oversight

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)

                                                     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

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