U.S. OFFICE OF PERSONNEL MANAGEMENT OFFICE OF THE INSPECTOR GENERAL OFFICE OF AUDITS Audit of the Federal Employees Health Benefits Program Operations at Aetna Open Access Athens and Atlanta, Georgia Rep o rt Numbe r 1C- 2U-00-1 4-059 Februa r y 20, 2015 --CAUTION - This audit r epot·t has been distributed to Federal officials who are n sponsible for the administration of the audited program. T his audit report may contain pt·opl'ietat·y data which is protected by Federal l aw (18 U.S.C. 1905). Therefot·e, while this audit report is available undet· the Freedom of Information Act and made available to the public on t he OIG webpage (http:lhmmv.opm.govl our-iu spector-geuernl), caution needs t o be exer cised before releasing the t·epot·t to the general public as it may contain proprietary information that was redacted from the publicly distributed copy. EXECUTIVE SUMMARY Audit ofthe Federal Employees Health Benefits Program Operations at Aetna Access -Athens and A tlant Why Did We Conduct the Audit? What Did We Find? The objectives of om audit were to We detennined that the FEHBP rates were developed by the Plan detennine if Aetna Open Access in accordance with applicable laws, regulations, and the U.S . Athens and Atlanta, Georgia (Plan) Office of Personnel Management's Rate Instructions to offered the Federal Employees Health Commlmity-Rated Caniers for the year audited. We therefore did Benefits Program (FEHBP) market not issue a draft rep01t and are not making any recommendations. price rates and that the loadings applied to the FEHBP rates were reasonable and equitable. Additional tests were perf01med to dete1mine if the Plan was in compliance with the provisions of the laws and regulations goveming the FEHBP. What Did We Audit? Under contract 2867, the Office of the Inspector General completed a perf01mance audit of the FEHBP's rates offered for contract year 2011. Om audit fieldwork was conducted from August 11 , 2014 tluough August 16, 2014 at the Plan's office in Blue Bell, Pennsylvania. Michael R. Esser Assistant Inspector General for Audits ABBREVIATIONS CFR Code of Federal Regulations FEHBP Federal Employees Health Benefit Program FY Fiscal Year OIG Office of the Inspector General OPM U.S. Office of Personnel Management Plan Aetna Open Access – Athens and Atlanta, Georgia SSSG Similarly Sized Subscriber Group U.S.C. United States Code ii TABLE OF CONTENTS Page EXECUT IVE SUMMARY ......................................................................................... i ABBREVIATIONS ..................................................................................................... ii I. BACK GROUND .......................................................................................................... ! II. OBJECTIVES, SCOPE, AND METHODOLOGY ..................................................3 III. RESULTS OF THE AUDIT .......................................................................................5 IV. MAJOR C ONTRIBUTORS TO TillS REPORT ....................................................6 REPORT FRAUD, WAST E, AND MI SMANAGEMENT ...................................... ? I. BACKGROUND This final rep01t details the audit results of the Federal Employees Health Benefits Program (FEHBP) operations at Aetna Open Access - Athens and Atlanta, Georgia (Plan). The audit covered contract year 2011 , an d was conducted at the Plan 's office in Blue Bell, Pennsylvania. The audit was conducted pursuant to FEHBP contract CS 2867; 5 U.S .C. Chapter 89; and 5 Code of Federal Regulations (CFR) Chapter 1, Part 890. The audit was perf01m ed by the U.S . Office of Personnel Management's (OPM) Office of the Inspector General (OIG), as established by the Inspector General Act of 1978, as amended. The FEHBP was established by the Federal Employees Health Benefi ts 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. The FEHBP is administered by OPM ' s Healthcar e and Insurance Office. Health insuran ce coverage is provided through contracts with health insurance can iers th at provide service benefits, indemnity benefi ts, or comprehensive medical services. Commlmity-rated caniers patticipating in the FEHBP are subject to various Federal, state and local laws, regulations, and ordinan ces. While most can iers are subject to state jurisdiction, many are further subject to the Health Maintenance Organization Act of 1973 (Public Law 93 222), as am ended (i.e. , many community-rated can iers are F ederally qualified). In addition, pruticipation in th e FEHBP subjects the caniers to the Federal Employees Health Benefits Act and implementing regulations promulgated by OPM. The chrut to the right shows the number of FEHBP contracts and members rep01ted by FEHBP the Plan as of Mru·ch 31 for the contract year audited. Contracts I Members March 31,2011 The FEHBP should pay a mru·ket price rate, 12,000 which is defmed as the best rate offered to 10 ,000 8,000 either of the two groups closest in size to the 6,000 4,000 FEHBP. In contracting with commlmity 2,000 rated can iers, OPM relies on can ier complian ce with appropriate laws an d regulations an d, consequently, does not negotiate base rates. OPM negotiations relate primru·ily to the level of coverage and other unique features of the FEHBP. 1 Rep01t No. 1C-2U-00-14-059 The Plan has participated in the FEHBP since 1983 and provides health benefits to FEHBP members in the Athens and Atlanta, Georgia areas. The last audit conducted by our office was a full scope audit and covered contract years 2006 through 2010. The audit questioned $1,273,625 in defective pricing and $213,730 in Lost Investment Income for 2007. There were no issues identified for years 2006, 2008, 2009, and 2010 during that audit. The prior audit findings have been resolved. The preliminary results of this audit were discussed with Plan officials at an exit conference and in subsequent correspondence. Since the audit concluded that the Plan’s rating of the FEHBP was in accordance with applicable laws, regulations, and OPM Rate Instructions to Community- Rated Carriers (rate instructions), a draft report was not issued. 2 Report No. 1C-2U-00-14-059 II. OBJECTIVES, SCOPE, AND METHODOLOGY Objective The primaty objectives of the audit were to detennine if the Plan offered the FEHBP market price rates and that the loadings to the FEHBP rates were reasonable and equitable. Additional tests were perf01med to detetmine whether the Plan was in compliance with the provisions of the laws and regulations goveming the FEHBP. Scope We conducted this perfonnance audit in accordance with generally accepted govemment auditing stan dards. Those standards require that we plan and perf01m the audit to obtain sufficient, appropriate evidence to provide a reasonable basis for om findings and conclusions based on om audit objectives. We believe that the evidence obtained provides a reasonable basis for om findings and conclusions based on om audit objectives. This perfonnance audit covered contract year 2011. For this year, the FEHBP paid approximately $55.5 million in premimns to the Plan. OIG audits of community-rated can1ers are designed to test catTier compliance with the FEHBP contract, applicable laws and regulations, and the rate instm ctions . These audits are also designed to provide reasonable assmance of detecting enors, inegularities, and illegal acts. We obtained an understanding of the Plan's intemal control structure, but we did not use this inf01mation to detetmine the natm e, timing, and extent of om audit procedmes. However, the audit included such tests of the Plan's rating system and such oth er auditing procedmes considered necessaty lmder the circumstan ces. Om review of intemal conti·ols was limited to the procedmes the Plan has in place to ensme that: • The appropriate Similarly Sized Subscriber Groups (SSSG) were selected; • the rates charged to the FEHBP were the mru·ket price rates (i.e., equivalent to the best rate offered to the SSSGs); and • the loadings to the FEHBP rates were reasonable and equitable. In conducting the audit, we relied to vruying degrees on computer-generated billing, enrollment, and claims data provided by the Plan. We did not verify the reliability of the data generated by the vru·ious inf01mation systems involved. However, nothing catne to om attention dming om audit testing utilizing the computer-generated data to cause us to doubt its reliability. We believe that the available data was sufficient to achieve om audit objectives. Except as noted above, the 3 Rep01i No. 1C-2U-00-14-059 audit was conducted in accordance with generally accepted government auditing standards, issued by the Comptroller General of the United States. The audit fieldwork was performed from August 11, 2014 through August 16, 2014 at the Plan’s office in Blue Bell, Pennsylvania. Additional audit work was conducted at our field offices in Jacksonville, Florida and Cranberry Township, Pennsylvania. Methodology We examined the Plan’s Federal rate submission and related documents as a basis for validating the market price rates. In addition, we examined the rate development documentation and billings to other groups, such as the SSSGs, to determine if the market price was actually charged to the FEHBP. Finally, we used the contract, the Federal Employees Health Benefits Acquisition Regulations, and the rate instructions to determine the propriety of the FEHBP premiums and the reasonableness and acceptability of the Plan’s rating system. To gain an understanding of the internal controls in the Plan’s rating system, we reviewed the Plan’s rating system policies and procedures, interviewed appropriate Plan officials, and performed other auditing procedures necessary to meet our audit objectives. To test the Plan’s compliance with the FEHBP health benefit provisions related to coordination of benefits with Medicare, we selected a judgmental sample of potential uncoordinated claim lines. We queried the Plan’s FEHBP claims data for any members over the age of 65 and sorted by the Insurance Amount Paid. We selected all claims over $10,000. This resulted in a universe of 12 members with 17 claims. We reviewed all the claims in the universe. We sent the entire universe to the Plan for review to determine if the claims were properly coordinated with Medicare. 4 Report No. 1C-2U-00-14-059 III. RESULTS OF THE AUDIT Our audit showed that the Plan' s rating of the FEHBP was in accordance with applicable laws, regulations, and the rate instm ctions for conu·act year 2011. Consequently, the audit did not identify any questioned costs and no con ective action is necessmy. 5 Rep01i No. 1C-2U-00-14-059 IV. MAJOR CONTRIBUTORS TO THIS REPORT COMMUNITY-RATED AUDITS GROUP , Auditor-in-Charge , Lead Auditor , Group Chief , Senior Team Leader 6 Report No. 1C-2U-00-14-059 Report Fraud, Waste, and Mismanagement Fraud, waste, and mismanagement in Government concerns everyone: Office of the Inspector General staff, agency employees, and the general public. We actively solicit allegations of any inefficient 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 7 Report No. 1C-2U-00-14-059
Audit of the Federal Employees Health Benefits Program Operations at Aetna Open Access - Athens and Atlanta, Georgia
Published by the Office of Personnel Management, Office of Inspector General on 2015-02-20.
Below is a raw (and likely hideous) rendition of the original report. (PDF)