oversight

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)

                                                                 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




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                                                     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.
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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