, while this audit report is available under the Freedom of Information Act and made available to the public on the OIG webpage, caution needs to be exercised before releasing the report to the general public as it may contain proprietary information that was redacted from the publicly distributed copy. EXECUTIVE SUMMARY Federal Employees Health Benefits Program Service Benefit Plan Contract CS 1039 BlueCross BlueShield Association Plan Code 10 Global Coordination of Benefits BlueCross and BlueShield Plans REPORT NO. 1A-99-00-12-029 DATE: 03/20/13 This final audit report on the Federal Employees Health Benefits Program (FEHBP) operations at all BlueCross and BlueShield (BCBS) plans questions $4,690,639 in health benefit charges. The BlueCross BlueShield Association (Association) and/or BCBS plans agreed with $2,478,834 and disagreed with $2,211,805 of the questioned charges. Our limited scope audit was conducted in accordance with Government Auditing Standards. The audit covered health benefit payments from June 1, 2011 through March 31, 2012 as reported in the Annual Accounting Statements. Specifically, we identified claims incurred on or after May 15, 2011 that were reimbursed from June 1, 2011 through March 31, 2012 and potentially not coordinated with Medicare. We determined that the BCBS plans did not properly coordinate 10,771 claim line payments with Medicare as required by the FEHBP contract. As a result, the FEHBP was overcharged $4,393,785 for these claim line payments. When we notified the Association of the coordination of benefit (COB) errors on April 26, 2012, these claims were within the Medicare timely filing requirement and could be filed with Medicare for coordination of benefits. Based on this, since the BCBS plans are required to initiate recovery efforts immediately for the actual COB errors, our expectation is for the plans to recover and return all of the actual COB errors to the FEHBP. A portion of the questioned amount may be determined to be not paid in error during the audit resolution phase. i Additionally, we identified 725 claim line payments that were not COB errors but contained other claim payment errors, resulting in overcharges of $296,854 to the FEHBP. In total, we determined that the BCBS plans incorrectly paid 11,496 claim lines, resulting in overcharges of $4,690,639 to the FEHBP. ii 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 Review .......................................................5 IV. MAJOR CONTRIBUTORS TO THIS REPORT ...........................................................14 V. SCHEDULES A. UNIVERSE AND SAMPLE OF POTENTIALLY UNCOORDINATED CLAIM LINES B. SUMMARY OF QUESTIONED CHARGES APPENDIX (BlueCross BlueShield Association reply, dated August 31, 2012, 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 64 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-99-00-11-055, dated March 28, 2012) for claims reimbursed from July 11, 2010 through April 30, 2011 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 May 2, 2012. The Association’s comments 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 February 11, 2013 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 June 1, 2011 through March 31, 2012 as reported in the Annual Accounting Statements. Using our data warehouse, we performed a computer search on the BCBS claims database to identify claims incurred on or after May 15, 2011 that were reimbursed from June 1, 2011 through March 31, 2012 and potentially not coordinated with Medicare. Based on our claim error reports, we identified 422,660 claim lines, totaling $48,977,166 in payments, that potentially were not coordinated with Medicare.2 From this universe, we selected and reviewed 48,559 claim lines, totaling $18,748,248 in payments, for coordination of benefits with Medicare. When we notified the Association of these potential errors on April 26, 2012, the claims were within the Medicare timely filing requirement and could be filed with Medicare for coordination of benefits.3 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 This universe did not include 3 inpatient claim lines with a discharge date of February 29, 2012 and 46 outpatient and 859 professional claim lines with an incurred date of February 29, 2012. These 908 claim lines with potential coordination of benefit errors, totaling $106,772 in payments, were inadvertently excluded from the universe. 3 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 Operations Center and the BCBS plans. Through audits and a reconciliation process, we have verified the reliability of the BCBS claims data in our data warehouse, which was used to identify the universe of potential COB errors. The BCBS claims data is provided to us on a monthly basis by the FEP Operations Center, and after a series of internal steps, uploaded into our data warehouse. However, due to time constraints, we did not verify the reliability of some of the data generated by the BCBS plans’ local claims systems. 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 May 2012 through February 2013. 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 48,559 claim lines, totaling $18,748,248 in payments, from a universe of 422,660 claim lines, totaling $48,977,166 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. We then conducted a limited review of the plans’ agreed responses and an expanded review of the plans’ disagreed responses to determine the appropriate questioned amount. We also verified on a limited test basis if the plans had initiated recovery efforts, adjusted or voided the claims, and/or completed the recovery process by the audit request due date (i.e., July 31, 2012) for the claim payment errors in our sample. Additionally, we reviewed the status of corrective actions that have been or are in the process of being implemented by the Association, FEP Operations Center and/or BCBS plans, as a result of our previous global audits, to reduce potential coordination of benefit errors. 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 2011 and 2012 Service Benefit Plan brochures, 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 Review $4,690,639 The BCBS plans incorrectly paid 11,496 claim lines, resulting in overcharges of $4,690,639 to the FEHBP. Specifically, the BCBS plans did not properly coordinate 10,771 claim line payments, totaling $5,260,435, 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 $4,393,785 for these 10,771 claim lines. The remaining 725 claim line payments were not coordination of benefit (COB) errors but contained other claim payment errors, resulting in overcharges of $296,854 to the FEHBP. The 2011 BlueCross and BlueShield Service Benefit Plan brochure, page 121, Primary Payer Chart, illustrates when Medicare is the primary payer. In addition, page 25 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 on or after May 15, 2011 and reimbursed from June 1, 2011 through March 31, 2012, we performed a computer search and identified 422,660 claim lines, totaling $48,977,166 in payments, that potentially were not coordinated with Medicare. From this universe, we selected for review a sample of 48,559 claim lines, totaling $18,748,248 in payments, to determine whether the BCBS plans complied with the contract provisions relative to COB with Medicare. When we submitted our sample of potential COB errors to the Association on April 26, 2012, the claims were within the Medicare timely filing requirement and could be filed with Medicare for coordination of benefits. Based on this, since the BCBS plans are required to initiate recovery efforts immediately for the actual COB errors, our expectation is for the plans to recover and return all of the actual COB errors to the FEHBP. A portion of the questioned amount may be determined to be not paid in error during the audit resolution phase. 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 5 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. 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 pays 80 percent 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 the 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 59 of the 64 BCBS plan sites did not properly coordinate claim charges with Medicare. Specifically, we identified 10,771 claim lines, totaling $5,260,435 in payments, where the FEHBP paid as the primary insurer when Medicare was the primary insurer. We estimate that the FEHBP was overcharged $4,393,785 for these claim line payments. 4 4 In addition, there were 4,937 claim lines, totaling $3,172,585 in COB overpayments, that were identified by the BCBS plans before our audit notification date (i.e., April 2, 2012) and adjusted and returned to the FEHBP by the audit request due date (i.e., July 31, 2012). Since these overpayments were already identified by the BCBS plans before our audit notification date and adjusted and returned to the FEHBP by the audit request due date, we did not question these overpayments in the final report. 6 The following table details the six categories of questioned COB claim lines: Claim Amount Amount Category Lines Paid Questioned Category A: Medicare Part A Primary for 80 $1,354,690 $1,306,092 Inpatient (I/P) Facility Category B: Medicare Part A Primary for Skilled Nursing/Home Health Care (HHC)/ 3,102 $539,249 $526,570 Hospice Care Category C: Medicare Part B Primary for Certain I/P Facility Charges 31 $406,290 $107,022 Category D: Medicare Part B Primary for Skilled Nursing/HHC/Hospice Care 13 $93,065 $23,266 Category E: Medicare Part B Primary for Outpatient (O/P) Facility and Professional 4,792 $1,483,605 $1,270,550 Category F: Medicare Part B Primary for O/P Facility and Professional (Participation Code F) 2,753 $1,383,536 $1,160,285 Total 10,771 $5,260,435 $4,393,785 Our audit disclosed the following for the COB errors: • For 5,499 (51 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 Direct 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 Direct 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 $2,358,311 for these COB errors. • For 2,722 (25 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 Direct 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 Direct 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 D, E, F, G and N were 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 $1,129,325 for these COB errors. 7 • For 1,427 (13 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 Direct Claims System for Medicare COB review by the processors. As a result, the FEHBP was overcharged $349,252 for these COB errors. • For 1,123 (11 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 $556,897 for these COB errors. Of the $4,393,785 in questioned COB errors: • $2,743,303 (62 percent) represents 6,698 claim line overpayments that were identified as a result of our audit. We noted that the BCBS plans initiated recovery efforts for these overpayments after receiving our audit request on April 26, 2012. • $866,775 (20 percent) represents 1,824 claim line overpayments where the BCBS plans initiated recovery efforts on or after our audit notification date (i.e., April 2, 2012) but before receiving our audit request (i.e., April 26, 2012), and also completed the recovery process and adjusted the claims by the audit request due date (i.e., July 31, 2012). However, since the recoveries for these overpayments were initiated on or after our audit notification date, we are continuing to question these COB errors. • $783,707 (18 percent) represents 2,249 claim line overpayments where the BCBS plans initiated recovery efforts before receiving our audit request (i.e., April 26, 2012) but had not recovered the overpayments and adjusted the claims by the audit request due date (i.e., July 31, 2012). Since these overpayments had not been recovered and returned to the FEHBP by the audit request due date, we are continuing to question these COB errors. Additionally, we identified 725 claim line payments that were not COB errors but contained other claim payment errors, resulting in overcharges of $296,854 to the FEHBP. These claim payment errors resulted from the following: • The BCBS plans incorrectly paid 558 claim lines due to the plans’ local claim systems and/or the FEP Direct Claims System not deferring non-covered ambulance claims. As a result, the FEHBP was overcharged $221,439 for these non-covered ambulance services. The 2011 BlueCross and BlueShield Service Benefit Plan brochure, page 83, states that ambulance transport services are covered under the following circumstances only: “medical emergency or accidental injury, when associated with inpatient hospital care, or when associated with covered hospice care.” Additionally, page 83 of this brochure defines non-covered services as: “Ambulance and any other modes of transportation to or from services including but not limited to physician appointments, dialysis, or diagnostic tests not associated with covered inpatient hospital care.” In each instance, the BCBS plan paid the claim line for a non- covered ambulance service. • The BCBS plans paid 167 claim lines using the incorrect procedure allowances or pricing methods when pricing these claim lines, resulting in overcharges of $75,415 to the FEHBP. 8 Of this $296,854 in questioned claim payment errors (non-COB errors): • $269,529 (91 percent) represents 710 claim line overpayments that were identified as a result of our audit. We noted that the BCBS plans initiated recovery efforts for these overpayments after receiving our audit request on April 26, 2012. • $27,301 (9 percent) represents 14 claim line overpayments where the BCBS plans initiated recovery efforts on or after our audit notification date (i.e., April 2, 2012) but before receiving our audit request (i.e., April 26, 2012), and also completed the recovery process and adjusted or voided the claims by the audit request due date (i.e., July 31, 2012). However, since the recoveries for these overpayments were initiated on or after our audit notification date, we are continuing to question these claim payment errors. • $24 represents one claim line overpayment where the BCBS plans initiated recovery efforts before receiving our audit request (i.e., April 26, 2012) but had not recovered the overpayment and adjusted or voided the claim by the audit request due date (i.e., July 31, 2012). Since the overpayment had not been recovered and returned to the FEHBP by the audit request due date, we are continuing to question this claim payment error. Regarding the payment of non-covered ambulance services, in May 2011 the Association identified that the FEP Direct Claims System allowed payment of these claims. According to the Association, the FEP Operations Center implemented corrective actions in April 2012 and developed system edits to defer payment of non-covered ambulance claims in the FEP Direct Claims System. However, the BCBS plans had not previously initiated recoveries for these non- covered ambulance claims. (Note: In our sample of potential COB errors, we identified 558 non-covered ambulance claim lines, totaling $221,439 in overpayments, which were processed by 29 of the 64 BCBS plans. We also noted that the BCBS plans adjusted or voided 171 of these claim lines, totaling $38,619 in payments, in the FEP Direct Claims System after receiving our audit notification letter, dated April 2, 2012. The remaining 387 non-covered ambulance claim lines, totaling $182,820 in payments, had not been adjusted or voided in the FEP Direct claims system as of December 31, 2012.) Due to the impact of this system-wide error (payment of non-covered ambulance services), we requested the Association to provide a data extract of all FEP claims that were paid during the period June 1, 2011 through December 31, 2012 that contained non-covered transport procedure codes, such as “A0426” (Ambulance Service, Advanced Life Support, Non-emergency Transport), “A0428” (Ambulance Service, Basic Life Support, Non-emergency Transport), and “A0425” (Ground Mileage, per Statute Mile), and/or potentially included non-covered ambulance services. The Association provided the requested data extract on February 11, 2013, identifying 24,425 FEP claim lines, totaling $3,266,025 in payments, related to potentially non-covered ambulance services. After completing our review of these claim line payments, we will issue a supplemental final report if there are significant overcharges to the FEHBP for non-covered ambulance claims. 9 Association's Response: In response to the draft report, the Association states, “After reviewing the OIG listing of potentially uncoordinated Medicare COB claims . . . the BCBS Association agrees that claims totaling $2,351,475 were paid incorrectly and identified by the audit.” The Association disagrees with $13,414,106 of the questioned charges in the draft report. For this contested amount, the Associations states, “we noted the following: • $8,589,815 in claims that were paid correctly; • $3,086,043 in claims that were initially paid incorrectly but the error was identified and corrected before the Audit Notification date and overpayment was recovered and returned before the response was due to OPM; • $851,335 in claims that were initially paid incorrectly but recovery was initiated on or after the Audit Notification date but before receiving the OIG sample and the overpayment was recovered and returned before the response was due to OPM; • $886,952 [in] claims that were initially paid incorrectly but recovery was initiated before receiving the OIG sample, however overpayment was not recovered and returned before the response was due to OPM;” Regarding corrective actions, the Association states, “The Association’s Action Plan includes steps to include that the top 10 Plans with COB errors are following the corrective action plan. In addition, to reduce the number and frequency of uncoordinated Medicare COB claims, BCBSA has completed the following: • Implemented an edit to defer all facility claims with Medicare B Revenue Codes where the member does not have Part A but has Part B. . . . • Modified the Uncoordinated Medicare Application to run monthly . . . • Required the top ten Plans with the highest COB findings to develop and implement action plans to improve performance and address the root causes behind erroneous Medicare COB payments. These Plans have taken steps to address operational weaknesses such as proactively working daily retroactive enrollment reports to ensure corrective action is completed timely, training for processing staff, communicating with the provider community to reinforce optimal billing practices that reduce downstream issues, and enhancing in-line auditing techniques to focus on claims with a high potential for claims payment errors. • Modified the FEP post payment review process to match with OIG global audit claims listings where appropriate. . . . • Modified the FEP claims system to defer inpatient facility Part B charges as well as changes related to payment of Home Health and Skill Nursing Facility Medicare claims for review and coordination. . . . • Modified existing pre-payment compatibility editing to increase clarity around Medicare Payment Disposition usage. . . . 10 The following corrective actions remain in process and under review: • Provide additional Plan guidance on mapping data from Medicare crossover claims to the correct Medicare Payment Disposition code. . . . • Modify the FEP claims system to require Plans to indicate that facility claims not coordinated with Medicare Part A are supported by a Medical Denial Notice. . . . • Create new Explanation of Benefit Remarks to more accurately explain denials due to no Medicare coordination. . . . • Modify the FEP claims system to accept Medicare denial reasons. This will allow additional editing of Medicare claims to ensure that claims are paid correctly. . . . To ensure that Plans review all claims incurred back to the Medicare effective date: • FEP updated the Plan Administrative Manual to instruct the Plans on what to do with the Retroactive Enrollment Report. • As part of the FEP CPR, FEP reviews Plan procedures for reviewing retroactive enrollment reports as well as tests transactions to ensure that all claims are reviewed back to the Medicare effective dates.” 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 $4,690,639. If the BCBS plans identified the claim payment errors and initiated recovery efforts before our audit notification date (i.e., April 2, 2012) and completed the recovery process (i.e., adjusted or voided the claims and recovered and returned the overpayments to the FEHBP) by the audit request due date (i.e., July 31, 2012), 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 $2,478,834 and disagree with $2,211,805 of the revised questioned charges. Although the Association only agrees with $2,351,475 in its response, the BCBS plans’ documentation supports concurrence with $2,478,834. Based on the Association’s response and/or the BCBS plans’ documentation, the contested amount of $2,211,805 represents the following items: • $894,076 ($866,775 for COB errors plus $27,301 for non-COB errors) of the contested amount represents claim overpayments where the BCBS plans initiated recovery efforts on or after our audit notification date (i.e., April 2, 2012) but before receiving our audit request (i.e., April 26, 2012), and also completed the recovery process and adjusted or voided the claims by the audit request due date (i.e., July 31, 2012). However, since the recoveries for these overpayments were initiated on or after our audit notification date, we are continuing to question this amount in the final report. 11 • $783,731 ($783,707 for COB errors plus $24 for non-COB errors) of the contested amount represents claim overpayments where the BCBS plans initiated recovery efforts before receiving our audit request (i.e., April 26, 2012) but had not recovered the overpayments and/or adjusted or voided the claims by the audit request due date (i.e., July 31, 2012). Since these overpayments had not been recovered and returned to the FEHBP by the audit request due date, we are continuing to question this amount in the final report. • $221,439 of the contested amount represents non-covered ambulance claims (non-COB errors). Even though the Association has implemented corrective actions to defer non- covered ambulance claims in the FEP Direct Claims System and the BCBS plans have initiated recovery efforts for many of these claim payments, the Association and BCBS plans disagree with these questioned charges pending further review. • $192,135 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. • $93,329 of the contested amount represents claim lines that the BCBS plans agree were COB errors. 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. • $27,095 of the contested amount represents COB errors 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 $4,393,785 for the 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. 12 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 all BCBS plans are using the daily retroactive enrollment reports and reviewing all claims incurred back to the Medicare effective dates when the other party liability information is updated in the FEP Direct 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 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 continues to utilize 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 Direct Claims System. Recommendation 5 Due to the significant number of manual processing errors, we recommend that the contracting officer require the Association to ensure that the FEP Operations Center’s corrective action, inputting a field(s) in the FEP Direct Claims System to collect Remittance Advice Remark Codes (RARC) and Claim Adjustment Reason Codes (CARC) from the BCBS plans, is implemented during 2013. 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 Direct 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. Recommendation 7 We recommend that the contracting officer disallow $296,854 for the non-COB claim payment errors and verify that the BCBS plans return all amounts recovered to the FEHBP (See Schedule B for a summary of these questioned non-COB claim payment errors by BCBS plan). 13 IV. MAJOR CONTRIBUTORS TO THIS REPORT Experience-Rated Audits Group , Auditor-In-Charge , Auditor , Auditor _______________________________________________________ , Chief Information Systems Audits Group , Chief , Information Technology Project Manager Senior Information Technology Specialist 14 SCHEDULE A V. SCHEDULES Coordination of Benefits with Medicare BlueCross and BlueShield Plans Claims Reimbursed from June 1, 2011 through March 31, 2012 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 Amounts Overcharge Potential CATEGORY Claims Claim Lines Patients Total Payments Methodology Claims Claim Lines Patients Paid Percentage Overcharge Category A: Medicare Part A Primary for 327 327 267 $4,248,365 all patients selected 327 327 267 $4,248,365 100% $4,248,365 Inpatient Facility Category B: Medicare Part A Primary for patients with cumulative 3,864 12,403 1,133 $2,286,319 2,510 9,129 426 $2,015,018 100% $2,015,018 Skilled Nursing/HHC/Hospice Care claims of $1,000 or more Category C: Medicare Part B Primary for 49 49 47 $592,652 all patients selected 49 49 47 $592,652 25% $148,163 Certain Inpatient Facility Charges Category D: Medicare Part B Primary for patients with cumulative 100 216 53 $310,624 50 50 28 $290,429 25% $72,607 Skilled Nursing/HHC/Hospice Care claims of $2,500 or more Category E: Medicare Part B Primary for patients with cumulative 7,970 14,928 2,379 $4,143,214 5,075 10,785 679 $3,583,303 80% $2,866,642 Outpatient Facility and Professional claims of $1,000 or more Category F: Medicare Part B Primary for patients with cumulative Outpatient Facility and Professional 268,410 394,737 146,513 $37,395,992 11,107 28,219 1,024 $8,018,481 80% $6,414,785 claims of $3,500 or more (Participation Code F) Totals 280,720 422,660 $48,977,166 19,118 48,559 $18,748,248 $15,765,581 Coordination of Benefits with Medicare SCHEDULE B BlueCross and BlueShield Plans Page 2 of 3 Claims Reimbursed from June 1, 2011 through March 31, 2012 SUMMARY OF QUESTIONED CHARGES COB Category A COB Category B COB Category C COB Category D COB Category E COB Category F ALL COB Errors Non-COB Errors TOTAL QUESTIONED Plan Plan Claim Amount Claim Amount Claim Amount Claim Amount Claim Amount Claim Amount Claim Amount Claim Amount Claim Amount Plan Name Site State Lines Questioned Lines Questioned Lines Questioned Lines Questioned Lines Questioned Lines Questioned Lines Questioned Lines Questioned Lines Questioned 003 NM BlueCross BlueShield of New Mexico (HCSC) 0 $0 0 $0 0 $0 0 $0 0 $0 1 $5,504 1 $5,504 0 $0 1 $5,504 005 GA WellPoint BlueCross BlueShield of Georgia 2 $70,346 100 $12,149 2 $2,224 0 $0 220 $56,782 127 $21,702 451 $163,204 20 $6,444 471 $169,648 006 MD CareFirst BlueCross BlueShield (Maryland Service Area) 2 $28,254 28 $12,725 1 $27,257 0 $0 476 $196,191 70 $38,780 577 $303,207 110 $9,909 687 $313,116 007 LA BlueCross BlueShield of Louisiana 8 $133,454 159 $20,892 0 $0 0 $0 203 $40,214 18 $1,629 388 $196,189 54 $26,068 442 $222,256 009 AL BlueCross BlueShield of Alabama 3 $7,096 2 $11,160 0 $0 0 $0 140 $59,628 4 $4,541 149 $82,425 40 $14,524 189 $96,948 010 ID BlueCross of Idaho Health Service 0 $0 4 $1,401 0 $0 0 $0 34 $16,930 0 $0 38 $18,331 3 $216 41 $18,547 011 MA BlueCross BlueShield of Massachusetts 1 $459 50 $4,986 0 $0 0 $0 15 $2,339 24 $7,523 90 $15,307 2 $4,200 92 $19,506 012 NY BlueCross BlueShield of Western New York 0 $0 0 $0 0 $0 0 $0 0 $0 18 $13,218 18 $13,218 0 $0 18 $13,218 013 PA Highmark BlueCross BlueShield 0 $0 0 $0 0 $0 0 $0 118 $45,009 193 $281,219 311 $326,229 0 $0 311 $326,229 015 TN BlueCross BlueShield of Tennessee 1 $7,436 33 $4,485 0 $0 0 $0 16 $4,312 65 $24,948 115 $41,181 41 $7,904 156 $49,085 016 WY BlueCross BlueShield of Wyoming 0 $0 13 $1,680 0 $0 0 $0 0 $0 0 $0 13 $1,680 0 $0 13 $1,680 017 IL BlueCross BlueShield of Illinois (HCSC) 2 $56,253 63 $7,936 2 $3,162 0 $0 196 $46,280 47 $44,860 310 $158,491 15 $7,092 325 $165,583 021 OH WellPoint BlueCross BlueShield of Ohio 0 $0 62 $38,015 1 $1,249 5 $6,677 0 $0 24 $43,654 92 $89,595 10 $2,765 102 $92,360 024 SC BlueCross BlueShield of South Carolina 3 $33,764 35 $2,920 0 $0 0 $0 9 $1,302 0 $0 47 $37,987 0 $0 47 $37,987 027 NH WellPoint BlueCross BlueShield of New Hampshire 0 $0 31 $22,059 0 $0 1 $5,214 0 $0 14 $3,137 46 $30,410 0 $0 46 $30,410 028 VT BlueCross BlueShield of Vermont 0 $0 7 $1,306 0 $0 0 $0 7 $1,805 2 $105 16 $3,216 0 $0 16 $3,216 029 TX BlueCross BlueShield of Texas (HCSC) 4 $58,261 80 $4,995 6 $12,065 0 $0 729 $219,122 128 $65,354 947 $359,796 184 $108,405 1,131 $468,201 030 CO WellPoint BlueCross BlueShield of Colorado 1 $13,386 19 $3,314 0 $0 0 $0 14 $2,883 6 $8,789 40 $28,372 14 $14,045 54 $42,417 031 IA Wellmark BlueCross BlueShield of Iowa 1 $5,335 31 $3,108 0 $0 0 $0 40 $2,951 0 $0 72 $11,394 0 $0 72 $11,394 032 MI BlueCross BlueShield of Michigan 0 $0 31 $5,186 0 $0 0 $0 71 $10,132 316 $70,410 418 $85,728 0 $0 418 $85,728 033 NC BlueCross BlueShield of North Carolina 4 $83,493 146 $10,511 1 $894 0 $0 296 $60,073 103 $31,362 550 $186,334 22 $2,607 572 $188,941 034 ND BlueCross BlueShield of North Dakota 0 $0 0 $0 0 $0 0 $0 28 $3,900 0 $0 28 $3,900 0 $0 28 $3,900 036 PA Capital BlueCross 2 $18,602 9 $1,315 1 $4,808 0 $0 0 $0 15 $5,709 27 $30,434 0 $0 27 $30,434 037 MT BlueCross BlueShield of Montana 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 4 $1,376 4 $1,376 038 HI BlueCross BlueShield of Hawaii 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 039 IN WellPoint BlueCross BlueShield of Indiana 0 $0 4 $15,100 0 $0 0 $0 43 $11,383 11 $15,025 58 $41,508 42 $13,186 100 $54,694 040 MS BlueCross BlueShield of Mississippi 1 $1,472 50 $5,214 0 $0 0 $0 39 $7,709 121 $16,944 211 $31,339 17 $8,959 228 $40,298 041 FL BlueCross BlueShield of Florida 9 $289,317 111 $14,767 2 $4,378 0 $0 175 $55,918 399 $188,158 696 $552,538 6 $4,878 702 $557,417 042 MO BlueCross BlueShield of Kansas City 0 $0 0 $0 0 $0 0 $0 2 $3,648 27 $11,395 29 $15,043 0 $0 29 $15,043 043 ID Regence BlueShield of Idaho 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 044 AR BlueCross BlueShield of Arkansas 3 $18,147 0 $0 0 $0 0 $0 146 $13,156 0 $0 149 $31,303 2 $528 151 $31,831 045 KY WellPoint BlueCross BlueShield of Kentucky 1 $214 57 $8,820 1 $7,789 0 $0 0 $0 1 $45 60 $16,868 7 $1,043 67 $17,911 047 WI WellPoint BlueCross BlueShield United of Wisconsin 0 $0 249 $19,527 0 $0 0 $0 14 $30,274 14 $10,857 277 $60,657 0 $0 277 $60,657 048 NY Empire BlueCross BlueShield (WellPoint) 2 $60,852 68 $8,236 2 $1,231 0 $0 204 $23,172 254 $22,666 530 $116,157 2 $639 532 $116,796 049 NJ Horizon BlueCross BlueShield of New Jersey 0 $0 0 $0 0 $0 0 $0 15 $2,455 74 $17,002 89 $19,457 2 $593 91 $20,050 050 CT WellPoint BlueCross BlueShield of Connecticut 0 $0 64 $5,341 0 $0 1 $3,219 0 $0 2 $2,960 67 $11,520 2 $1,121 69 $12,640 052 CA WellPoint BlueCross of California 1 $15,306 294 $69,410 0 $0 0 $0 112 $27,681 13 $9,093 420 $121,490 0 $0 420 $121,490 053 NE BlueCross BlueShield of Nebraska 0 $0 15 $1,343 0 $0 0 $0 36 $13,516 1 $360 52 $15,219 0 $0 52 $15,219 054 WV Mountain State BlueCross BlueShield 0 $0 26 $2,622 0 $0 0 $0 2 $2,089 1 $4,864 29 $9,574 0 $0 29 $9,574 055 PA Independence BlueCross 11 $126,873 12 $15,969 0 $0 0 $0 20 $5,353 0 $0 43 $148,196 0 $0 43 $148,196 056 AZ BlueCross BlueShield of Arizona 2 $55,090 175 $12,019 0 $0 0 $0 104 $17,051 7 $21,983 288 $106,143 0 $0 288 $106,143 Coordination of Benefits with Medicare SCHEDULE B BlueCross and BlueShield Plans Page 3 of 3 Claims Reimbursed from June 1, 2011 through March 31, 2012 SUMMARY OF QUESTIONED CHARGES COB Category A COB Category B COB Category C COB Category D COB Category E COB Category F ALL COB Errors Non-COB Errors TOTAL QUESTIONED Plan Plan Claim Amount Claim Amount Claim Amount Claim Amount Claim Amount Claim Amount Claim Amount Claim Amount Claim Amount Plan Name Site State Lines Questioned Lines Questioned Lines Questioned Lines Questioned Lines Questioned Lines Questioned Lines Questioned Lines Questioned Lines Questioned 058 OR Regence BlueCross BlueShield of Oregon 1 $250 9 $1,630 0 $0 0 $0 5 $7,394 5 $8,988 20 $18,262 8 $7,010 28 $25,272 059 ME WellPoint BlueCross BlueShield of Maine 0 $0 32 $4,337 3 $9,213 2 $2,354 1 $51 3 $103 41 $16,057 0 $0 41 $16,057 060 RI BlueCross BlueShield of Rhode Island 1 $37,644 67 $1,360 2 $3,857 0 $0 15 $853 2 $20 87 $43,733 0 $0 87 $43,733 061 NV WellPoint BlueCross BlueShield of Nevada 0 $0 19 $1,910 0 $0 0 $0 18 $4,439 0 $0 37 $6,349 0 $0 37 $6,349 062 VA WellPoint BlueCross Blue Shield of Virginia 2 $21,144 55 $28,128 1 $1,483 3 $3,656 227 $32,452 106 $19,140 394 $106,003 9 $881 403 $106,884 064 NY Excellus BlueCross BlueShield of the Rochester Area 0 $0 68 $6,795 0 $0 0 $0 0 $0 0 $0 68 $6,795 1 $21 69 $6,815 066 UT Regence BlueCross BlueShield of Utah 0 $0 82 $6,714 0 $0 0 $0 24 $9,899 3 $463 109 $17,076 2 $601 111 $17,676 067 CA BlueShield of California 0 $0 0 $0 0 $0 0 $0 329 $43,862 31 $12,222 360 $56,084 40 $31,510 400 $87,594 068 PR Triple-S Salud, Inc. 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 069 WA Regence BlueShield of Washington 0 $0 0 $0 0 $0 0 $0 68 $6,729 26 $11,497 94 $18,226 13 $7,989 107 $26,215 070 AK BlueCross BlueShield of Alaska 0 $0 0 $0 1 $4,094 0 $0 0 $0 1 $26 2 $4,120 0 $0 2 $4,120 074 SD Wellmark BlueCross BlueShield of South Dakota 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 0 $0 075 WA Premera BlueCross 1 $33,308 1 $274 0 $0 0 $0 73 $3,666 19 $6,799 94 $44,047 0 $0 94 $44,047 076 MO WellPoint BlueCross BlueShield of Missouri 1 $5,932 85 $6,611 2 $4,539 1 $2,147 5 $3,551 33 $7,022 127 $29,802 0 $0 127 $29,802 078 MN BlueCross BlueShield of Minnesota 4 $52,535 0 $0 1 $12,456 0 $0 101 $54,933 67 $10,548 173 $130,471 2 $653 175 $131,125 079 NY Excellus BlueCross BlueShield of Central New York 0 $0 56 $5,626 0 $0 0 $0 0 $0 0 $0 56 $5,626 0 $0 56 $5,626 082 KS BlueCross BlueShield of Kansas 0 $0 9 $1,062 0 $0 0 $0 1 $1,316 0 $0 10 $2,378 0 $0 10 $2,378 083 OK BlueCross BlueShield of Oklahoma (HCSC) 0 $0 159 $24,650 1 $1,971 0 $0 13 $3,918 42 $9,426 215 $39,966 8 $3,150 223 $43,116 084 NY Excellus BlueCross BlueShield of Utica-Watertown 1 $1,959 0 $0 0 $0 0 $0 0 $0 0 $0 1 $1,959 0 $0 1 $1,959 085 DC CareFirst BlueCross BlueShield (DC Service Area) 5 $69,910 303 $74,487 1 $4,351 0 $0 388 $114,228 299 $57,059 996 $320,036 43 $8,538 1,039 $328,574 088 PA BlueCross of Northeastern Pennsylvania 0 $0 12 $1,289 0 $0 0 $0 0 $0 0 $0 12 $1,289 0 $0 12 $1,289 089 DE BlueCross BlueShield of Delaware 0 $0 117 $13,188 0 $0 0 $0 0 $0 0 $0 117 $13,188 0 $0 117 $13,188 092 DC CareFirst BlueCross BlueShield (Overseas Area) 0 $0 0 $0 0 $0 0 $0 0 $0 16 $23,176 16 $23,176 0 $0 16 $23,176 TOTALS 80 $1,306,092 3,102 $526,570 31 $107,022 13 $23,266 4,792 $1,270,550 2,753 $1,160,285 10,771 $4,393,785 725 $296,854 11,496 $4,690,639 Appendix BlueCross lllueShiel d AssoclaUon ..\Ii As.""Ciation of Indepe ndent August 31, 2012 Blue Cross and Illue Shield PlHns FNkral Empl oyee Program lJlO G.Su-~, NW roup re Wa shington, OC 20005 Experience-Rated Audits Group 202.942.1000 Fax 202.942.l125 Office of the Inspector General U.S. Office of Personnel Management 1900 E Street, Room 6400 W ashington, DC 204 15-1100 Reference: OPM DRAFT AUDIT REPORT Tier XII Global Coordination of Benefits Audit Report #1A-99-00-12-029 Dear T his is in response to the above - referenced U.S. Office of Personne l Management (OPM) Draft Audit Report concerning the Global Coordinat ion of Benefits Audit for claims paid from June 1,2011 through March 31, 2012. Our comments concerni ng the findings in the report are as follows: Recommendation 1 and 3: Coordination of Benefits with Medicare Questioned Amount $15.765.580 T he OPM OIG submitted the ir sample of potent ial Medicare Coordination of Benefits errors to the Blue Cross Blue Shield Asso ciation (BCBS) on Apr il 26, 2012 . The BCBS Asso ciation and/or the BCBS Plans were requested to review these potent ial errors and provide responses by July 31, 2012. These listings included claims incurred on or after May 15, 2011 and reimbursed from June 1, 2011 through March 31, 2012. OPM OIG identified 422 ,660 claim lines, tota ling $49,977,166 in payments , which potentially were not coordinated with Medicare . From this universe, OPM OIG selected for review a sample of 48,559 claim lines, total ing $18 ,748,248 in payments with a potential overpayment of $15 ,765,580 to the Federal Employee Health Benefit Program (FEHBP). Blue Cross Blue Shield As sociation (BCBSA) Response to Recommendation 1 and 3: After reviewing the OIG listing of potentia lly uncoordinated Medicare COB claims tota ling $15,765,580, the BCBS Association agrees that claims totaling $2,351 ,475 were paid incorrectl y and identified by the audit. For the remaining $13,414,106 in claim payments, we noted the following: • $8,589,815 in claims that were paid correctl y; August 31, 2012 Page 2 • $3,086,043 in claims that were initially paid incorrectly but the error was identified and corrected before the Audit Notification date and overpayment was recovered and returned before the response was due to OPM; • $851,335 in claims that were initially paid incorrectly but recovery was initiated on or after the Audit Notification date but before receiving the OIG sample and the overpayment was recovered and returned before the response was due to OPM; • $886,952 claims that were initially paid incorrectly but recovery was initiated before receiving the OIG sample, however overpayment was not recovered and returned before the response was due to OPM; and See Attachment B for the amounts associated with each of the above disagree reasons. For claim payments that the BCBS Association agrees that the claims were paid correctly, see Attachment C. The Association’s Action Plan includes steps to include that the top 10 Plans with COB errors are following the corrective action plan. In addition, to reduce the number and frequency of uncoordinated Medicare COB claims, BCBSA has completed the following: • Implemented an edit to defer all facility claims with Medicare B Revenue Codes where the member does not have Part A but has Part B. This was implemented in the Fourth Quarter 2011. • Modified the Uncoordinated Medicare Application to run monthly instead of quarterly in early 2011. • Required the top ten Plans with the highest COB findings to develop and implement action plans to improve performance and address the root causes behind erroneous Medicare COB payments. These Plans have taken steps to address operational weaknesses such as proactively working daily retroactive enrollment reports to ensure corrective action is completely timely, training for processing staff, communicating with the provider community to reinforce optimal billing practices that reduce downstream issues, and enhancing in-line auditing techniques to focus on claims with a high potential for claims payment errors. • Modified the FEP post payment review process to match with OIG global audit claims listings where appropriate. The FEP Uncoordinated Medicare Application was updated on April 14, 2012. Based on our preliminary evaluation, we believe that changes made will address 85% of the claims questioned. Once the COB Tier 12 audit is completed, we will further evaluate the effectiveness of the changes determine next steps. • Modified the FEP claims system to defer inpatient facility Part B charges as well as changes related to payment of Home Health and Skill Nursing Facility August 31, 2012 Page 3 Medicare claims for review and coordination. These edits were implemented in early 2012. • Modify existing pre-payment compatibility editing to increase clarity around Medicare Payment Disposition usage. This change was implemented in Release 4 on January 1, 2012. The following corrective actions remain in process and under review: • Provide additional Plan guidance on mapping data from Medicare crossover claims to the correct Medicare Payment Disposition code. Because of resource limitations, this will not be implemented until 2013. • Modify the FEP claims system to require Plans to indicate that facility claims not coordinated with Medicare Part A are supported by a Medical Denial Notice. This modification is under review and a work plan will be developed by the Third Quarter 2012 for implementation in 2013. • Create new Explanation of Benefit Remarks to more accurately explain denials due to no Medicare coordination. The targeted implementation date is 2013. • Modify the FEP claims system to accept Medicare denial reasons. This will allow additional editing of Medicare claims to ensure that claims are paid correctly. This modification will be further explored during 2013. Recommendation 2: OPM OIG recommended that BCBSA provide support for each COB error that is included in the sample selections and part of this preliminary finding (even if the BCBS plan initiated the overpayment recovery prior to the audit notification date and completed the recovery process by the draft report response due date). 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. Recommendation 4: OPM OIG recommended 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. August 31, 2012 Page 4 BCBSA Response: To ensure that Plans review all claims incurred back to the Medicare effective date: • FEP updated the Plan Administrative Manual to instruct the Plans on what to do with the Retroactive Enrollment Report. • As part of the FEP CPR, FEP reviews Plan procedures for reviewing retroactive enrollment reports as well as tests transactions to ensure that all claims are reviewed back to the Medicare effective dates. We appreciate the opportunity to provide our response to this Draft Audit Report and would request that our comments be included in their entirety as part of the Final Audit Report. Sincerely, Director, FEP Program Assurance Attachments
Audit on Global Coordination of Benefits for BlueCross and BlueShield Plans
Published by the Office of Personnel Management, Office of Inspector General on 2013-03-20.
Below is a raw (and likely hideous) rendition of the original report. (PDF)