oversight

Global Audit of Claims-to-Enrollment Match for BlueCross and BlueShield Plans

Published by the Office of Personnel Management, Office of Inspector General on 2018-08-28.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

862)),&E OF PERSONNEL MANAGEMENT
   OFFICE OF THE INSPECTOR GENERAL
            OFFICE OF AUDITS




  Final Audit Report

Global Audit of Claims-to-Enrollment Match for
       BlueCross and BlueShield Plans

         Report Number 1A-99-00-17-048
                 August 28, 2018
             EXECUTIVE SUMMARY
                               Global Audit of Claims-To-Enrollment Match

Report No. 1A-99-00-17-048                                                                             August 28, 2018

Why Did We Conduct the Audit?              What Did We Find?

The objectives of our audit were to        For many years, we have had serious concerns related to the efforts
determine whether the Blue Cross and       of BCBS plans and the Association to implement corrective
Blue Shield (BCBS) plans charged costs     actions to prevent enrollment claim payment errors. Our audits
to the Federal Employees Health Benefits
                                           (performed since 2009) routinely show that retroactive adjustments
Program (FEHBP) and provided services
                                           are the primary reason for enrollment claim payment errors. Since
to FEHBP members in accordance with
the terms of the BCBS Association’s        we began these audits, we have identified $38 million in claim
(Association) contract with the U.S.       overpayments related to enrollment errors.
Office of Personnel Management.
Specifically, our objective was to         Although the Association has taken several steps to reduce
determine whether the BCBS plans           enrollment errors, the results of this audit continue to indicate that
complied with contract provisions          these corrective actions have not had a substantial impact in
relative to claims paid for ineligible     reducing the amount of enrollment payment errors. Our audit
enrollees.
                                           determined that in a 32-month period, BCBS plans paid
                                           $12,357,989 in error for ineligible members that should not be
What Did We Audit?
                                           participating in the FEHBP. Since the Association initiated
The Office of the Inspector General        recovery for $5,010,634 of the claim overpayments prior to the
(OIG) has completed a limited scope        start of this audit, this amount is not included in the questioned
performance audit of the FEHBP             costs for this audit.
operations at all BCBS plans. The audit
covered claim payments from                This report questions the remaining $7,347,355 in health benefit
October 1, 2014, through May 31, 2017.     charges.
Specifically, we identified and audited
claims from this period for services
incurred:
x when no enrollee enrollment record
    existed;
x during gaps of coverage; or
x after termination of enrollee
    coverage.




 Michael R. Esser
 Assistant Inspector General
 for Audits
                                                         i
	
              ABBREVIATIONS
Association    Blue Cross Blue Shield Association
BCBS           Blue Cross Blue Shield
FEHB           Federal Employees Health Benefits
FEHBP          Federal Employees Health Benefits Program
FEP            Federal Employee Program
FEP Express    Association’s nation-wide claims processing system
FEP OC         Federal Employee Program Operations Center
OIG            Office of the Inspector General
OPM            U.S. Office of Personnel Management
Plan(s)        Blue Cross and Blue Shield Plan(s)




                            ii
	
                          TABLE OF CONTENTS
                                                                                                                        Page
	
         EXECUTIVE SUMMARY ......................................................................................... i
	

         ABBREVIATIONS ..................................................................................................... ii
	

I. 	     BACKGROUND ..........................................................................................................1
	

II. 	    OBJECTIVES, SCOPE, AND METHODOLOGY ..................................................3
	

III. 	   AUDIT FINDINGS AND RECOMMENDATIONS.................................................6 


         Global Claims-to-Enrollment Match Review ...............................................................6
	

         APPENDIX: Blue Cross Blue Shield Association’s October 27, 2017, response to 

                   the Draft Audit Report, issued August 8, 2017. 


         REPORT FRAUD, WASTE, AND MISMANAGEMENT
                                  I. BACKGROUND

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
Blue Cross and/or Blue Shield (BCBS) plans. The audit was performed by the U.S. Office of
Personnel Management’s (OPM) Office of the Inspector General (OIG), as authorized by the
Inspector General Act of 1978, as amended.

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 codified in Title 5, Chapter 1, Part 890 of the
Code of Federal Regulations. Health insurance coverage is made available through contracts
with various health insurance carriers.

The Blue Cross Blue Shield 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 36 local BCBS companies participating in the
FEHBP. The 36 companies are comprised of 64 local BCBS plans.

The Association has established a Federal Employee Program (FEP1) 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 Blue Cross Blue Shield, located in Owings
Mills, Maryland. 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.


1
  Throughout this report, when we refer to "FEP", we are referring to the Service Benefit Plan lines of business at
the Plan(s). When we refer to the "FEHBP", we are referring to the program that provides health benefits to Federal
employees.
                                                         1                      Report No. 1A-99-00-17-048 

Compliance with laws and regulations applicable to the FEHBP is the responsibility of the
Association and Plan management. Also, management of each BCBS plan is responsible for
establishing and maintaining a system of internal controls.

Findings from our previous global claims-to-enrollment match audit of all BCBS plans
(Report No. 1A-99-00-15-008, dated January 21, 2016), for claims reimbursed from
January 1, 2012, through September 30, 2014, are currently in the process of being resolved. We
will continue to report procedural recommendations from the prior audit report until
implemented.

Our sample selections, instructions, and preliminary audit results of enrollment errors were
presented to the Association in a draft report dated August 8, 2017. The Association’s comments
offered in response to the draft report were considered in preparing our final report and are
included as an Appendix to this report. Also, additional documentation provided by the
Association and BCBS plans on various dates through July 12, 2018, was considered in
preparing our final report.




                                               2                  Report No. 1A-99-00-17-048 

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 objective was to determine whether the plans complied with contract provisions
 relative to claims paid for ineligible enrollees.

 SCOPE

 The audit covered health benefit payments from October 1, 2014, through May 31, 2017, as
 reported in the Blue Cross and Blue Shield Association’s Government-wide Service Benefit Plan
 FEP Annual Accounting Statements. We performed a computer search on our claims data
 warehouse to identify all claims that were paid for ineligible enrollees during this period. This
 search identified 44,709 enrollees who incurred 330,216 claims, totaling $48,787,071 in
 payments, when they were not eligible for coverage.

 This universe is comprised of claims for two distinct member enrollment issues. The first
 category, “Conflict with Enrollment Coverage,” consists of claims incurred during gaps in an
 enrollment coverage or after termination of an enrollee. The second category, “No Enrollment
 Record on File,” consists of claims incurred when no enrollee records existed. To test each
 BCBS plan’s compliance with the FEHBP health benefit provisions related to enrollment
 eligibility, we selected for review all claim lines in both categories for enrollees with cumulative
 claim payments over $1,000. The results of this review were not projected to the population.
 Exhibit I contains a summary of the total population and sample selection for potentially
 ineligible enrollees.

                 Exhibit I – Summary of Total Population and Sample Selection
                                           Ineligible Enrollees
                                                                      Enrollees with cumulative
                                      Total Population
         Category                                                       payments over $1,000
                                        Claim      Potential                 Claim      Potential
                          Enrollees                               Enrollees
                                        Lines    Overpayments                Lines Overpayments
 Conflict with
                           43,102      287,403    $42,623,610      5,735     60,730     $35,895,097
 Enrollment Coverage
 No Enrollment Record
                           1,607       42,813      $6,163,461       597      16,673     $5,891,447
 on File
 Total                     44,709      330,216    $48,787,071      6,332     77,403     $41,786,544
                                                   3                   Report No. 1A-99-00-17-048 

METHODOLOGY

The claims selected for review were submitted to each BCBS plan for their analysis and
response. We then conducted a limited review of the responses by selecting a small sample of
claims that the plans determined were paid correctly, and a larger sample of claims determined to
be paid incorrectly. Specifically, we verified supporting documentation and the accuracy and
completeness of the plans’ responses. We also determined if the claims were paid correctly, and
if not, calculated the amount of the claim payment errors. On a limited test basis, we also
verified whether the BCBS plans had initiated recovery efforts, adjusted or voided the claims,
and/or completed the recovery process by the audit request due date (i.e., September 29, 2017)
for the claim payment errors in our sample. The determination of the claim payment errors
questioned in this report was based on the FEHBP contract, the 2014 through 2017 Service
Benefit Plan brochures, and the Association’s FEP Administrative Procedures Manual.

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 objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on our audit objectives.

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 claims paid for ineligible
enrollees. 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 claims paid for ineligible
enrollees. Exceptions noted are explained in detail in the “Audit Findings and
Recommendations” section of this audit report. With respect to the items not tested, nothing
came to our attention that caused us to believe that the BCBS plans had not complied, in all
material respects, with those provisions.

In conducting our audit, we relied to varying degrees on computer-generated data provided by
the FEP Director’s Office, the FEP Operations Center, and the BCBS plans. Through audits and
a reconciliation process, we have verified the reliability of the BCBS claims data in our data
warehouse, which was used to identify the universe of potential enrollment claim payment
                                                 4                    Report No. 1A-99-00-17-048 

errors. The BCBS claims data is provided to us on a monthly basis by the FEP Operations
Center, and after a series of internal steps, uploaded into our data warehouse. However, due to
time constraints, we did not verify the reliability of the data generated by the BCBS plans’ local
claims systems. While utilizing the computer-generated data during our audit, nothing came to
our attention to cause us to doubt its reliability. We believe that the data was sufficient to
achieve our audit objectives.

Audit fieldwork was performed at our offices in Washington, D.C., Cranberry Township,
Pennsylvania and Jacksonville, Florida through July 2018.




                                                 5                   Report No. 1A-99-00-17-048 

III. AUDIT FINDINGS AND RECOMMENDATIONS

 The section below details the results of our Global Claims-to-Enrollment Match audit. The
 results reflect claims paid for ineligible enrollees who did not have active FEP enrollment
 coverage on the date the service was incurred.

 Global Claims-to-Enrollment Match Review		                                             $7,347,355

 As mentioned in the Scope section above, our sample of claims selected for review included all
 claim lines in both categories of enrollment issues for enrollees with cumulative claim payments
 more than $1,000. We determined that the BCBS plans incorrectly paid 35,827 claim lines,
 totaling $7,347,355 in payments for ineligible enrollees. See Exhibit II for a summary of our
 review by category.

                                Exhibit II – Summary of Review

                 Category                              Reviewed                  Paid in Error

 Conflict with Enrollment Coverage            60,730       $35,895,097        31,953    $6,553,512

 No Enrollment Record on File                 16,673       $5,891,447         3,874       $793,843

 Total                                        77,403       $41,786,544       35,827     $7,347,355



 These 35,827 claim payment errors are comprised of the following:

 x	 33,830 claim lines, totaling $6,848,022, were incorrectly paid because the FEP Operation’s
    Center (FEP OC) did not have accurate enrollment information. Enrollees whose coverage
    was, or should have been, terminated remained active in the Association’s nation-wide
    claims processing system (FEP Express). Our review identified the most common reasons
    for these retroactive enrollment errors:

     1) Several months or years passed before removal of a former spouse;
	
     2) Untimely removal of a dependent over the age of 26; and
	
     3) Untimely cancelation or termination of a contract holder.
	

 x   The remaining 1,997 claim lines, totaling $499,333, were paid in error for various reasons
     including manual processing errors, system processing errors, and/or provider billing errors.


                                                 6		                    Report No. 1A-99-00-17-048 

The BCBS plans acknowledge that $12,357,989 in claim overpayments were made during the
scope of our audit. 2 As previously cited, we determined that a majority of these enrollment
errors occurred because the Association did not promptly update the FEP Express system when
there were changes in the enrollment status of contract holders and their dependents. Due to the
nature of the enrollment process, we recognize that some retroactive enrollment errors will
occur; however, the results of this audit indicate that enrollment errors continue to increase. We
recognize the Association’s efforts to substantially reduce errors by 42 percent from 2014 to
2015; however, our audit has identified a 27 percent average increase in errors per year from
2015 to 2017. 3 See Exhibit III for a summary of recognized overpayments from 2014 to 2017.

        Exhibit III – Summary of Global Audits Claims-to-Enrollment Match Overcharges

                                 Summary of Overcharges by Year
    7
    6
    5
    4
    3
    2
    1
    0
             2013                  2014                   2015                  2016                  2017

                                                   Overcharges in millions



As part of the FEP OC’s efforts to decrease enrollment errors, it performs quarterly
reconciliations with the employing payroll offices. This process only includes reconciliation of
contract holders. Therefore, our recommendations mainly focus on the Association’s
implementation of controls to identify ineligible family members. We believe the Association’s
corrective actions should promptly focus on maintaining current enrollee record files to prevent
member fraud, waste and abuse.

We used the following criteria to evaluate the Association’s management of the FEHBP
enrollment process:


2
  Of this $12,357,989 in overcharges, $5,010,634 represents recoveries that were identified by the BCBS plans
before our audit notification date (i.e., July 31, 2017), and adjusted or voided by the draft report response due date
(i.e., September 29, 2017). We did not consider these as questionable claim payment errors in the final report based
on CS 1039 guidelines.
3
  To estimate the overall impact for 2017, we calculated a monthly average using January through May 2017
overpayments and applied this average to the remaining months.
                                                          7                        Report No. 1A-99-00-17-048 

x	 5 CFR 890.308-(a)(1) states, “Carrier Disenrollment: Enrollment reconciliation . . . a carrier
   that cannot reconcile its record of an individual’s enrollment with agency enrollment records
   or does not receive documentation necessary to resolve the discrepancy from the employing
   office within 31 days of a request must provide written notice to the individual that the
   employing office of record does not show him or her as enrolled in the carrier’s plan and that
   he or she will be disenrolled 31 calendar days after the date of the notice . . . (e) Carrier
   removal from enrollment: Ineligible individuals. (1) A carrier may request verification of
   eligibility from the enrollee at any time of an individual who is covered as a family member
   . . . To verify eligibility, the carrier shall send the enrollee a request for appropriate
   documentation of the individual’s relationship to the enrollee with a copy to the enrollee’s
   employing office of record. The request shall contain a written notice that the individual will
   no longer be covered 60 calendar days after the date of the notice unless the enrollee or
   employing office provides appropriate documentation as requested.”

x	 Contract CS 1039, Part III, section 2.3 (8)(i) states, “The Carrier may charge the contract for
   benefit payments made erroneously but in good faith . . . .”

x	 Contract CS 1039, Part II, section 2.3(g) states, “[i]f 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 . . . regardless of any time period
   limitations in the written agreement with the provider.”

x	 Contract CS 1039, Part III, section 3.16(b) states, “Claim payment findings (i.e., claim
   overpayments) in the scope of an OIG audit are reportable as questioned charges unless the
   Carrier provides documentation supporting that these findings were already identified (i.e.,
   documentation that the plan initiated recovery efforts) prior to audit notification and
   corrected (i.e., claims were adjusted and/or voided and overpayments were recovered and
   returned to the FEHBP) by the original due date of the draft report response.”

x	 Contract CS 1039, Part I, section 1.9 (a) states, “Detection of Fraud, Waste, and Abuse
   (FWA). The Carrier shall conduct a program to assess its vulnerability to FWA to include
   but not limited to performing post-payment reviews and audits of providers identified either
   proactively or reactively. . . . In addition, FEHBP Carriers must demonstrate they have
   submitted written notification to OPM-OIG within 30 business days of identifying potential
   FWA issues impacting the FEHB Program regardless of dollar value. The program must
   specify provisions in place for cost avoidance, not just fraud detection, along with criteria for
   follow-up actions.”



                                                 8		                  Report No. 1A-99-00-17-048 

Association Response:

In response to the $41,786,544 potential overpayments questioned in the draft report, the
Association agrees with $14,493,450 in recognized overpayments and states, “For these
payment errors, the members initially had coverage before the claim payment; however, the
payment subsequently became an overpayment due to retroactive enrollment notices received
from an OPM Payroll Office and processed in the FEP enrollment system after the claim was
paid.”

For the remaining balance of potential overcharges questioned in the draft report, the Association
contests $27,293,094 and states, “Plans determined the claims were paid correctly because the
member either had coverage when the claim was incurred or had coverage under another
member id.”

In regards to corrective actions to reduce enrollment errors the Association states, “BCBSA
[Association] is in the process of reviewing claims identified as overpayments and expects to
have the analysis completed (including completion of a root cause analysis) by 1st quarter
2018.”

OIG Comments:

Based on the Association’s response and documentation provided by the BCBS plans, we
determined that the Association and/or plans acknowledge $12,357,989 in claim overpayments
for ineligible enrollees. If claim overpayments were identified by the BCBS plans before our
audit notification date (i.e., July 31, 2017), and adjusted or voided by the draft report due date
(i.e., September 29, 2017), we did not consider these as claim payment errors in the final report.
This report questions the remaining $7,347,355 in health benefit charges that were paid for
ineligible enrollees.

Acknowledged claim payment overpayments:

The Association agrees with $7,347,355 in claim overpayments. This amount is comprised of
the following:

x	 $4,665,736 represents claim overpayments for which the BCBS plans have committed to
   pursue recovery.

x	 $2,667,114 represents claim overpayments for which the BCBS plans did not initiate
   recovery because a) they believed they were restricted by contract limitations or b) that

                                                 9		                 Report No. 1A-99-00-17-048 

    recovery efforts had been exhausted. However, we continue to question these costs because
    the BCBS plans are required by contract CS 1039 to attempt recovery regardless of provider
    contract limitations, or because they have not provided us with documentation supporting
    that all recovery efforts have been exhausted.

x   $14,505 represents claim overpayments for which the BCBS plans did not initiate recovery
    because the individual claim lines questioned were under $100, and the Association does not
    consider this material. However, the entire overpayment for each of these claims (the sum of
    all claim lines) is greater than $100, and therefore we continue to question these costs.

Recommendation 1

We recommend that the contracting officer disallow $7,347,355 for claim overpayments and
verify that the BCBS plans return all amounts recovered to the FEHBP.

Recommendation 2 (Rolled-forward from Enrollment Report No. 1A-99-00-15-008 - Open)

We recommend that the contracting officer require the Association to perform a cost analysis to
determine the benefit of automating the process of updating the FEP Express system when
identifying enrollment discrepancies between the FEP OC and employing agencies. If
determined cost effective, we recommend that the contracting officer require the Association to
implement these automated procedures.

Recommendation 3

We recommend that the contracting officer require the Association to implement automated
procedures to include family members in the FEP OC’s quarterly reconciliation to identify
enrollment discrepancies between the FEP OC and employing agencies.

Recommendation 4

We recommend that the contracting officer require the Association to educate contract holders
about the rules and regulation requirements for having a qualified family member in the FEHBP.

Recommendation 5

We recommend that the contracting officer require the Association to report any contract holder
that misrepresents or provides false enrollment information over a 12-month period. Per contract


                                               10                  Report No. 1A-99-00-17-048 

CS 1039 Section 1.9(a) and Carrier Letter 2017-13, the Association should report these instances
to the applicable employing agency’s OIG and OPM OIG’s Office of Investigations.

Recommendation 6

We recommend that the contracting officer ensure that the Association’s FEP enrollment website
contains sufficient controls to detect and identify member eligibility requests for inconsistencies,
fraud, and misrepresentation before enrolling in the FEHBP. The FEP OC or BCBS plans
should report these member eligibility requests to the appropriate employing federal office or
agency. If any request for enrollment is identified as fraud and/or misrepresentation, the
Association must report the issue to OPM OIG’s Office of Investigations per Carrier Letter
2017-13, as well as the employing agency’s OIG.

Recommendation 7

We recommend that the contracting officer ensure that the Association implements a process and
procedure to detect and identify fraud and misrepresentation related to online eligibility requests.
If any request for enrollment is identified as fraud and/or misrepresentation, the Association must
report the issue to OPM OIG’s Office of Office of Investigations per Carrier Letter 2017-13, as
well as the employing agency’s OIG.




                                                11                    Report No. 1A-99-00-17-048 

                                         APPENDIX
	




October 27, 2017 



Senior Team Leader                                                    Federal Employee Program
Experience-Rated Audits Group                                         1310 G Street, N.W.
Office of the Inspector General                                       Washington, D.C. 20005
                                                                      202.942.1000
U.S. Office of Personnel Management                                   Fax 202.942.1125
1900 E Street, N.W., Room 6400
Washington, D.C. 20415

Reference:                    OPM DRAFT AUDIT REPORT
                              Global Claims-to-Enrollment Match
                              Audit Report 1A-99-00-17-048

Dear              :

This attached letter is in response to the above referenced U.S. Office of Personnel Management
(OPM) Draft Audit Report concerning the Global Claims-to-Enrollment Match Audit of the FEP
Blue Cross Blue Shield Plans. Our comments concerning the recommendations in the report are
as follows:

Recommendation 1

We recommend that the contracting officer disallow $41,786,544 for claims paid on behalf of
ineligible patients, and have the BCBS plans return all amounts recovered to the FEHBP.

BCBSA Response:

IR#1A Conflict with Enrollment

The Plans’ completed a review of potential claim overpayments totaling $35,895,097
paid on behalf of ineligible patients, and determined that claims totaling $22,742,526 were paid
correctly. Plans determined the claims were paid correctly because the member either had
coverage when the claim was incurred or had coverage under another member id.

The Plans’ review also identified claims totaling $13,152,572 that were paid in error. For these
payment errors, the members initially had coverage before the claim payment; however, the
payment subsequently became an overpayment due to retroactive enrollment notices received
                                               12                   Report No. 1A-99-00-17-048 

from an OPM Payroll Office and processed in the FEP enrollment system after the claim was
paid. Of the claims paid in error, the Plans’ noted the following:

x   Claims totaling $2,826,395 were determined to be paid in error after a retroactive enrollment
    change was received and processed and recovery was initiated after the audit began.
    Recovery has been initiated in accordance with CS1039, Section 2.3(g).

x   Claims totaling $5,312,077 were determined to be paid in error after a retroactive enrollment
    change was received and processed; however, the claims were recovered before the audit
    started.

x	 Claims totaling $325,631 were determined to be paid in error after a retroactive enrollment
   change was received and processed; however, recovery was not initiated because the claim
   payment was less than $100. CS1039, Section 2.6 (g) states “The benefits payable by this
   Plan shall be determined, on a claim by claim basis, only for those claims in excess of $100,
   except where Medicare is the primary payer of benefits, claims in excess of $50”.

x	 Claims totaling $4,688,469 were determined to be paid in error after a retroactive enrollment
   change was received and processed; however, recovery was initiated before the audit began
   and the overpayment was determined to be uncollectible or not recovered by the time the
   response to the Draft Report was submitted. Recovery documentation was also provided to
   support that Plans completed due diligence overpayment recovery procedures as required by
   CS1039, Section 2.3g, where applicable.

IR#1B No Enrollment Record on File

The Plans’ completed a review of potential claim overpayments totaling $5,891,447
paid for members where there appeared to be no record of enrollment on file, and determined
that claims totaling $4,550,569 were paid correctly. Plans determined the claims were paid
correctly because the member either had coverage when the claim was incurred or had coverage
under another member id.
The Plans’ review also identified claims totaling $1,340,878 that were paid in error. For these
payment errors, the members initially had coverage before the claim payment; however, the
payment subsequently became an overpayment due to retroactive enrollment notices received
from an OPM Payroll Office and processed in the FEP enrollment system after the claim was
paid. Of the claims paid in error, the Plans’ noted the following:

x	 Claims totaling $371,672 were determined to be paid in error after a retroactive enrollment
   change was received and processed; however recovery was not initiated on these
   overpayments before the audit began. Recovery has been initiated in accordance with
   CS1039, Section 2.3(g), where applicable.

                                               13		                 Report No. 1A-99-00-17-048 

x	 Claims totaling $370,987 were determined to be paid in error after a retroactive enrollment
   change was received and processed; however, the claims were recovered before the audit
   started.

x	 Claims totaling $36,671 were determined to be paid in error after a retroactive enrollment
   change was received and processed; however, recovery was not initiated because the claim
   payment was less than $100. CS1039, Section 2.6 (g) states “The benefits payable by this
   Plan shall be determined, on a claim by claim basis, only for those claims in excess of $100,
   except where Medicare is the primary payer of benefits, claims in excess of $50”.

x	 Claims totaling $561,548 were determined to be paid in error after a retroactive enrollment
   change was received and processed; however, recovery was initiated before the audit began
   and the overpayment was determined to be uncollectible or not recovered by the time the
   response to the Draft Report was submitted. Recovery documentation was also provided to
   support that Plans completed due diligence overpayment recovery procedures as required by
   CS1039, Section 2.3g, where applicable.

Recommendation 2

We recommend that the contracting officer instruct the Association perform an analysis to
identify the root cause(s) of the claim payment errors and implement corrective
actions/procedures to prevent these types of errors from occurring in the future.

BCBSA Response:

BCBSA is in the process of reviewing claims identified as overpayments and expects to have the
analysis completed (including completion of a root cause analysis) by 1st quarter 2018.

We appreciate the opportunity to provide our response to the finding and request that our
comments be included in their entirety as part of the Final Audit Report.

If you have any question, please contact                  at              .

Sincerely,


Executive Director, FEP Program Integrity




                                               14		                 Report No. 1A-99-00-17-048 

	                                                                      



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                            and wasteful practices, fraud, and
                       mismanagement related to OPM programs
                      and operations. You can report allegations
                                  to us in several ways:


     By Internet: 	        http://www.opm.gov/our-inspector-general/hotline-to-
                           report-fraud-waste-or-abuse


       By Phone: 	         Toll Free Number:                  (877) 499-7295
                           Washington Metro Area:             (202) 606-2423


        By Mail:           Office of the Inspector General
                           U.S. Office of Personnel Management
                           1900 E Street, NW
                           Room 6400
                           Washington, DC 20415-1100