U.S. OFFICE OF PERSONNEL MANAGEMENT OFFICE OF THE INSPECTOR GENERAL OFFICE OF AUDITS AUDIT OF THE FEDERAL EMPLOYEES HEALTH BENEFITS PROGRAM OPERATIONS AT MVP HEALTH PLAN, INC.- CENTRAL REGION Rep o rt Numbe r 1C- M9-00-15-003 M a r c h 23,2015 --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 the OIG webpage (http:lhmmv.opm.govl our-iu spector-geuernl), caution needs to 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 MVP Health Inc. - Central Why Did We Conduct the Audit? What Did We Find? The objectives of om audit were to We detennined th at th e FEHBP rates were developed by the Plan detennine if MVP Health Plan, Inc. in accordance with applicable laws, regulations, and the U.S . Central Region (Plan) offered the Office of Personnel Management's Rate Instructions to Federal Employees Health Benefits Commlmity-Rated Caniers for the year audited. We therefore did Program (FEHBP) market price rates not issue a draft rep01t and are not making any recommendations. and that the loadings applied 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. What Did We Audit? Under contract 2362, the Office of the Inspector General completed a perfonnance audit of the FEHBP's rates offered for contract year 2014. Om audit fieldwork was conducted from November 10, 2014 tluough November 14, 2014 at the Plan's office in Schenectady, New York. 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 MVP Health Plan, Inc. – Central Region 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 report details the audit results of the Federal Employees Health Benefi ts Program (FEHBP) operations at MVP Health Plan, Inc. - Central Region (Plan) . The audit covered contract year 2014, an d was conducted at the Plan's office in Schenectady, New York. The audit was conducted pursuant to FEHBP contract CS 2362, 5 U.S. C. Chapter 89; and 5 Code of Federal Regulations (CFR) Chapter 1, Patt 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 Healthcare and Insurance Office. Health insuran ce coverage is provided through contracts with health insurance can iers that provide service benefits, indenmity benefits, or comprehensive medical services. Commlmity-rated catTiers patticipating in the FEHBP are subj ect to various Federal, state and local laws, regulations, and ordinances. While m ost catTiers are subject to state j urisdiction, many are further subject to the Health Maintenance Organization Act of 1973 (Public Law 93 222), as amended (i.e. , many community-rated catTiers ar e federally qualified) . In addition, patticipation in the FEHBP subjects the catTiers to the Federal Employees Health Benefits Act and implementing regulations promulgated by OPM. The FEHBP should pay a mm·ket price rate, which is defined as th e best rate offered to either of the two FEHBP groups closest in size to the FEHBP. In contracting Contracts/Members with connmmity-rated can iers, OPM relies on March 31,2014 can ier compliance with appropriate laws and 8,000 regulations an d, consequently, does not negotiate 6,000 base rates. OPM negotiations relate primm·ily to the 4 ,000 level of coverage and oth er lmique features of the 2,000 0 1"---------< FEHBP. 2014 • Conu·acts 3,413 The chatt to the right shows the number of FEHBP • Members 6,258 contracts an d members rep01ted by the Plan as of March 31 for conu·act year 2014 . 1 Rep01t No. 1C-M9-00-15-003 The Plan has participated in the FEHBP since 1988 and provides health benefits to FEHBP members throughout the Central Region of Upstate New York. The last audit conducted by our office was a performance audit of the Plan’s rate reconciliation and covered contract year 2013. That audit identified an incorrect Medicare retention loading and a Similarly Sized Subscriber Group (SSSG) discount that was not applied to the FEHBP rates. All audit issues related to that audit 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-M9-00-15-003 II. OBJECTIVES, SCOPE, AND METHODOLOGY Objectives 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 2014. For this year, the FEHBP paid approximately $40.5 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 instmctions . 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 SSSGs 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 3 Rep01i No. 1C-M9-00-15-003 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 from November 10, 2014 through November 14, 2014 at the Plan's office in Schenectady, New York. Additional audit work was completed at our office in 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. 4 Report No. 1C-M9-00-15-003 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 2014. Consequently, the audit did not identify any questioned costs and no con ective action is necessruy. 5 Rep01i No. 1C-M9-00-15-003 IV. MAJOR CONTRIBUTORS TO THIS REPORT COMMUNITY-RATED AUDITS GROUP , Auditor-in-Charge , Senior Team Leader , Senior Team Leader , Group Chief 6 Report No. 1C-M9-00-15-003 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 -- 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 which 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 (http://www.opm.gov/our-inspector-general), 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. 7 Report No. 1C-M9-00-15-003
Audit of the Federal Employees Health Benefits Program Operations at MVP Health Plan, Inc. - Central Region
Published by the Office of Personnel Management, Office of Inspector General on 2015-03-23.
Below is a raw (and likely hideous) rendition of the original report. (PDF)