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.
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)