U.S . OFFICE OF PERSONNEL MANAGEMENT
OFFICE OF THE INSPECTOR GENERAL
OFFICE OF AUDITS
Final Audit Report
SUbject:
Audit of the Federal Employees Health Benefits
Program Operations at United Healthcare Insurance
Company, Inc.
Report No. lC-E9-00-12-007
Date: March 1, 2012
-- CAUTION -
This audit report has been distributed to Federal officials who are re 'ponsible for tbe administration of the audited prog ram. This audit
report may contain proprietary data which is protected by Federal law (18 U.S.C. 1905). Therefore, while tbis 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 ge neral public as it may contain proprietary information that was redacted from Ihe publicl y distributed copy.
UNITED STATES OFFICE OF PERSONNEL MANAGEMENT
Washington, DC 20415
Office of the
Inspector General
AUDIT REPORT
Federal Employees Health Benefits Program
Community-Rated Health Maintenance Organization
United Healthcare Insurance Company, Inc.
Contract Number 2913 - Plan Code E9
Hartford, Connecticut
Report No. lC-E9-00-12-007 Dak: March 1, 2012
Michael R. Esser
Assistant Inspector General
for Audits
www.opm.gov www.usajobs.gov
UNITED STATES OFFICE OF PERSONNEL MANAGEMENT
Was hingto n, DC 204 15
Office of the
In pee tor General
EXECUTIVES~ARY
Federal Employees Health Benefits Program
Community-Rated Health Maintenance Organization
United Healthcare Insurance Company, Inc.
Contract Number 2913 - Plan Code E9
Hartford, Connecticut
Report No. lC-E9-00-12-007 Date: March 1, 2012
The Office of the Inspector General perfom1ed an audit of the Federal Employees Health
Benefits Program (FEHBP) operations at United Healthcare Insurance Company, Inc. (Plan).
The audit covered contract year 2009 and was conducted at the Plan' s office in Hartford,
Connecticut. We found that the FEHBP rates were developed in accordance with applicable
laws, regulations, and the Office of Personnel Management's rating instructions for the year
audited. The Plan ceased participation in the FEHBP on December 31, 2010.
www.opm . gov www. usajobs.gov
CONTENTS
Page
EXECUTIVE SUMMARY .............................................................................................. i
I. INTRODUCTION AND BACKGROUND..................................................................... 1
II. OBJECTIVES, SCOPE, AND METHODOLOGY ......................................................... 3
III. RESULTS OF THE AUDIT ............................................................................................ 5
IV. MAJOR CONTRIBUTORS TO THIS REPORT ............................................................ 6
The Plan has participated in the FEHBP since 2007 and provides health benefits to FEHBP
members in Arizona, Arkansas, California, Colorado, the District of Columbia, Florida, Georgia,
Illinois, Iowa, Kansas, Louisiana, Maryland, Mississippi, Missouri, New Mexico, North
Carolina, Nevada, Ohio, Oklahoma, Oregon, Rhode Island, Tennessee, Texas, Virginia,
Washington State, and Wisconsin. The last audit conducted by our office was a rate
reconciliation audit that covered contract year 2010. There were no issues identified during that
audit. The Plan ceased participation in the FEHBP on December 31, 2010.
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 instructions, a draft report was not
issued.
2
II. OBJECTIVES, SCOPE, AND METHODOLOGY
Objectives
The primary objectives of the audit were to verify that the Plan offered market price rates to the
FEHBP and to verify that the loadings to the FEHBP rates were reasonable and equitable.
Additional tests were performed to determine whether the Plan was in compliance with the
provisions of the laws and regulations governing the FEHBP.
Scope
FEHBP Premiums Paid to Plan
We conducted this performance audit in
accordance with generally accepted government
auditing standards. Those standards require that $20
Millions
we plan and perform the audit to obtain $15
sufficient, appropriate evidence to provide a
$10
reasonable basis for our findings and conclusions
based on our audit objectives. We believe that $5
the evidence obtained provides a reasonable $0
basis for our findings and conclusions based on 2009
Revenue $19.0
our audit objectives.
This performance audit covered contract year
2009. For this year, the FEHBP paid approximately $19.0 million in premiums to the Plan, as
shown on the chart above.
OIG audits of community-rated carriers are designed to test carrier compliance with the FEHBP
contract, applicable laws and regulations, and OPM rate instructions. These audits are also
designed to provide reasonable assurance of detecting errors, irregularities, and illegal acts.
We obtained an understanding of the Plan’s internal control structure, but we did not use this
information to determine the nature, timing, and extent of our audit procedures. However, the
audit included such tests of the Plan’s rating system and such other auditing procedures
considered necessary under the circumstances. Our review of internal controls was limited to the
procedures the Plan has in place to ensure that:
• The appropriate similarly sized subscriber groups (SSSG) were selected;
• the rates charged to the FEHBP were the market 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 varying 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 various information systems involved. However, nothing came to our attention during our
audit testing utilizing the computer-generated data to cause us to doubt its reliability. We believe
3
that the available data was sufficient to achieve our audit objectives. Except as noted above, the
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 at the Plan’s office in Hartford, Connecticut, during October
2011. Additional audit work was completed at our offices in Jacksonville, Florida.
Methodology
We examined the Plan’s federal rate submissions 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 OPM’s Rate Instructions to Community-Rated Carriers 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.
4
III. RESULTS OF THE AUDIT
Our audit showed that the Plan’s rating of the FEHBP was in accordance with applicable laws,
regulations, and OPM’s rating instructions to carriers for contract year 2009. Consequently, the
audit did not identify any questioned costs and no corrective action is necessary.
5
IV. MAJOR CONTRIBUTORS TO THIS REPORT
Community-Rated Audits Group
, Auditor-in-Charge
., Chief
, Senior Team Leader
6
Audit of the Federal Employees Health Benefits Program Operations at United Healthcare Insurance Company, Inc.
Published by the Office of Personnel Management, Office of Inspector General on 2012-03-01.
Below is a raw (and likely hideous) rendition of the original report. (PDF)