Office of Personnel Management, Office of Inspector General | U.S. Office of Personnel Management | Audit of the Federal Employees Health Benefits Program Operations at Health Plan of Nevada, Inc.

Audit of the Federal Employees Health Benefits Program Operations at Health Plan of Nevada, Inc.

Published by the Office of Personnel Management, Office of Inspector General on 2012-08-23.

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 of the Federal Employees Health Benefits
Program Operations at Health Plan of Nevada, Inc.

Report No. 1C-NM-00-12-018

Date: August 23, 2012

-- 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, 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.
AUDIT REPORT

Federal Employees Health Benefits Program
Community-Rated Health Maintenance Organization
Health Plan of Nevada, Inc.
Contract Number 1942 - Plan Code NM
Las Vegas, Nevada

Report No. 1C-NM-00-12-018 Date: August 23, 2012

Michael R. Esser
Assistant Inspector General
for Audits

Federal Employees Health Benefits Program
Community-Rated Health Maintenance Organization
Health Plan of Nevada, Inc.
Contract Number 1942 - Plan Code NM
Las Vegas, Nevada

Report No. 1C-NM-00-12-018 Date: August 23, 2012

The Office of the Inspector General performed an audit of the Federal Employees Health
Benefits Program (FEHBP) operations at Health Plan of Nevada, Inc. The audit covered contract
years 2009 through 2011. 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 years audited.

i
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 1984 and provides health benefits to FEHBP
members in the Nevada counties of Clark, Esmeralda and Nye. The last audit of the Plan
conducted by our office was a full scope audit of contract years 2003 through 2008. All 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 instructions, a draft report was not
issued.

2
In conducting the audit, we relied to varying degrees on computer-generated billing, and
enrollment 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 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 Las Vegas, Nevada, during January
and February 2012. Additional audit work was completed at our offices in Cranberry Township,
Pennsylvania and 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 (FEHBAR), 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 the applicable
laws, regulations, and OPM’s rating instructions for contract years 2009 through 2011.
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

Lead Auditor

, Auditor

., Chief

, Senior Team Leader