oversight

Audit on Global Assistant Surgeon Claim Overpayments for BlueCross and BlueShield Plans

Published by the Office of Personnel Management, Office of Inspector General on 2013-02-21.

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
   ASSISTANT SURGEON CLAIM OVERPAYMENTS
    FOR BLUECROSS AND BLUESHIELD PLANS




                                                       Report No. IA-99-00-12-055


                                                       Date: February 21, 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 Assistant Surgeon Claim Overpayments
                                          BlueCross and BlueShield Plans




                      REPORT NO. 1A-99-00-12-055                                     02/21/13
                                                                              DATE: ______________




                                                                               __________________
                                                                               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 that 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 Assistant Surgeon Claim Overpayments
                              BlueCross and BlueShield Plans




              REPORT NO. 1A-99-00-12-055                     02/21/13
                                                      DATE: ______________


This final audit report on the Federal Employees Health Benefits Program (FEHBP) operations
at all BlueCross and BlueShield (BCBS) plans questions $1,057,326 in health benefit charges.
The BlueCross BlueShield Association (Association) and/or BCBS plans agreed with $881,150
and disagreed with $176,176 of the questioned charges.

Our limited scope audit was conducted in accordance with Government Auditing Standards. The
audit covered health benefit payments from August 1, 2009 through May 31, 2012 as reported in
the Annual Accounting Statements. Specifically, we identified and reviewed claims paid from
August 1, 2009 through May 31, 2012 that potentially were not paid in accordance with the
BCBS plans’ assistant surgeon pricing procedures. We determined that the BCBS plans
incorrectly paid 1,217 claim lines, resulting in net overcharges of $1,057,326 to the FEHBP.
Specifically, the BCBS plans overpaid 1,124 claim lines by $1,137,440 and underpaid 93 claim
lines by $80,114.




                                              i
                                                 CONTENTS
                                                                                                                 PAGE

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

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

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

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

           Assistant Surgeon Claim Payment Errors ...................................................................5

IV.    MAJOR CONTRIBUTORS TO THIS REPORT ...........................................................10

V.     SCHEDULES

       A. UNIVERSE AND SAMPLE OF POTENTIAL ASSISTANT SURGEON CLAIM
          OVERPAYMENTS BY PLAN

       B. QUESTIONED CHARGES BY PLAN

       APPENDIX           (BlueCross BlueShield Association reply, dated October 19, 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 BlueCross BlueShield, 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 audit of assistant surgeon claim overpayments (Report No.
1A-99-00-09-061, dated March 30, 2010), covering claims reimbursed from January 1, 2006
through July 31, 2009 for all BCBS plans, have been satisfactorily resolved.

Our preliminary results of the potential assistant surgeon claim overpayments were presented in
detail in a draft report, dated July 13, 2012. The Association’s comments offered in response to
the draft report were considered in preparing our final report and are included as the Appendix to
this report. Also, additional documentation provided by the Association and BCBS plans on
various dates through January 15, 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 assistant surgeon claim payments, which should be paid in accordance with
the BCBS plans’ assistant surgeon pricing procedures.

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 August 1, 2009 through May 31, 2012 as
reported in the Annual Accounting Statements. Using our SAS data warehouse function, we
performed a computer search on the BCBS claims database to identify claims paid from
August 1, 2009 through May 31, 2012 that potentially were not paid in accordance with the
BCBS plans’ assistant surgeon pricing procedures. Based on this computer search, we identified
76,504 assistant surgeon claim groups, totaling $18,417,876 in potential overpayments, that may
not have been paid in accordance with the BCBS plans’ assistant surgeon pricing procedures.
From this universe, we selected and reviewed all assistant surgeon claim groups with potential
overpayments of $300 or more. Our sample included 11,100 assistant surgeon claim groups,
totaling $13,470,622 in potential overpayments, for 60 of the 64 BCBS plans (See Schedule A
for the universe and sample of potential assistant surgeon claim overpayments by BCBS plan).

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 assistant surgeon claim
payments. 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 assistant surgeon claim
payments. Exceptions noted in the areas reviewed are set forth in detail in the “Audit Finding
and Recommendations” section of this audit report. With respect to the items not tested, nothing
came to our attention that caused us to believe that the BCBS plans had not complied, in all
material respects, with those provisions.

In conducting our audit, we relied to varying degrees on computer-generated data provided by
the FEP Director’s Office, the FEP Operations Center, and the BCBS plans. Due to time
constraints, we did not verify the reliability of the data generated by the various information
systems involved. However, while utilizing the computer-generated data during our audit




                                                3
testing, nothing came to our attention to cause us to doubt its reliability. We believe that the data
was sufficient to achieve our audit objective.

The audit was performed at our offices in Washington, D.C.; Cranberry Township, Pennsylvania;
and Jacksonville, Florida from July 2012 through January 2013.

METHODOLOGY

To test each BCBS plan’s compliance with the FEHBP health benefit provisions related to
assistant surgeon claim payments, we selected all assistant surgeon claim groups with potential
overpayments of $300 or more that were identified in a computer search. Specifically, we
selected for review a sample of 11,100 assistant surgeon claim groups, totaling $13,470,622 (out
of 76,504 groups, totaling $18,417,876) in potential overpayments, that may not have been paid
in accordance with the BCBS plans’ assistant surgeon pricing procedures.

The 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.
Additionally, we 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., October 1, 2012) for the claim payment errors in our sample. We did not project the
sample results to the universe of potential assistant surgeon claim overpayments.

The determination of the questioned amount is based on the FEHBP contract, the 2009 through
2012 Service Benefit Plan brochures, and the Association’s FEP administrative manual.




                                                  4
                  III. AUDIT FINDING AND RECOMMENDATIONS
Assistant Surgeon Claim Payment Errors                                                                $1,057,326

The BCBS plans incorrectly paid 1,217 claim lines, resulting in net overcharges of $1,057,326 to
the FEHBP. Specifically, the BCBS plans overpaid 1,124 claim lines by $1,137,440 and
underpaid 93 claim lines by $80,114.

Contract CS 1039, Part III, section 3.2 (b)(1) states, “The Carrier may charge a cost to the
contract for a contract term if the cost is actual, allowable, allocable, and reasonable.” Part II,
section 2.6 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 . . . .” Additionally, 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 . . . .”

Section 6(h) of the FEHB Act provides that rates should reasonably and equitably reflect the
costs of benefits provided.

We performed a computer search on the BCBS claims database to identify claims that potentially
were not paid in accordance with the BCBS plans’ assistant surgeon pricing procedures. For the
period August 1, 2009 through May 31, 2012, we identified 76,504 assistant surgeon claim
groups (representing 290,566 claim lines), totaling $18,417,876 in potential overpayments, that
met this search criteria. From this universe, we selected and reviewed all assistant surgeon claim
groups with potential overpayments of $300 or more, and determined if the BCBS plans paid
these claims properly. Our sample included 11,100 assistant surgeon claim groups (representing
34,549 claim lines), totaling $13,470,622 in potential overpayments, for 60 of the 64 BCBS
plans (See Schedule A for the universe and sample of potential assistant surgeon claim
overpayments by BCBS plan). The majority of these claim groups contained at least one
primary surgeon and one assistant surgeon claim line.

Based on our review, we determined that 1,217 assistant surgeon claim lines were paid incorrectly,
resulting in net overcharges of $1,057,326 to the FEHBP. 2 Specifically, BCBS plans overpaid
1,124 claim lines by $1,137,440 and underpaid 93 claim lines by $80,114 (See Schedule B for a
summary of the assistant surgeon claim payment errors by BCBS plan).




2
 In addition, there were 40 assistant surgeon claim overpayments, totaling $108,096, that were identified by the
BCBS plans before our audit notification date (i.e., June 1, 2012) and adjusted and returned to the FEHBP by the
audit request due date (i.e., October 1, 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.




                                                         5
These assistant surgeon claim payment errors resulted from the following:

•   The BCBS plans paid 549 claim lines using incorrect Medicare or plan procedure
    allowances, resulting in net overcharges of $548,562 to the FEHBP. Specifically, the BCBS
    plans overpaid 505 claim lines by $581,210 and underpaid 44 claim lines by $32,648.

•   The BCBS plans incorrectly paid 346 claim lines due to manual processing errors, such as
    incorrect coding, overriding system edits, and using incorrect allowances. Consequently, the
    BCBS plans overpaid 326 claim lines by $317,423 and underpaid 20 claim lines by $12,373,
    resulting in net overcharges of $305,050 to the FEHBP.

•   The BCBS plans incorrectly paid 79 claim lines due to the plans’ local claim systems
    improperly identifying the assistant surgeon modifiers, resulting in overcharges of $60,410 to
    the FEHBP.

•   The BCBS plans incorrectly paid 89 claim lines due to errors in the calculation of the
    assistant surgeon fee, which should have been priced at the applicable plan’s percentage of
    the procedure allowance. Consequently, the BCBS plans overpaid 76 claim lines by $72,591
    and underpaid 13 claim lines by $24,057, resulting in net overcharges of $48,534 to the
    FEHBP.

•   The BCBS plans paid 31 claim lines using the billed charges instead of the Medicare or plan
    procedure allowances, resulting in net overcharges of $21,730 to the FEHBP. Specifically,
    the BCBS plans overpaid 25 claim lines by $26,293 and underpaid 6 claim lines by $4,563.

•   The BCBS plans incorrectly priced 43 claim lines due to provider billing errors, resulting in
    net overcharges of $20,808 to the FEHBP. Specifically, the BCBS plans overpaid 33 claim
    lines by $27,281 and underpaid 10 claim lines by $6,473.

•   The BCBS plans paid 13 claim lines that were incurred after termination of the patient’s
    coverage, resulting in overcharges of $16,156 to the FEHBP.

•   The BCBS plans inadvertently paid 27 claim lines twice, resulting in duplicate charges of
    $14,355 to the FEHBP.

•   The BCBS plans paid 15 claim lines even though the procedures were not medically
    necessary or the surgical assistants were not required for the surgeries, resulting in
    overcharges of $10,588 to the FEHBP.

•   The BCBS plans incorrectly paid 16 claim lines that were subject to the Omnibus Budget
    Reconciliation Act of 1993 (OBRA 93) pricing guidelines, resulting in overcharges of $8,350
    to the FEHBP. These errors were due to Palmetto GBA (an OBRA 93 pricing vendor) not
    recognizing the assistant surgeon pricing modifier and erroneously calculating the assistant
    surgeon fee.




                                                 6
•   The BCBS plans did not properly coordinate nine claim lines with Medicare or the patient’s
    primary insurance carrier, resulting in overcharges of $2,783 to the FEHBP.

Association's Response:

The Association agrees with $845,276 of the questioned charges.

Regarding the contested amount, the Association disagrees with these questioned charges for the
following reasons:

•   The claims were paid correctly based on the assistant surgeon allowance or non-participating
    provider allowance.
•   The claim payment errors were identified by the BCBS plans before the audit started, but are
    still in the recovery process.

The Association states, “In order to reduce these types of claim payment errors from occurring,
the following corrective actions were implemented:

•   Instructed Plans to educate their providers on the correct method for submitting charges for
    Assistant Surgeon services.
•   Instructed Plans to use these confirmed errors as training tools to ensure that examiners know
    the proper coding requirements for the adjudication of Assistant Surgeon Claims.
•   Continued to include Assistant Surgeon claims in the FEP periodic System-Wide Claim
    Review Process.
•   Implemented an edit that defers claims with Assistant Surgeon modifiers when there is no
    discount applied to the allowance submitted.
•   Updated the FEP Administrative Manual Volume II with more specific coding details to
    include actual examples for each of the Assistant Surgeon Modifiers on how these claims
    should be submitted to the Operations Center for adjudication.
•   Included Assistant Surgeon Coding Training in the Micro Regional Meetings provided by the
    Operations Center to ensure the Plans have face-to-face training.
•   Evaluated the OBRA ’93 pricing vendor’s (Palmetto) internal controls for generating pricing
    data for the Assistant Surgeon Modifiers to ensure compliance with Medicare pricing
    guidelines in an audit of the vendor.
•   Updated guidance for various Assistant Surgeon modifiers in the FEP-OPM User Guide,
    which documents the procedures for successfully submitting claims electronically to
    Palmetto.”

The Association also states, “To continue to improve the payment accuracy of assistant surgeon
claims, FEP will issue an Audit Alert to all Plans that provides details on the errors noted with
recommended action steps to improve performance, including performing causal analysis on the
errors identified and development of corrective action plans to reduce these errors. During
Association Plan audits . . . activities implemented at Plans to further approve assistant surgeon
processing will be verified.”




                                                 7
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 $1,057,326. If the BCBS plans
identified the claim payment errors and initiated recovery efforts before our audit notification
date (i.e., June 1, 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.,
October 1, 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 $881,150 and disagree with $176,176 of the questioned
charges. Although the Association only agrees with $845,276 in its response, the BCBS plans’
documentation supports concurrence with $881,150.

Based on the Association’s response and/or the BCBS plans’ documentation, the contested
amount of $176,176 represents the following items:

•   $159,567 of the contested amount represents 145 claim line overpayments that the BCBS
    plans agree were paid incorrectly. However, due to overpayment recovery time limitations
    with providers, the plans state that these overpayments are uncollectible. Since these
    overpayments were identified as a result of our audit, we are continuing to question this
    amount in the final report. If the plans had timely indentified these overpayments prior to
    our audit, the plans’ recovery efforts would have been within the applicable time limitations,
    and therefore, the overpayments would have been recoverable. Additionally, the FEHBP
    should not be expected to cover these claim overpayments because of provider refund issues.

•   $11,690 of the contested amount represents five claim line overpayments where the BCBS
    plans initiated recovery efforts before receiving our audit request (i.e., July 13, 2012) but had
    not recovered the overpayments by the audit request due date (i.e., October 1, 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.

•   $4,919 of the contested amount represents seven claim line overpayments where the BCBS
    plans initiated recovery efforts after our audit notification date (i.e., June 1, 2012) but before
    receiving our audit request (i.e., July 13, 2012), and also completed the recovery process and
    adjusted or voided the claims by the audit request due date (i.e., October 1, 2012). However,
    since the recoveries for these overpayments were initiated after our audit notification date,
    we are continuing to question this amount in the final report.

Recommendation 1

We recommend that the contracting officer disallow $1,137,440 for claim overcharges and verify
that the BCBS plans return all amounts recovered to the FEHBP.




                                                  8
Recommendation 2

We recommend that the contracting officer allow the BCBS plans to charge the FEHBP $80,114
if additional payments are made to the providers to correct the underpayments. However, before
making any additional payment(s) to a provider, the contracting officer should require the BCBS
plan to first recover any questioned overpayment(s) for that provider.

Recommendation 3

Although the Association has developed a corrective action plan to reduce assistant surgeon
claim overpayments, we recommend that the contracting officer instruct the Association to
ensure that the BCBS plans are following the corrective action plan. Also, we recommend that
the contracting officer verify that the additional corrective actions included in the Association’s
draft report response are being implemented.




                                                 9
              IV. MAJOR CONTRIBUTORS TO THIS REPORT

Experience-Rated Audits Group

               Lead Auditor

               , Auditor
___________________________________________________________

                  , Chief

Information Systems Audits Group

                  , Senior Information Technology Specialist

            , Senior Information Technology Specialist




                                            10
                                                                        V. SCHEDULES                                                      SCHEDULE A

                                              GLOBAL ASSISTANT SURGEON CLAIM OVERPAYMENTS
                                                     BLUECROSS AND BLUESHIELD PLANS

                            UNIVERSE AND SAMPLE OF POTENTIAL ASSISTANT SURGEON CLAIM OVERPAYMENTS BY PLAN

                                                                         UNIVERSE                                           SAMPLE
 Site                                               Assistant Surgeon        Total        Potential    Assistant Surgeon      Total          Potential
Number                 Plan Name            State    Claim Groups         Claim Lines   Overpayments    Claim Groups       Claim Lines     Overpayments
  003    BCBS of New Mexico (HCSC)           NM            233                720       $      41,354          29               49       $          25,720
  005    WellPoint BCBS of Georgia           GA           3,032             11,427      $     309,370         177              431       $          92,813
  006    CareFirst BCBS (MD Service Area)    MD           2,883             13,084      $     355,211         149              370       $          85,027
  007    BCBS of Louisiana                   LA            942               3,385      $     375,974         176              463       $         320,698
  009    BCBS of Alabama                     AL           1,335              4,268      $     267,564         277              590       $         143,028
  010    BC of Idaho Health Service          ID            329               1,379      $      46,433          26               66       $          17,645
  011    BCBS of Massachusetts               MA            304                662       $      42,961          36               55       $          15,322
  012    BCBS of Western New York            NY            219                728       $      28,248          18               41       $          11,877
  013    Highmark BCBS                       PA           2,576              9,373      $     143,307          85              194       $          90,005
  015    BCBS of Tennessee                   TN            380               1,648      $      90,685          59              222       $          68,212
  016    BCBS of Wyoming                     WY            144                401       $      30,813          35               62       $          18,269
  017    BCBS of Illinois (HCSC)             IL           1,137              3,499      $     332,498         314              936       $         233,534
  021    WellPoint BCBS of Ohio              OH           2,001              6,694      $     157,982          34               96       $          33,436
  024    BCBS of South Carolina              SC            827               3,593      $     179,730         122              393       $          83,524
  027    WellPoint BCBS of New Hampshire     NH            375               1,490      $      66,757          50              164       $          29,509
  028    BCBS of Vermont                     VT             74                205       $      17,318          16               43       $           9,190
  029    BCBS of Texas (HCSC)                TX           14,492            60,479      $   3,215,556        1,113            2,873      $       2,390,132
  030    WellPoint BCBS of Colorado          CO           4,423             19,451      $     280,358         128              683       $         157,650
  031    Wellmark BCBS of Iowa               IA            151                487       $      19,336          19               29       $           7,572
  032    BCBS of Michigan                    MI            392               1,103      $      52,219          39               49       $          17,004
  033    BCBS of North Carolina              NC           1,128              3,278      $     197,032         170              386       $          89,977
  034    BCBS of North Dakota                ND            158                469       $      25,131           8               12       $          12,014
  037    BCBS of Montana                     MT            347               1,251      $      27,199           7               15       $           5,126
  038    BCBS of Hawaii                      HI             13                 30       $        2,491          3                8       $           1,671
  039    WellPoint BCBS of Indiana           IN            727               2,287      $      76,935          38              101       $          31,383
  040    BCBS of Mississippi                 MS            275               1,033      $      66,495          72              202       $          45,070
  041    BCBS of Florida                     FL           6,398             23,994      $   1,678,243        1,308            4,634      $       1,267,233
  042    BCBS of Kansas City                 MO            550               2,050      $      37,679          10               25       $           7,650
  043    Regence BS of Idaho                 ID            105                362       $      14,192          10               19       $           6,574
  044    BCBS of Arkansas                    AR            294               1,052      $      32,249          17               34       $          11,980
  045    WellPoint BCBS of Kentucky          KY           1,331              3,770      $     132,692          42              145       $          43,272


                                                                         Page 1 of 4
                                                                        V. SCHEDULES                                                         SCHEDULE A

                                              GLOBAL ASSISTANT SURGEON CLAIM OVERPAYMENTS
                                                     BLUECROSS AND BLUESHIELD PLANS

                            UNIVERSE AND SAMPLE OF POTENTIAL ASSISTANT SURGEON CLAIM OVERPAYMENTS BY PLAN

                                                                         UNIVERSE                                           SAMPLE
 Site                                               Assistant Surgeon        Total        Potential    Assistant Surgeon      Total          Potential
Number                  Plan Name           State    Claim Groups         Claim Lines   Overpayments    Claim Groups       Claim Lines     Overpayments
  047    WellPoint BCBS of Wisconsin         WI            528               1,805      $     167,482         165              519       $         129,232
  048    Empire BCBS (WellPoint)             NY           1,161              3,126      $   1,753,492         675             1,898      $       1,696,787
  049    Horizon BCBS of New Jersey          NJ           3,809             12,887      $   2,836,497        2,063            6,749      $       2,596,744
  050    WellPoint BCBS of Connecticut       CT            387               1,324      $     148,584          88              284       $         121,790
  053    BCBS of Nebraska                    NE            345               1,230      $      41,202          23               33       $          11,134
  054    Mountain State BCBS                 WV            150                366       $      26,398          16              33        $          12,114
  056    BCBS of Arizona                     AZ           2,243              6,911      $     433,736         277              703       $         284,720
  058    Regence BCBS of Oregon              OR            749               2,531      $      77,261          31              68        $          23,164
  059    WellPoint BCBS of Maine             ME            491               1,632      $      29,720          11               22       $           4,820
  060    BCBS of Rhode Island                RI            101                248       $      20,907          13               35       $          11,957
  061    WellPoint BCBS of Nevada            NV           1,056              5,026      $     142,091          50              219       $         116,671
  062    WellPoint BCBS of Virginia          VA           1,640              7,051      $     316,481         114              483       $         234,673
  064    Excellus BCBS of Rochester Area     NY             97                366       $        7,082          4                6       $           1,374
  066    Regence BCBS of Utah                UT            910               3,040      $     109,977          98              183       $          55,494
  067    BS of California                    CA           2,958             11,517      $     420,917         244              889       $         213,537
  068    Triple-S Salud of Puerto Rico       PR              2                 2        $        1,380          1                1       $           1,266
  069    Regence BS of Washington            WA            941               2,988      $     134,614          98              229       $          51,800
  070    BCBS of Alaska                      AK           1,519              6,761      $   1,312,231         873             4,114      $       1,222,714
  074    Wellmark BCBS of South Dakota       SD            238                694       $      30,146          21               49       $           8,687
  075    Premera BC                          WA            227                687       $      27,027          15              38        $          13,182
  076    WellPoint BCBS of Missouri          MO            597               2,471      $     106,650          35              201       $          74,776
  078    BCBS of Minnesota                   MN           2,147              6,832      $     954,139        1,113            3,172      $         808,039
  079    BCBS of Central New York            NY            206                736       $      22,998          13               32       $           7,188
  082    BCBS of Kansas                      KS            209                601       $      46,975          63              127       $          27,970
  083    BCBS of Oklahoma (HCSC)             OK           2,398             10,806      $     291,449         131              338       $          91,769
  084    Excellus BCBS of Utica-Watertown    NY            127                374       $      15,456          10               23       $           6,938
  085    CareFirst BCBS (DC Service Area)    DC           3,439             14,158      $     493,543         197              538       $         182,753
  089    BCBS of Delaware                    DE            109                417       $      38,862          25               89       $          31,231
  092    CareFirst BCBS (Overseas Area)      DC            145                327       $      66,568          46               84       $          55,980

                        Totals                           76,504              290,566    $   18,417,876      11,100           34,549      $      13,470,622


                                                                         Page 2 of 4
                                                                                                                                                             SCHEDULE B
                                                    GLOBAL ASSISTANT SURGEON CLAIM OVERPAYMENTS
                                                           BLUECROSS AND BLUESHIELD PLANS

                                                               QUESTIONED CHARGES BY PLAN

 Site                                                        Total Questioned                      Amounts Questioned by Year                   Plan               Plan
Number                Plan Name             State     Claim Lines Total Charges             2009       2010         2011        2012           Agrees            Disagrees
  003    BCBS of New Mexico (HCSC)           NM             5         $       11,916    $     1,777 $       -    $     8,219 $    1,920    $       11,916    $           -
  005    WellPoint BCBS of Georgia           GA            39         $       26,735    $     1,591 $    6,265 $     14,355 $     4,524    $       25,645    $         1,090
  006    CareFirst BCBS (MD Service Area)    MD            45         $       40,032    $     1,433 $   19,208 $     10,739 $     8,653    $       37,031    $         3,001
  007    BCBS of Louisiana                   LA            68         $     153,184     $     8,578 $   82,336 $     51,669 $ 10,600       $       64,311    $        88,872
  009    BCBS of Alabama                     AL            20         $        1,463    $     1,708 $      (956) $     1,174 $     (463)   $        1,463    $           -
  010    BC of Idaho Health Service          ID             6         $        6,702    $        -  $       -    $     6,702 $      -      $        6,702    $           -
  011    BCBS of Massachusetts               MA            10         $        5,503    $        -  $       198 $      5,306 $      -      $        5,503    $           -
  012    BCBS of Western New York            NY             9         $        4,422    $        -  $    1,478 $       1,089 $    1,855    $        4,422    $           -
  013    Highmark BCBS                       PA            19         $       18,728    $     2,508 $    5,265 $       3,640 $    7,314    $       18,728    $           -
  015    BCBS of Tennessee                   TN            46         $       48,669    $     3,716 $   12,575 $     15,012 $ 17,366       $       48,669    $           -
  016    BCBS of Wyoming                     WY             7         $        2,103    $       330 $       647 $      1,127 $      -      $        2,103    $           -
  017    BCBS of Illinois (HCSC)             IL            10         $        5,799    $        -  $       982 $      2,545 $    2,272    $        5,799    $           -
  021    WellPoint BCBS of Ohio              OH             5         $        3,843    $       660 $       744 $        411 $    2,027    $        3,843    $           -
  024    BCBS of South Carolina              SC             3         $        1,474    $       360 $       -    $     1,000 $      114    $        1,474    $           -
  027    WellPoint BCBS of New Hampshire     NH            25         $       11,679    $       524 $    3,807 $       3,174 $    4,174    $       11,325    $           354
  028    BCBS of Vermont                     VT             3         $        1,646    $     1,148 $       -    $       498 $      -      $        1,646    $           -
  029    BCBS of Texas (HCSC)                TX           104         $     114,302     $    13,478 $   31,554 $     26,543 $ 42,727       $      108,697    $         5,605
  030    WellPoint BCBS of Colorado          CO            48         $       52,839    $     4,016 $    8,192 $     40,631 $       -      $       52,839    $           -
  031    Wellmark BCBS of Iowa               IA             2         $          645    $        -  $       -    $       308 $      337    $          645    $           -
  032    BCBS of Michigan                    MI             8         $        3,079    $        -  $       -    $     1,755 $    1,324    $        3,079    $           -
  033    BCBS of North Carolina              NC            58         $       32,676    $    12,643 $    3,665 $     10,025 $     6,343    $       32,676    $           -
  034    BCBS of North Dakota                ND             1         $        1,262    $        -  $       -    $     1,262 $      -      $        1,262    $           -
  037    BCBS of Montana                     MT             1         $         (598)   $        -  $       -    $      (598) $     -      $         (598)   $           -
  038    BCBS of Hawaii                      HI             3         $       (1,603)   $        -  $       -    $    (1,603) $     -      $       (1,603)   $           -
  039    WellPoint BCBS of Indiana           IN            10         $       14,407    $        -  $    2,239 $     11,236 $       932    $       14,407    $           -
  040    BCBS of Mississippi                 MS            23         $       12,045    $     5,079 $       629 $      4,139 $    2,199    $       12,045    $           -
  041    BCBS of Florida                     FL           131         $       89,963    $    16,869 $    8,298 $     34,607 $ 30,188       $       89,637    $           326
  042    BCBS of Kansas City                 MO             9         $        4,723    $        -  $       923 $      2,107 $    1,693    $        4,723    $           -
  043    Regence BS of Idaho                 ID             4         $        2,849    $       288 $    1,993 $         -    $     568    $          568    $         2,281
  044    BCBS of Arkansas                    AR             3         $        5,019    $        -  $    2,029 $         790 $    2,200    $        5,019    $           -
  045    WellPoint BCBS of Kentucky          KY            14         $        4,647    $       653 $    1,061 $       2,933 $      -      $        4,647    $           -




                                                                              Page 3 of 4
                                                                                                                                                              SCHEDULE B
                                                    GLOBAL ASSISTANT SURGEON CLAIM OVERPAYMENTS
                                                           BLUECROSS AND BLUESHIELD PLANS

                                                                 QUESTIONED CHARGES BY PLAN

 Site                                                        Total Questioned                      Amounts Questioned by Year                    Plan               Plan
Number                Plan Name             State     Claim Lines Total Charges             2009       2010         2011        2012            Agrees            Disagrees
  047    WellPoint BCBS of Wisconsin         WI            7          $        3,569    $       -    $      -    $       694 $    2,875     $        3,569    $           -
  048    Empire BCBS (WellPoint)             NY           109         $       71,454    $    10,953 $   18,005 $     12,908 $ 29,587        $       71,454    $           -
  049    Horizon BCBS of New Jersey          NJ            3          $       (3,062)   $       -    $      -    $    (3,062) $     -       $       (3,062)   $           -
  050    WellPoint BCBS of Connecticut       CT            19         $       29,607    $    11,241 $    3,361 $       9,290 $    5,715     $       29,607    $           -
  053    BCBS of Nebraska                    NE             6         $        2,257    $       210 $    1,474 $         -    $     573     $          573    $         1,684
  054    Mountain State BCBS                 WV            5          $        4,123    $       -    $   2,018 $       2,105 $      -       $        4,123    $           -
  056    BCBS of Arizona                     AZ           16          $       16,749    $     1,922 $   13,106 $       1,721 $      -       $       16,749    $           -
  058    Regence BCBS of Oregon              OR           20          $       12,696    $        13 $    9,096 $       3,691 $     (103)    $        2,916    $         9,780
  059    WellPoint BCBS of Maine             ME            3          $          947    $       -    $     376 $         332 $      239     $          947    $           -
  060    BCBS of Rhode Island                RI            5          $        7,589    $     1,371 $    5,623 $         594 $      -       $        7,589    $           -
  061    WellPoint BCBS of Nevada            NV             8         $        4,297    $       -    $   2,043 $       1,829 $      425     $        4,297    $           -
  062    WellPoint BCBS of Virginia          VA            15         $       17,801    $       -    $ 13,439 $        3,734 $      628     $       13,346    $         4,456
  064    Excellus BCBS of Rochesterr Area    NY             3         $        4,627    $       -    $      -    $       -    $   4,627     $        4,627    $           -
  066    Regence BCBS of Utah                UT            32         $       18,986    $     6,392 $    6,544 $       5,426 $      623     $        5,772    $        13,214
  067    BS of California                    CA            9          $        2,316    $       656 $      816 $         844 $      -       $         (350)   $         2,666
  068    Triple-S Salud of Puerto Rico       PR            0          $          -      $       -    $      -    $       -    $     -       $          -      $           -
  069    Regence BS of Washington            WA           48          $       27,701    $     5,937 $ 11,668 $         3,560 $    6,536     $        8,313    $        19,389
  070    BCBS of Alaska                      AK            34         $       27,098    $    (5,133) $ 22,797 $      13,790 $    (4,356)    $       15,865    $        11,233
  074    Wellmark BCBS of South Dakota       SD            3          $        1,814    $       -    $      -    $     1,814 $      -       $        1,814    $           -
  075    Premera BC                          WA           10          $       15,400    $     4,865 $    9,634 $         902 $      -       $        4,192    $        11,208
  076    WellPoint BCBS of Missouri          MO            5          $        2,416    $       -    $     767 $       1,351 $      299     $        2,416    $           -
  078    BCBS of Minnesota                   MN            6          $        1,215    $       -    $     793 $        (301) $     723     $        1,215    $           -
  079    BCBS of Central New York            NY            11         $        5,068    $       -    $     333 $       4,735 $      -       $        5,068    $           -
  082    BCBS of Kansas                      KS            7          $        5,567    $       -    $   2,439 $         893 $    2,235     $        5,567    $           -
  083    BCBS of Oklahoma (HCSC)             OK            14         $       20,432    $       559 $    1,903 $       5,160 $ 12,810       $       19,414    $         1,018
  084    Excellus BCBS of Utica-Watertown    NY             8         $        5,358    $       -    $   2,790 $       2,568 $      -       $        5,358    $           -
  085    CareFirst BCBS (DC Service Area)    DC           44          $       40,187    $    (7,354) $ 14,628 $      19,666 $ 13,248        $       40,187    $           -
  089    BCBS of Delaware                    DE            27         $       27,619    $     8,455 $    4,020 $       1,180 $ 13,965       $       27,619    $           -
  092    CareFirst BCBS (Overseas Area)      DC            1          $        3,341    $       -    $   3,341 $         -    $     -       $        3,341    $           -

                      Totals                             1,217       $    1,057,326     $   117,448   $ 344,148   $   356,217   $ 239,513   $     881,150     $       176,176




                                                                              Page 4 of 4
                                                                         BlueCross lllueShiel d
                                                                         AssoclaUon
                                                                         ..\Ii As.""Ciation of Indepe ndent
October 19, 2012                                                         Blue Cross and Illue Shield PlHns


                                                                         F~a1       Employee Program
                                                                         IJ 10 G.   Slr~   NW
 roup      te                                                            Washington. OC 20005
Experience-Rated Audits Group                                            202.942.1000
                                                                         Fax 202.942. 1125
Office of the Inspector General
U.S. Office of Personnel Manage ment
1900 E Street, Room 6400
Washington, DC 204 15-1100

Reference:	          OPM DRAFT AUDIT REPORT
                     Global As si stant Surgeon Claim Payments
                     Audit Report #1A-99-00-12-055

Dear

Th is is in response to the above - referenced U.S. Office of Personnel Management
(OPM) Draft Aud it Report concerning the Global Assistant Surgeon claims paid from
August 1, 2009 through May 31, 2012. Our comme nts concerning the findings in the
report are as follows :

Potential As sistant Surgeon Claim Overpayments	                           $13,470,622

The OPM OIG submitted their sample of claims that potentially were not paid in
accordance with the Blue Cross Blue Shield (BCBS) Plan's ass istant surgeon pricing
procedu res on July 13, 20 11. The BCBS Association and/or the BCBS Plans were
requested to review these potential errors and provide response s by October 1,
2012. Based on the claim error report, OPM OIG identified 76,504 assistant surgeon
claim groups, totaling $18,4 17,876 in potential overpa yments , which potentia lly were
not pa id in accorda nce with the Plans' assistant surgeon pricing procedures. From
th is universe, we selected a jUdgmental sample of 11,100 groups , totaling
$13,470 ,622 in potentia l overpa yments , to review.

BCBS Association	 Response to Recommendation 1 and 2:

Afte r reviewing the OPM OIG sample of potential assistant surgeon claim
overpa yments tota ling $13,4 70,622, the BCBS Assoc iation agrees that claims
totali ng $845 ,276 were paid incorrectly and identified by the audit. For the rema ining
$12,450,643 in claim payments, we noted the following:

•	 $12,450 ,643 in claims that were paid correctl y based upon the ass istant surgeon
   allowance or the non par provider allowance ; and
•	 $174,704 in cla ims where the Plan identified the error before the audit started,
   but the cla im is still in the recovery proce ss.
October 19, 2012
Page 2


See Attachment 1 for a schedule of reasons for why Plans agree the claims were
paid incorrectly. See Attachment 2 for a listing of questioned amount, agreed to
amount and disagreed to amount by Plan site. Documentation to support the
contested claims has been provided.

Recommendation 3

In order to reduce these types of claim payment errors from occurring, the following
corrective actions were implemented:

•   Instructed Plans to educate their providers on the correct method for submitting
    charges for Assistant Surgeon services.
•   Instructed Plans to use these confirmed errors as training tools to ensure that
    examiners know the proper coding requirements for the adjudication of Assistant
    Surgeon Claims.
•   Continued to include Assistant Surgeon claims in the FEP periodic System-Wide
    Claim Review Process.
•   Implemented an edit that defers claims with Assistant Surgeon modifiers when
    there is no discount applied to the allowance submitted.
•   Updated the FEP Administrative Manual Volume II with more specific coding
    details to include actual examples for each of the Assistant Surgeon Modifiers on
    how these claims should be submitted to the Operations Center for adjudication.
•   Included Assistant Surgeon Coding Training in the Micro Regional Meetings
    provided by the Operations Center to ensure the Plans have face-to-face
    training.
•   Evaluated the OBRA ’93 pricing vendor’s (Palmetto) internal controls for
    generating pricing data for the Assistant Surgeon Modifiers to ensure compliance
    with Medicare pricing guidelines in an audit of the vendor.
•   Updated guidance for various Assistant Surgeon modifiers in the FEP-OPM User
    Guide, which documents the procedures for successfully submitting claims
    electronically to Palmetto. See Attachment X for the updated guidance.

The major reasons for the claim payment errors identified in this audit were the
result of:

•   Processors incorrectly overrode the new assistant surgeon pricing deferral;
•   Plan’s system did not properly identify the assistant surgeon modifier;
•   Plans submitted an incorrect Medicare or plan procedure allowance in pricing the
    claim; and
•   Plans used an incorrect percentage in calculating the assistant surgeon payment
    amount.
October 19, 2012
Page 3

To continue to improve the payment accuracy of assistant surgeon claims, FEP will
issue an Audit Alert to all Plans that provides details on the errors noted with
recommended action steps to improve performance, including performing causal
analysis on the errors identified and development of corrective action plans to
reduce these errors. During Association Plan audits (CPRs) activities implemented
at Plans to further approve assistant surgeon processing will be verified.

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