U.S. OFFICE OF PERSONNEL MANAGEMENT
OFFICE OF THE INSPECTOR GENERAL
OFFICE OF AUDITS
Final Audit Report
Subject:
AUDIT ON GLOBAL
CONTINUOUS STAY CLAIMS
FOR BLUECROSS AND BLUESHIELD PLANS
Report No. lA-99-00-13-004
August 20, 2013
Date:
--<:JllJl[l()~--
This audit report has been distributed to Federal officials who are responsible fot· the administration of the audited program. This audit
t·eport may contain pt·op.-ietat·y data that is protected by Federal law (18 U.S.C. 1905). Therefore, while this audit report is available
under the Ft·eedom of Infor mation Act and made available to the public on the OIG webpage, caution needs to be exercised before
t·eleasing the report to the general public as it may contain proprietary information that was redacted from the publicly distributed copy.
AUDIT REPORT
Federal Employees Health Benefits Program
Service Benefit Plan Contract CS 1039
BlueCross BlueShield Association
Plan Code 10
Global Continuous Stay Claims
BlueCross and BlueShield Plans
August 20, 2013
REPORT NO. 1A-99-00-13-004 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 Continuous Stay Claims
BlueCross and BlueShield Plans
August 20, 2013
REPORT NO. 1A-99-00-13-004 DATE: ______________
This final audit report on the Federal Employees Health Benefits Program (FEHBP) operations
at all BlueCross and BlueShield (BCBS) plans questions $6,259,347 in health benefit charges.
The BlueCross BlueShield Association (Association) and/or BCBS plans agreed with $3,436,554
and disagreed with $2,822,793 of the questioned charges.
Our limited scope audit was conducted in accordance with Government Auditing Standards. The
audit covered health benefit payments from January 1, 2010 through July 31, 2012 as reported in
the plans’ Annual Accounting Statements. Specifically, we performed a computer search on the
BCBS claims database, using our SAS data warehouse function, to identify continuous stay
claims that were paid from January 1, 2010 through July 31, 2012. Continuous stay claims are
two or more inpatient facility claims with consecutive dates of service that were billed by a
provider for a patient with one length of stay. We selected for review a sample of 8,054
continuous stay claim groups (representing 21,446 claims), totaling $945,117,644 in payments.
Our sample included all groups with cumulative claim payment amounts of $35,000 or more.
Based on our review of this sample, we determined that the BCBS plans incorrectly paid 630
continuous stay claims, resulting in net overcharges of $5,982,167 to the FEHBP. We also
identified 29 additional claim payment errors, totaling $277,180 in overcharges to the FEHBP, as
a result of an expanded review of continuous stay claims for BCBS of Nebraska. In total, we
determined that the BCBS plans overpaid 512 claims by $9,713,652 and underpaid 147 claims
by $3,454,305, resulting in net overcharges of $6,259,347 to the FEHBP for these 659 claim
payment errors.
i
CONTENTS
PAGE
EXECUTIVE SUMMARY .............................................................................................. i
I. INTRODUCTION AND BACKGROUND .....................................................................1
II. OBJECTIVES, SCOPE, AND METHODOLOGY ..........................................................3
III. AUDIT FINDING AND RECOMMENDATIONS .........................................................5
Continuous Stay Claim Payment Errors .....................................................................5
IV. MAJOR CONTRIBUTORS TO THIS REPORT ...........................................................13
V. SCHEDULES
A. UNIVERSE AND SAMPLE OF CONTINUOUS STAY CLAIM GROUPS BY
PLAN
B. QUESTIONED CHARGES BY PLAN
APPENDIX (BlueCross BlueShield Association reply, dated February 4, 2013, 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
This is our first global audit of continuous stay claims for the BCBS plans. Our sample
selections and instructions for this audit were presented in a draft report, dated September 28,
2012, and discussed in detail with Association and BCBS plan officials during the entrance
conference on October 18, 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 July 9, 2013 was considered in preparing our final report.
2
II. OBJECTIVES, SCOPE, AND METHODOLOGY
OBJECTIVES
The objectives of our audit were to determine whether the BCBS plans charged costs to the
FEHBP and provided services to FEHBP members in accordance with the terms of the contract.
Specifically, our objectives were to determine whether the BCBS plans complied with contract
provisions relative to continuous stay claim payments. Continuous stay claims are two or more
inpatient facility claims with consecutive dates of service that were billed by a provider for a
patient with one length of stay.
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 claim payments from January 1, 2010 through July 31, 2012 as reported in the
plans’ Annual Accounting Statements. Using our SAS data warehouse function, we performed a
computer search on the BCBS claims database to identify continuous stay claims that were paid
from January 1, 2010 through July 31, 2012. Based on this computer search, we identified 57,140
continuous stay claim groups (representing 126,476 claims), totaling approximately $1.3 billion
in payments. 2 From this universe, we selected and reviewed a judgmental sample of 8,054 groups
(representing 21,446 claims), totaling $945,117,644 in payments. Our sample included all groups
with cumulative claim payment amounts of $35,000 or more for 59 of the 64 BCBS plans.
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 continuous stay 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 continuous stay 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.
2
This universe excludes continuous stay claim groups for BCBS plans that were already audited during this period.
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 continuous stay claim groups. 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 SAS 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 objectives.
The audit was performed at our offices in Washington, D.C.; Cranberry Township, Pennsylvania;
and Jacksonville, Florida from October 2012 through June 2013.
METHODOLOGY
To test each BCBS plan’s compliance with the FEHBP health benefit provisions related to
continuous stay claims, we selected for review all continuous stay groups with cumulative claim
payment amounts of $35,000 or more that were identified in a computer search. Specifically, we
selected for review a sample of 8,054 continuous stay claims groups, representing 21,446 claims,
totaling $945,117,644 in payments (out of 57,140 groups, representing 126,476 claims, totaling
approximately $1.3 billion in payments). Each of these groups contained two or more inpatient
facility claims with consecutive dates of service that were billed by a provider for a patient with
one length of stay. (See Schedule A for a summary of the universe and sample selections of
continuous stay claim groups by BCBS plan)
The sample selections were submitted to each applicable BCBS plan for their review and
response. We then conducted a limited review of the plans’ “paid incorrectly” responses and an
expanded review of the plans’ “paid correctly” responses, including the supporting
documentation, to verify the accuracy and completeness of the plans’ responses, determine if the
continuous stay claims were paid correctly, and/or calculate the appropriate questioned amounts
for the claim payment errors. For each BCBS plan, we also reviewed the inpatient facility
contracts for a sample of providers (a maximum of five providers for each plan) with the highest
claims utilization to determine if the applicable continuous stay claims in our sample were priced
correctly based on the providers’ contract terms. 3 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., January 18, 2013) for claim payment
errors in our sample. We did not project the sample results to the universe of continuous stay
claims.
The determination of the questioned amount is based on the FEHBP contract, the 2010 through
2012 Service Benefit Plan brochures, and the Association’s FEP Administrative Manual.
3
In total for all BCBS plans, we reviewed the inpatient facility contracts for 290 providers (from a total of 1,581
providers) that were reimbursed for continuous stay claims in our sample.
4
III. AUDIT FINDING AND RECOMMENDATIONS
Continuous Stay Claim Payment Errors $6,259,347
During our audit of continuous stay claims, we determined that the BCBS plans incorrectly paid
659 continuous stay claims (630 from our initial sample and an additional 29 from an expanded
review), resulting in net overcharges of $6,259,347 to the FEHBP. Specifically, the BCBS plans
overpaid 512 claims by $9,713,652 and underpaid 147 claims by $3,454,305. Continuous stay
claims are two or more inpatient facility claims with consecutive dates of service that were billed
by a provider for a patient with one length of stay.
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 . . .
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 . . . .”
Section 6(h) of the FEHB Act provides that rates should reasonably and equitably reflect the cost
of the benefits provided.
For the period January 1, 2010 through July 31, 2012, we identified 57,140 continuous stay
claim groups (representing 126,476 claims), totaling approximately $1.3 billion in payments. 4
From this universe, we selected and reviewed a judgmental sample of 8,054 continuous stay
claim groups (representing 21,446 claims), totaling $945,117,644 in payments, to determine if
these claims were correctly priced and paid by the BCBS plans. Our sample included all groups
with cumulative claim payment amounts of $35,000 or more for 59 of the 64 BCBS plans.
Our initial sample included 630 continuous stay claim payment errors, resulting in net
overcharges of $5,982,167 to the FEHBP. Specifically, the BCBS plans overpaid 483 claims by
$9,436,472 and underpaid 147 claims by $3,454,305. 5
4
This universe excludes continuous stay claim groups for BCBS plans that were already audited during this period.
5
In addition, there were 40 claim payment errors, totaling $298,772 in overpayments, that were identified by the
BCBS plans before our audit notification date (i.e., August 1, 2012) and adjusted and returned to the FEHBP by the
audit request due date (i.e., January 18, 2013). 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 claim payment errors resulted from the following:
• The BCBS plans incorrectly paid 453 claims due to manual processing errors, such as
incorrect coding, overriding system edits, and using incorrect allowances. Consequently, the
BCBS plans overpaid 336 claims by $5,647,877 and underpaid 117 claims by $2,568,902,
resulting in net overcharges of $3,078,975 to the FEHBP.
• The BCBS plans incorrectly paid 98 claims due to provider billing errors, resulting in net
overcharges of $1,271,254 to the FEHBP. Specifically, the BCBS plans overpaid 77 claims
by $1,976,826 and underpaid 21 claims by $705,572.
• The BCBS plans did not provide documentation to support the pricing and payment amounts
for 35 claims, resulting in unsupported charges (overcharges) of $1,068,205 to the FEHBP.
(Note: On multiple occasions during the audit, we requested BlueCross (BC) of California
and the BCBS plans of Minnesota, Mississippi, Missouri, Montana, North Carolina, Texas,
and Virginia to provide support for the pricing and payment amounts of these potential
questionable claims. However, these plans did not provide the requested documentation.)
• The BCBS plans did not properly coordinate 13 claims with Medicare or the patient’s
primary insurance carrier, resulting in net overcharges of $379,708 to the FEHBP.
Specifically, the BCBS plans overpaid 12 claims by $381,957 and underpaid 1 claim by
$2,249.
• For seven claims, the paid amounts were higher in the FEP Direct Claims System than in the
plans’ local claims systems. As a result, the paid amounts for these claims are overstated in
the FEP Direct Claims System by $135,692. Consequently, the health benefit payments for
these BCBS plans were overstated in the applicable Annual Accounting Statements (AAS).
Since claims expense is considered when developing premium rates, overstating the claims
expense in the AAS may increase future rates.
• The BCBS plans inadvertently paid six claims twice, resulting in duplicate charges of
$89,962 to the FEHBP.
• BCBS of Nebraska incorrectly paid three claims, resulting in overcharges of $21,814 to the
FEHBP, due to the plan’s local claims system (“CoreLink”) incorrectly calculating the claim
payment amounts when the patient transferred from one facility to another. Specifically,
these overpayments were due to the plan’s “CoreLink” using too many days when
calculating the claim payment amounts and/or not applying the lesser of logic when the
allowed amounts exceeded the covered charges. Since this is a local system processing error,
we expanded our review of this claim payment error for BCBS of Nebraska (see below).
• For 15 of the claim payment errors, the BCBS plans did not correctly load the contract rates
into their local claims systems. Consequently, these BCBS plans overpaid seven claims by
$114,139 and underpaid eight claims by $177,582, resulting in net undercharges of $63,443
to the FEHBP.
6
We expanded our review of the “CoreLink” system processing error for BCBS of Nebraska.
Specifically, we requested this plan to identify all claims paid during the period January 1, 2010
through December 31, 2012, where patients transferred from one facility to another and the claim
payment amounts were incorrectly calculated and paid. As a result of our expanded review, we
identified 29 additional claim payment errors, totaling $277,180 in overcharges to the FEHBP.
According to BCBS of Nebraska, corrective actions were implemented in May 2013 to fix this
“CoreLink” system processing error.
In total, we determined that 51 BCBS plans incorrectly paid 659 claims, resulting in net
overcharges of $6,259,347 to the FEHBP. Of these, the BCBS plans overpaid 512 claims by
$9,713,652 and underpaid 147 claims by $3,454,305 (See Schedule B for a summary of the
claim payment errors by BCBS plan).
Of the $6,259,347 in net overcharges to the FEHBP:
• $5,062,218 (81 percent) represents 597 claim payment errors that were identified as a result
of our audit. Specifically, the BCBS plans overpaid 450 of these claims by $8,516,523 and
underpaid 147 of these claims by $3,454,305. We noted that the BCBS plans initiated
corrective actions for these claim payment errors after receiving our audit request (i.e.,
sample of continuous stay claims) on September 28, 2012.
• $720,451 (11 percent) represents 29 claim overpayments where the BCBS plans initiated
recovery efforts before receiving our audit request (i.e., September 28, 2012) but had not
recovered the overpayments and/or adjusted or voided the claims by the audit request due
date (i.e., January 18, 2013). Since these overpayments had not been recovered and returned
to the FEHBP by the audit request due date, we are continuing to question these claim
payment errors.
• $476,678 (8 percent) represents 33 claim overpayments where the BCBS plans initiated
recovery efforts on or after our audit notification date (i.e., August 1, 2012) but before
receiving our audit request (i.e., September 28, 2012), and also completed the recovery
process and adjusted or voided these claims by the audit request due date (i.e., January 18,
2013). 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.
In addition to the questioned charges, we identified the following procedural issues requiring
corrective action by the Association and/or FEP Operations Center:
For 1,197 continuous stay claims, we identified that the FEP Direct Claims System (FEP Direct)
potentially applied multiple inpatient admission copayments incorrectly, instead of only one
admission copayment, for a patient’s entire length of stay. As a result, 999 members were
potentially overcharged $383,086 for copayments. Specifically, 271 members with Basic Option
coverage were potentially overcharged $181,160 and 728 members with Standard Option
coverage were potentially overcharged $201,926. On average, we determined that each of these
members with Basic Option coverage was potentially overcharged by $668 and each of these
members with Standard Option coverage was potentially overcharged by $277. Since the
7
providers collect the members’ copayment amounts, we could not determine the actual amounts
billed by the providers and paid by the members for these claims. Therefore, we only estimated
the potential impact of these copayment calculation errors to the members. Additionally, these
copayment calculation errors could result in potential undercharges of $383,086 to the FEHBP.
The 2012 BlueCross and BlueShield Service Benefit Plan brochure, page 69, states that the
member’s liability to a preferred provider for unlimited days is “$750 per admission copayment”
for Basic Option coverage and “$150 per day copayment up to $250 per admission” for Standard
Option coverage. 6 Additionally, page 128 of this brochure defines an admission as, “the period
from entry (admission) as an inpatient into a hospital (or other covered facility) until discharge.”
For the continuous stay claims in our sample, we noted that FEP Direct calculated the member’s
liability by using the following claim data fields: incurred date, discharge date, bill type, and
patient transfer status. However, FEP Direct did not properly recognize continuous stay claims
that were processed out of sequential order and/or for in-house transfers to a different level of
care with no gaps in service dates. Specifically, we identified 508 claims, totaling $159,411 in
potential overpayments by members, for continuous stay claims that were processed out of
sequential order. We also identified 689 claims, totaling $223,675 in potential overpayments by
members, for continuous stay claims where the patient transferred to a different level of care
within the same facility and without gaps in service dates.
• According to the Association, 508 of these copayment calculation errors occurred because
FEP Direct did not properly recognize the continuous stay claims that were processed out of
sequential order. However, the Association states that these copayment calculation errors
were identified by the BCBS plans prior to the audit, and the FEP Operations Center has
already developed two corrective action initiatives, one for the Basic Option coverage and
another for the Standard Option coverage. Specifically, the copayment calculation error for
the Basic Option coverage was identified in October 2008 and the FEP Direct modifications
were implemented in April 2012. The copayment calculation error for the Standard Option
coverage was identified in November 2012 and the FEP Direct modifications are scheduled
to be implemented in September 2013. The Association also states that when these
copayment calculation errors were initially identified, the Association instructed the BCBS
plans to manually calculate the members’ copayment amounts for these continuous stay
claims until the FEP Direct modifications are implemented. Even though the BCBS plans
have procedures to manually calculate admission copayments for continuous stay claims that
are processed out of sequential order (according to the Association), we identified 508 claims
in our sample where FEP Direct and/or the BCBS plans incorrectly processed the members’
copayments because the claims were out of sequential order. Additionally, the Association
has not instructed the BCBS plans to determine the impact on members affected by this
copayment calculation error to ensure that these members are refunded for overpayments.
• For the 689 claims where members were potentially charged extra inpatient admission
copayments for transferring to a different level of care within the same facility, the
Association and/or BCBS plans did not provide sufficient documentation to support that
6
Since our sample included claims with multiple incurred dates of service, we determined the member’s copayment
amount by using the applicable Service Benefit Plan brochure service year.
8
these were not actually continuous stay claims. As a result, the members were potentially
overcharged for re-admission copayments. Since these potential copayment errors were
identified as a result of this audit, the Association is continuing to research this issue.
For these procedural issues, we estimate that 999 members potentially paid unnecessary
copayments of $383,086 for 1,197 continuous stay claims in our sample.
Association's Response:
The Association agrees with $1,363,732 of the questioned charges. The Association states that
the BCBS plans have recovered and returned $964,081 of the confirmed overpayments to the
FEHBP as of February 1, 2013. To the extent that claim payment errors did occur, the
Association also states that these payments were good faith erroneous benefit payments and fall
within the context of CS 1039, Part II, section 2.3(g). Any payments the BCBS plans are unable
to recover are allowable charges to the FEHBP as long as the plans demonstrate due diligence in
the recovery of these overpayments. As good faith erroneous payments, lost investment income
is not applicable to the claim payment errors identified in this finding.
Regarding the contested claim payment errors, the Association states the following:
• The majority of the claims were paid correctly according to the BCBS plans’ pricing
methodologies.
• The remaining claims were initially paid incorrectly but the BCBS plans are in the
process of or have resolved recovery of the overpayment amounts.
Regarding corrective actions, the Association states, “In order to prevent these types of
overpayments from occurring, as of January 1, 2013 we began including these types of claim
payments in our online claims monitoring tool. Thus far, the majority of the overpayments were
caused by one of the following reasons:
• Examiner Coding Errors;
• Provider Billing Errors; and
• Insufficient Investigation of FEP Deferrals.
Examiner Coding Errors: FEP has requested that coding instructions for claims where the
patient is still confined to the hospital be one of the topics for training during the 2013 Micro
Regional Meetings conducted by the FEP Operations Center . . . In addition, FEP will request
that the Plans use these confirmed payment errors as training tools in any re-fresher and new
claims examiner training sessions. We expect this to be completed by 3rd quarter 2013.
Provider Billing Errors: For a number of the confirmed overpayments, the providers submitted
the charges on a UB04 claim form with type of bill 111 which means that the charges on the
claim covered from admission to discharge. FEP is investigating the feasibility of developing an
edit that would defer claims when the type of billing is ‘111’ and the patient status is 30 (patient
is confined in hospital). The instructions to the Plans would be to return the claim to the
9
provider with instructions to change the type of bill if the patient is still confined in the hospital.
We will complete the feasibility review by 3rd quarter 2013.
Insufficient Investigation of FEP Deferrals: A number of the confirmed overpayments
deferred requesting that the Plans verify that the payments were correct because of the payment
amount (High Dollar Edit). FEP will look to expand this edit to include verification of
Continuous Stay Claims, if the reimbursement type is DRG or a Per Case Rate by 3rd quarter
2013.”
OIG Comments:
After reviewing the Association’s draft report response and additional documentation provided
by the BCBS plans, we determined that 51 BCBS plans incorrectly paid 659 continuous stay
claims, resulting in net overcharges of $6,259,347 to the FEHBP. If the BCBS plans identified
the claim payment errors and initiated recovery efforts before our audit notification date (i.e.,
August 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.,
January 18, 2013), 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 $3,436,554 and disagree with $2,822,793 of these net
questioned overcharges. Although the Association only agrees with $1,363,732 of these net
questioned overcharges in its response, the BCBS plans’ documentation supports concurrence
with $3,436,554.
Based on the Association’s response and/or the BCBS plans’ documentation, the contested
amount of $2,822,793 represents the following items:
• $1,068,205 of the contested amount represents 35 claims that the BCBS plans state were
charged correctly to the FEHBP. However, the plans did not provide sufficient
documentation to support that these claims were paid correctly. (Note: On multiple
occasions during the audit, we requested BC of California and the BCBS plans of Minnesota,
Mississippi, Missouri, Montana, North Carolina, Texas, and Virginia to provide support for
the pricing and payment amounts of these potential questionable claims. However, these
plans did not provide the requested documentation.)
• $476,678 of the contested amount represents 33 claim overpayments where the BCBS plans
initiated recovery efforts on or after our audit notification date (i.e., August 1, 2013) but
before receiving our audit request (i.e., September 28, 2012), and also completed the
recovery process and adjusted or voided the claims by the audit request due date (i.e.,
January 18, 2013). 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.
• $421,767 of the contested amount represents 44 claim 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
10
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 identified 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.
• $411,563 of the contested amount represents 18 claim overpayments where the BCBS plans
initiated recovery efforts before receiving our audit request (i.e., September 28, 2012) but
had not recovered the overpayments and/or adjusted or voided the claims by the audit request
due date (i.e., January 18, 2013). 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.
• $308,888 of the contested amount represents 11 claim overpayments that the BCBS plans
agree were paid incorrectly. 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.
• $135,692 of the contested amount represents seven claims that BC of Northeastern
Pennsylvania, Empire BCBS, and Independence BC state were charged correctly to the
FEHBP. Although these plans made the correct payments to the providers, the paid amounts
for these claims were higher in FEP Direct than in the plans’ local claims systems. As a
result, the health benefit payments for these plans were overstated in the applicable AAS’s.
Since claims expense is considered when developing premium rates, overstating the claims
expense in the AAS may increase future rates.
Regarding the procedural issues for the copayment calculation errors, we developed these issues
while reviewing the BCBS plans' responses to our sample selections and after receiving the
Association's response to the draft report. However, we had numerous discussions with the
Association while developing these procedural issues. The Association and/or FEP Operations
Center are continuing to research these procedural issues.
Recommendation 1
We recommend that the contracting officer disallow $9,713,652 for claim overcharges and verify
that the BCBS plans return all amounts recovered to the FEHBP.
Recommendation 2
We recommend that the contracting officer allow the BCBS plans to charge the FEHBP
$3,454,305 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.
11
Recommendation 3
Although the Association has developed a corrective action plan to reduce continuous stay claim
payment errors, we recommend that the contracting officer instruct the Association to provide
evidence or supporting documentation ensuring that all 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.
Recommendation 4
For the claim payment errors where the provider contract rates were loaded incorrectly into the
BCBS plans’ local claims systems, we recommend that the contracting officer require the
Association to provide evidence or supporting documentation ensuring that these plans have
implemented controls for properly updating their local claims systems with the provider contract
rates. We noted these exceptions with BC of California; the BCBS plans of Florida, Georgia,
Kentucky, and Oklahoma; and Empire BCBS.
Recommendation 5
Due to paid amount variances that were identified between the plans’ local claims systems and
the FEP Direct Claims System for the BC of Northeastern Pennsylvania, Empire BCBS, and
Independence BC plans, we recommend that the contracting officer require the Association to
provide evidence or supporting documentation ensuring that all BCBS plans are performing
regular reconciliations between their local claim systems and the FEP Direct Claims System.
Additionally, the BCBS plans with the questioned variances should adjust the applicable claims
in FEP Direct to reflect the actual amounts paid to the providers.
Recommendation 6
Due to the significant number of copayment calculation errors, 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 is incorrectly calculating the members’ copayments
for continuous stay claims. After identifying the reason(s) why, the FEP Operations Center
should implement corrective edits in the FEP Direct Claims System.
In addition to implementing corrective edits, we recommend that the contracting officer require
the Association to have the FEP Operations Center perform an analysis to identify all continuous
stay claims potentially impacted by the copayment calculation errors, and then determine if FEP
members are due refunds and/or if providers are due additional payments as a result of any
copayment calculation errors. The results of this analysis should be provided to the contracting
officer.
12
IV. MAJOR CONTRIBUTORS TO THIS REPORT
Experience-Rated Audits Group
, Lead Auditor
, Auditor
, Auditor
___________________________________________________________
, Chief
Information Systems Audits Group
, Senior Information Technology Specialist
, Senior Information Technology Specialist
13
V. SCHEDULES SCHEDULE A
Page 1 of 2
GLOBAL CONTINUOUS STAY CLAIMS
BLUECROSS AND BLUESHIELD PLANS
UNIVERSE AND SAMPLE OF CONTINUOUS STAY CLAIM GROUPS BY PLAN
UNIVERSE SAMPLE
Site Claim Claim
Number Plan Name State Groups Claims Amounts Paid Period Subject to Audit Groups Claims Amounts Paid
003 BlueCross BlueShield of New Mexico (HCSC) NM 369 815 $ 5,984,904 January 1, 2010 through July 31, 2012 40 104 $ 3,422,562
005 WellPoint BlueCross BlueShield of Georgia GA 1,101 2,442 $ 52,203,196 January 1, 2010 through July 31, 2012 329 787 $ 43,197,745
006 CareFirst BlueCross BlueShield (Maryland Service Area) MD 3,264 7,352 $ 75,751,819 January 1, 2010 through July 31, 2012 526 1,322 $ 56,184,566
007 BlueCross BlueShield of Louisiana LA 722 1,613 $ 15,710,738 January 1, 2010 through July 31, 2012 98 234 $ 10,586,212
009 BlueCross BlueShield of Alabama AL 1,362 3,009 $ 38,731,039 January 1, 2010 through July 31, 2012 291 820 $ 31,759,337
010 BlueCross of Idaho Health Service ID 215 444 $ 1,319,724 January 1, 2010 through July 31, 2012 10 23 $ 620,524
011 BlueCross BlueShield of Massachusetts MA 1,613 3,499 $ 18,722,491 January 1, 2010 through July 31, 2012 159 428 $ 10,668,217
012 BlueCross BlueShield of Western New York NY 118 260 $ 1,821,758 January 1, 2010 through July 31, 2012 13 32 $ 1,312,051
013 Highmark BlueCross BlueShield PA 1,089 2,455 $ 8,814,310 January 1, 2010 through July 31, 2012 36 100 $ 3,758,733
015 BlueCross BlueShield of Tennessee TN 913 1,892 $ 16,003,217 January 1, 2010 through July 31, 2012 119 260 $ 10,916,729
016 BlueCross BlueShield of Wyoming WY 148 449 $ 2,636,831 January 1, 2010 through July 31, 2012 22 115 $ 1,411,430
017 BlueCross BlueShield of Illinois (HCSC) IL 2,715 6,204 $ 72,805,639 January 1, 2010 through July 31, 2012 491 1,281 $ 50,778,552
021 WellPoint BlueCross BlueShield (Ohio) OH 3,019 6,632 $ 62,388,630 January 1, 2010 through July 31, 2012 285 755 $ 45,250,344
024 BlueCross BlueShield of South Carolina SC 271 566 $ 7,117,956 January 1, 2010 through July 31, 2012 67 142 $ 4,777,641
027 WellPoint BlueCross BlueShield of New Hampshire NH 502 1,053 $ 8,643,812 January 1, 2010 through July 31, 2012 59 131 $ 6,269,554
028 BlueCross BlueShield of Vermont VT 94 201 $ 1,240,645 January 1, 2010 through July 31, 2012 7 15 $ 681,719
029 BlueCross BlueShield of Texas (HCSC) TX 4,455 9,971 $ 141,522,460 January 1, 2010 through July 31, 2012 839 2,238 $ 107,777,105
030 WellPoint BlueCross BlueShield of Colorado CO 1,274 2,916 $ 36,007,039 January 1, 2010 through July 31, 2012 185 588 $ 28,850,612
031 Wellmark BlueCross BlueShield of Iowa IA 493 1,051 $ 5,610,133 January 1, 2010 through July 31, 2012 38 107 $ 3,002,184
032 BlueCross BlueShield of Michigan MI 946 2,008 $ 9,966,711 January 1, 2010 through July 31, 2012 79 179 $ 5,171,797
033 BlueCross BlueShield of North Carolina NC 780 1,638 $ 15,002,484 January 1, 2011 through July 31, 2012 120 273 $ 11,491,600
034 BlueCross BlueShield of North Dakota ND 219 563 $ 2,816,466 January 1, 2010 through July 31, 2012 18 92 $ 1,581,156
036 Capital BlueCross PA 635 1,291 $ 4,804,252 January 1, 2010 through July 31, 2012 33 69 $ 2,210,566
037 BlueCross BlueShield of Montana MT 354 1,069 $ 8,515,796 January 1, 2010 through July 31, 2012 76 445 $ 6,326,619
038 BlueCross BlueShield of Hawaii HI 30 67 $ 1,095,962 January 1, 2010 through July 31, 2012 10 23 $ 941,553
039 WellPoint BlueCross BlueShield of Indiana IN 1,383 3,015 $ 32,105,587 January 1, 2010 through July 31, 2012 180 449 $ 24,690,795
040 BlueCross BlueShield of Mississippi MS 586 1,246 $ 5,669,575 January 1, 2010 through July 31, 2012 41 91 $ 3,619,443
041 Florida Blue FL 1,120 2,398 $ 20,008,661 October 1, 2011 through July 31, 2012 98 218 $ 13,587,949
042 BlueCross BlueShield of Kansas City MO 581 1,285 $ 8,806,078 January 1, 2010 through July 31, 2012 73 179 $ 6,011,567
043 Regence BlueShield of Idaho ID 0 0 $ - January 1, 2010 through July 31, 2012 0 0 $ -
044 BlueCross BlueShield of Arkansas AR 680 1,569 $ 8,883,868 January 1, 2010 through July 31, 2012 63 242 $ 5,489,729
045 WellPoint BlueCross BlueShield of Kentucky KY 1,199 2,601 $ 21,619,174 January 1, 2010 through July 31, 2012 125 338 $ 14,291,699
047 WellPoint BlueCross BlueShield United of Wisconsin WI 780 1,709 $ 21,243,906 January 1, 2010 through July 31, 2012 126 325 $ 17,406,309
048 Empire BlueCross BlueShield (WellPoint) NY 904 1,950 $ 22,978,582 January 1, 2010 through July 31, 2012 160 380 $ 17,725,190
049 Horizon BlueCross BlueShield of New Jersey NJ 680 1,438 $ 8,398,415 January 1, 2011 through July 31, 2012 51 137 $ 4,688,673
050 WellPoint BlueCross BlueShield of Connecticut CT 666 1,412 $ 14,464,180 January 1, 2010 through July 31, 2012 85 206 $ 10,417,160
052 WellPoint BlueCross of California CA 2,920 6,500 $ 153,376,453 January 1, 2010 through July 31, 2012 771 2,030 $ 141,206,256
SCHEDULE A
Page 2 of 2
GLOBAL CONTINUOUS STAY CLAIMS
BLUECROSS AND BLUESHIELD PLANS
UNIVERSE AND SAMPLE OF CONTINUOUS STAY CLAIM GROUPS BY PLAN
UNIVERSE SAMPLE
Site Claim Claim
Number Plan Name State Groups Claims Amounts Paid Period Subject to Audit Groups Claims Amounts Paid
053 BlueCross BlueShield of Nebraska NE 180 385 $ 3,081,164 January 1, 2010 through July 31, 2012 25 59 $ 1,610,018
054 Mountain State BlueCross BlueShield WV 499 1,144 $ 8,283,891 January 1, 2010 through July 31, 2012 54 140 $ 4,961,662
055 Independence BlueCross PA 1,175 2,471 $ 22,830,489 January 1, 2010 through July 31, 2012 169 380 $ 14,564,372
056 BlueCross BlueShield of Arizona AZ 712 1,604 $ 12,855,800 January 1, 2010 through July 31, 2012 86 223 $ 7,798,327
058 Regence BlueCross BlueShield of Oregon OR 736 1,976 $ 16,518,842 January 1, 2010 through July 31, 2012 129 432 $ 11,293,110
059 WellPoint BlueCross BlueShield of Maine ME 440 921 $ 5,375,755 January 1, 2010 through July 31, 2012 36 76 $ 3,122,510
060 BlueCross BlueShield of Rhode Island RI 289 614 $ 2,668,278 January 1, 2010 through July 31, 2012 14 33 $ 839,166
061 WellPoint BlueCross BlueShield of Nevada NV 338 739 $ 6,646,579 January 1, 2010 through July 31, 2012 39 105 $ 4,128,355
062 WellPoint BlueCross Blue Shield of Virginia VA 2,918 6,152 $ 28,579,937 January 1, 2010 through July 31, 2012 140 318 $ 15,557,709
064 Excellus BlueCross BlueShield of the Rochester Area NY 67 153 $ 1,228,393 January 1, 2010 through July 31, 2012 6 23 $ 804,665
066 Regence BlueCross BlueShield of Utah UT 950 2,103 $ 18,893,896 January 1, 2010 through July 31, 2012 141 373 $ 13,827,521
067 BlueShield of California CA 0 0 $ - January 1, 2010 through July 31, 2012 0 0 $ -
068 Triple-S Salud, Inc PR 9 18 $ 63,189 January 1, 2010 through July 31, 2012 0 0 $ -
069 Regence BlueShield of Washington WA 0 0 $ - January 1, 2010 through July 31, 2012 0 0 $ -
070 BlueCross BlueShield of Alaska AK 105 270 $ 7,451,636 January 1, 2010 through July 31, 2012 53 163 $ 6,810,145
074 Wellmark BlueCross BlueShield of South Dakota SD 0 0 $ - January 1, 2010 through July 31, 2012 0 0 $ -
075 Premera BlueCross WA 1,172 2,461 $ 18,369,784 January 1, 2010 through July 31, 2012 111 258 $ 12,562,940
076 WellPoint BlueCross BlueShield of Missouri MO 950 2,104 $ 19,214,025 January 1, 2010 through July 31, 2012 117 332 $ 13,828,293
078 BlueCross BlueShield of Minnesota MN 870 2,198 $ 37,622,492 January 1, 2010 through July 31, 2012 216 663 $ 30,539,306
079 Excellus BlueCross BlueShield of Central New York NY 55 115 $ 1,016,774 January 1, 2010 through July 31, 2012 9 21 $ 577,631
082 BlueCross BlueShield of Kansas KS 571 1,179 $ 3,442,814 January 1, 2010 through July 31, 2012 27 55 $ 1,929,629
083 BlueCross BlueShield of Oklahoma (HCSC) OK 1,293 2,784 $ 31,389,050 January 1, 2010 through July 31, 2012 272 645 $ 21,104,740
084 Excellus BlueCross BlueShield of Utica-Watertown NY 33 70 $ 556,755 January 1, 2010 through July 31, 2012 4 10 $ 421,609
085 CareFirst BlueCross BlueShield (DC Service Area) DC 4,376 9,583 $ 83,484,063 January 1, 2010 through July 31, 2012 505 1,437 $ 49,328,661
088 BlueCross of Northeastern Pennsylvania PA 502 1,195 $ 2,945,226 January 1, 2010 through July 31, 2012 16 49 $ 864,168
089 BlueCross BlueShield of Delaware DE 263 560 $ 8,216,609 January 1, 2010 through July 31, 2012 54 116 $ 7,031,938
092 CareFirst BlueCross BlueShield (Overseas) DC 437 1,094 $ 17,587,340 January 1, 2010 through July 31, 2012 108 377 $ 13,527,293
Totals 57,140 126,476 $ 1,291,115,270 8,054 21,446 $ 945,117,644
SCHEDULE B
Page 1 of 2
GLOBAL CONTINUOUS STAY CLAIMS
BLUECROSS AND BLUESHIELD PLANS
QUESTIONED CHARGES BY PLAN
Site Total Questioned Amounts Questioned by Year Plan Plan
Number Plan Name State Claims Charges 2009 2010 2011 2012 Agrees Disagrees
003 BlueCross BlueShield of New Mexico (HCSC) NM 11 $ 61,345 $ (1,368) $ 12,205 $ 50,507 $ - $ 61,345 $ -
005 WellPoint BlueCross BlueShield of Georgia GA 14 $ (29,658) $ - $ (3,595) $ 23,411 $ (49,474) $ (74,782) $ 45,124
006 CareFirst BlueCross BlueShield (Maryland Service Area) MD 11 $ 66,478 $ - $ 3,305 $ 3,798 $ 59,374 $ 63,228 $ 3,250
007 BlueCross BlueShield of Louisiana LA 26 $ (67,507) $ - $ 110,414 $ (259,269) $ 81,349 $ (310,280) $ 242,774
009 BlueCross BlueShield of Alabama AL 12 $ 623,144 $ - $ - $ 95,165 $ 527,978 $ 623,144 $ -
010 BlueCross of Idaho Health Service ID 6 $ 188,492 $ - $ - $ 188,492 $ - $ 188,492 $ -
011 BlueCross BlueShield of Massachusetts MA 21 $ 286,208 $ - $ 96,401 $ 32,819 $ 156,988 $ 135,152 $ 151,056
012 BlueCross BlueShield of Western New York NY 0 $ - $ - $ - $ - $ - $ - $ -
013 Highmark BlueCross BlueShield PA 0 $ - $ - $ - $ - $ - $ - $ -
015 BlueCross BlueShield of Tennessee TN 0 $ - $ - $ - $ - $ - $ - $ -
016 BlueCross BlueShield of Wyoming WY 1 $ (1,275) $ - $ (1,275) $ - $ - $ (1,275) $ -
017 BlueCross BlueShield of Illinois (HCSC) IL 31 $ 323,113 $ 5,102 $ 247,450 $ (14,189) $ 84,749 $ 323,113 $ -
021 WellPoint BlueCross BlueShield (Ohio) OH 9 $ 40,093 $ 5,355 $ 40,056 $ (2,426) $ (2,892) $ 40,093 $ -
024 BlueCross BlueShield of South Carolina SC 4 $ 6,207 $ - $ 20,093 $ (13,886) $ - $ 6,207 $ -
027 WellPoint BlueCross BlueShield of New Hampshire NH 3 $ 8,778 $ 1,613 $ - $ - $ 7,165 $ 8,778 $ -
028 BlueCross BlueShield of Vermont VT 0 $ - $ - $ - $ - $ - $ - $ -
029 BlueCross BlueShield of Texas (HCSC) TX 106 $ 1,547,990 $ 56,197 $ 571,725 $ 413,179 $ 506,889 $ 1,303,289 $ 244,701
030 WellPoint BlueCross BlueShield of Colorado CO 24 $ (146,449) $ (2,970) $ (2,810) $ (1,806) $ (138,862) $ (148,298) $ 1,850
031 Wellmark BlueCross BlueShield of Iowa IA 6 $ 106,325 $ - $ 534 $ 26,479 $ 79,311 $ 106,325 $ -
032 BlueCross BlueShield of Michigan MI 0 $ - $ - $ - $ - $ - $ - $ -
033 BlueCross BlueShield of North Carolina NC 18 $ 536,035 $ - $ - $ 380,347 $ 155,688 $ 339,469 $ 196,565
034 BlueCross BlueShield of North Dakota ND 0 $ - $ - $ - $ - $ - $ - $ -
036 Capital BlueCross PA 2 $ 25,303 $ - $ 25,303 $ - $ - $ 25,303 $ -
037 BlueCross BlueShield of Montana MT 17 $ 120,112 $ - $ 87,577 $ 30,256 $ 2,280 $ 2,280 $ 117,833
038 BlueCross BlueShield of Hawaii HI 2 $ 9,350 $ - $ 592 $ 8,758 $ - $ 9,350 $ -
039 WellPoint BlueCross BlueShield of Indiana IN 9 $ (12,852) $ 9,946 $ (15,649) $ (3,720) $ (3,429) $ (34,864) $ 22,011
040 BlueCross BlueShield of Mississippi MS 6 $ 104,420 $ 39,459 $ 56,293 $ - $ 8,668 $ 48,127 $ 56,293
041 Florida Blue FL 21 $ 513,327 $ - $ - $ 128,749 $ 384,578 $ 491,666 $ 21,661
042 BlueCross BlueShield of Kansas City MO 2 $ 16,456 $ - $ 16,456 $ - $ - $ - $ 16,456
043 Regence BlueShield of Idaho ID 0 $ - $ - $ - $ - $ - $ - $ -
044 BlueCross BlueShield of Arkansas AR 5 $ (1,905) $ - $ 145 $ (1,250) $ (800) $ (1,905) $ -
045 WellPoint BlueCross BlueShield of Kentucky KY 7 $ 49,540 $ 3,596 $ 36,260 $ (937) $ 10,621 $ 49,540 $ -
047 WellPoint BlueCross BlueShield United of Wisconsin WI 5 $ 49,028 $ - $ - $ (65,169) $ 114,196 $ 25,336 $ 23,692
048 Empire BlueCross BlueShield (WellPoint) NY 11 $ 70,045 $ - $ 141,190 $ 19,325 $ (90,470) $ (20,375) $ 90,421
049 Horizon BlueCross BlueShield of New Jersey NJ 1 $ 2,824 $ - $ - $ 2,824 $ - $ 2,824 $ -
050 WellPoint BlueCross BlueShield of Connecticut CT 7 $ (61,507) $ - $ (10,572) $ (64,547) $ 13,612 $ (77,358) $ 15,851
052 WellPoint BlueCross of California CA 45 $ 110,090 $ 2,610 $ 8,383 $ 325,967 $ (226,869) $ (268,021) $ 378,111
053 BlueCross BlueShield of Nebraska NE 33 $ 330,445 $ - $ 74,076 $ 71,417 $ 184,952 $ 249,000 $ 81,445
SCHEDULE B
Page 2 of 2
GLOBAL CONTINUOUS STAY CLAIMS
BLUECROSS AND BLUESHIELD PLANS
QUESTIONED CHARGES BY PLAN
Site Total Questioned Amounts Questioned by Year Plan Plan
Number Plan Name State Claims Charges 2009 2010 2011 2012 Agrees Disagrees
054 Mountain State BlueCross BlueShield WV 0 $ - $ - $ - $ - $ - $ - $ -
055 Independence BlueCross PA 13 $ 225,345 $ - $ 84,700 $ 17,073 $ 123,573 $ 106,661 $ 118,684
056 BlueCross BlueShield of Arizona AZ 1 $ 4,500 $ - $ 4,500 $ - $ - $ 4,500 $ -
058 Regence BlueCross BlueShield of Oregon OR 10 $ 128,602 $ 754 $ 12,535 $ 88,700 $ 26,613 $ 122,975 $ 5,627
059 WellPoint BlueCross BlueShield of Maine ME 7 $ 69,641 $ - $ 2,435 $ 71,871 $ (4,666) $ 69,641 $ -
060 BlueCross BlueShield of Rhode Island RI 4 $ 5,745 $ - $ (1,796) $ 9,676 $ (2,136) $ 5,745 $ -
061 WellPoint BlueCross BlueShield of Nevada NV 2 $ 47,717 $ - $ - $ - $ 47,717 $ 47,717 $ -
062 WellPoint BlueCross Blue Shield of Virginia VA 19 $ 499,023 $ 2,533 $ 5,301 $ 379,767 $ 111,422 $ 130,433 $ 368,591
064 Excellus BlueCross BlueShield of the Rochester Area NY 1 $ 9,026 $ - $ - $ 9,026 $ - $ 9,026 $ -
066 Regence BlueCross BlueShield of Utah UT 3 $ 4,476 $ - $ (6,496) $ 3,511 $ 7,462 $ 4,476 $ -
067 BlueShield of California CA 0 $ - $ - $ - $ - $ - $ - $ -
068 Triple-S Salud, Inc PR 0 $ - $ - $ - $ - $ - $ - $ -
069 Regence BlueShield of Washington WA 0 $ - $ - $ - $ - $ - $ - $ -
070 BlueCross BlueShield of Alaska AK 7 $ 17,350 $ 17,534 $ - $ 4,266 $ (4,450) $ (184) $ 17,534
074 Wellmark BlueCross BlueShield of South Dakota SD 0 $ - $ - $ - $ - $ - $ - $ -
075 Premera BlueCross WA 2 $ (6,556) $ - $ (6,556) $ - $ - $ (12,383) $ 5,827
076 WellPoint BlueCross BlueShield of Missouri MO 8 $ 260,660 $ - $ 34,637 $ 192,459 $ 33,564 $ 118,148 $ 142,512
078 BlueCross BlueShield of Minnesota MN 2 $ 188,902 $ - $ - $ - $ 188,902 $ - $ 188,902
079 Excellus BlueCross BlueShield of Central New York NY 2 $ 6,738 $ - $ - $ 6,738 $ - $ 6,738 $ -
082 BlueCross BlueShield of Kansas KS 0 $ - $ - $ - $ - $ - $ - $ -
083 BlueCross BlueShield of Oklahoma (HCSC) OK 31 $ 87,803 $ (13,474) $ 12,263 $ 31,584 $ 57,430 $ (34,732) $ 122,535
084 Excellus BlueCross BlueShield of Utica-Watertown NY 1 $ 1,235 $ - $ - $ 1,235 $ - $ 1,235 $ -
085 CareFirst BlueCross BlueShield (DC Service Area) DC 63 $ (218,100) $ - $ 83,945 $ (239,515) $ (62,530) $ (318,503) $ 100,404
088 BlueCross of Northeastern Pennsylvania PA 1 $ 11,030 $ - $ 11,030 $ - $ - $ - $ 11,030
089 BlueCross BlueShield of Delaware DE 1 $ 10,410 $ - $ - $ 10,410 $ - $ 10,410 $ -
092 CareFirst BlueCross BlueShield (Overseas) DC 5 $ 31,805 $ - $ - $ (4,075) $ 35,880 $ (250) $ 32,055
TOTALS 659 $ 6,259,347 $ 126,886 $ 1,751,055 $ 1,957,021 $ 2,424,385 $ 3,436,554 $ 2,822,793
Plan Sites in Sample = 59
Plan Sites with Claim Payment Errors = 51
February 4, 2013 Federal Employee Program
1310 G Street, N.W.
, Group Chief Washington, D.C. 20005
202.942.1000
Experience-Rated Audits Group Fax 202.942.1125
Office of the Inspector General
U.S. Office of Personnel Management
1900 E Street, Room 6400
Washington, DC 20415-1100
Reference: OPM DRAFT AUDIT REPORT
Global Audit on Continuous Stay Claims
Audit Report #1A-99-00-13-004
(Report dated and received 09/28/2012)
Dear :
This is in response to the above referenced U.S. Office of Personnel Management
(OPM) Draft Audit Report concerning the Global Audit on Continuous Stay Claims
for claims paid from January 1, 2010 through July 31, 2012. The sample included
8,054 groups with cumulative claim payment amounts of $35,000 or more,
representing 21,446 claims, totaling $945,117,644 in payments. Potential
overpayments were not estimated in the draft report. Our comments concerning the
findings in this report are as follows:
The OPM OIG auditors recommended that the Association and/or BCBS Plans
review the sample of 21,446 continuous stay claims totaling $945,117,644 to
determine whether the claims were paid properly. For all claim payment errors, the
BCBS plans should initiate recovery efforts immediately as required by the FEHBP
contract, and return all amounts recovered to the FEHBP.
BCBSA Response:
After reviewing the sample of Continuous Stay claims totaling $945,117,644, the
Association does not contest 546 overpayments totaling $5,224,800 and 625
underpayments totaling $3,861,968, for a net overpayment amount of $1,363,732.
As of February 1, 2013, the Plans have recovered and returned $964,081 to the
February 4, 2013
Page 2 of 3
Program for the identified overpayments. See Attachment A for a listing of
contested and uncontested amounts per Plan and Schedule B for a listing of the
reasons the claims were paid incorrectly.
To the extent that claim payment errors did occur or were not identified, these
payments were good faith erroneous benefit payments and fall within the context of
CS 1039, Section 2.3 (g). Any benefit payments the Plans are unable to recover are
allowable charges to the Program as long as the Plan is able to demonstrate due
diligence in collection of the overpayments. In addition, as good faith erroneous
payments, lost investment income is not applicable to these confirmed
overpayments.
We contest the remaining 21,020 claims totaling $943,753,912 in potential claim
payment errors (support provided) for the following:
$940,271,539 in potential claim payment errors were paid correctly according
to the Plan’s pricing methodology;
$3,482,373 in claims that were initially paid incorrectly but the Plan is in the
process of or has resolved recovery of the overpayment amount.
Documentation to support the contested amounts and the initiation of overpayment
recovery before the audit has been provided.
In order to prevent these types of overpayments from occurring, as of
January 1, 2013 we began including these types of claim payments in our online
claims monitoring tool.
Thus far, the majority of the overpayments were caused by one of the following
reasons:
Examiner Coding Errors;
Provider Billing Errors; and
Insufficient Investigation of FEP Deferrals.
Examiner Coding Errors: FEP has requested that coding instructions for claims
where the patient is still confined to the hospital be one of the topics for training
during the 2013 Micro Regional Meetings conducted by the FEP Operations Center
for small of groups of Plan held in multiple areas of the country. In addition, FEP will
request that the Plans use these confirmed payment errors as training tools in any
re-fresher and new claims examiner training sessions. We expect this to be
completed by 3rd quarter 2013.
Provider Billing Errors: For a number of the confirmed overpayments, the
providers subm itted the charges on a UB04 claim form w ith type of bill 111 which
means that the charges on the claim covered from admission to discharge. FEP is
investigating the feasibility of developing an edit that would defer claims w hen the
type of billing is "111 " and the patient status is 30 (patient is confined in hospital).
The instructions to the Plans would be to return the claim to the provider w ith
instructions to change the type of bill if the patient is still confined in the hospital.
We w ill complete the feas ibility review by 3rd quarter 2013.
Ins ufficient Investigation of FEP Deferrals : A number of the confirmed
overpayments deferred requesting that the Plans verify that the payments w ere
correct because of the payment amount (High Dollar Edit). FEP w ill look to expand
th is edit to include verification of Continuous Stay Claims, if the reimbursement type
is DRG or a Per Case Rate by 3rd quarter 2013.
We appreciate the opportun ity to provide our response to this Draft Aud it Report and
would request that our comments be included in their entirety as part of the Final
Audit Report.
Sincerely,
~ogram Assurance
Attachments
cc:
Audit on Global Continuous Stay Claims for BlueCross and BlueShield Plans
Published by the Office of Personnel Management, Office of Inspector General on 2013-08-20.
Below is a raw (and likely hideous) rendition of the original report. (PDF)