I f i ·.·l1S OFFICE OF PERSONNEL MANAGEMENT QFFICEOFTHE INSPECTOR GENERAL·· OFFICE OF AUDItS ) ... ~-CAUTION~- Thisllud.it reporlhas~bceildistfi"lJted io Federal Cifficiaiswhollre respDiisible (orthelld!JIinistratiDn olthe audited progra~. This audit report. may c:ontainproprietary da(a whic:hjsprCitec:tedbyFederalia~(18 U.S.C .i!iOs); therefore. while .Ihis audit report isavliilable· undertlie Freedom oflnfor!JIation Acl.cautionneed~ to be exerCised bdorereJeasingthereport 10 the general public. UNITED STATES OFFICE OF PERSONNEL MANAGEMENT Washington, DC 2~415 Office of the Inspector General AUDIT REPORT Federal Employees Health Benefits Program. Community-Rated Health Maintenance Organization Aetna Open Access Contract Number 2914 - Plan Code P3 Blue Bell, Pennsylvania Report No. lC-P3-00-09-013 Date: February 3, 2009 Michael R. Esser Assistant Inspector General. for Audits www.opm.goY www.usaJobs.goY UNITED STATES OFFICE OF PERSONNEL MANAGEMENT Washington. DC 20415 Office of the Inspector General EXECUTIVE SUMMARY Federal Employees Health Benefits Program Community-Rated Health Maintenance Organization Aetna Open Access Contract Number 2914 - Plan Code P3 Blue Bell~ Pennsylvania Report No. lC-P3-00-09-013 Date: February 3. 2009 The Office of the Inspector General performed an audit of the Federal Employees Health Benefits Program (FEHBP) operations at Aetna Open Access - Plan Code P3. The audit covered contract years 2005 through 2008 and was conducted at our field office in Jacksonville, Florida. We found that the FEHBP rates were developed in accordance with the Office ofPersonne1 Management's rules and regulations in 2005, 2006, 2007, and 2008. www.opm.gov www.usa)obs.gov CONTENTS Page EXECUTIVE SUMMARY i I. INTRODUCTION AND BACKGROUND 1 II. OBJECTIVES, SCOPE, AND METHODOLOGY 3 III. RESULTS OF AUDIT ; 5 IV. MAJOR CONTRIBUTORS TO THIS REPORT 6 I. INTRODUCTION AND BACKGROUND Introduction We completed an audit ofthe Federal Employees Health Benefits Program (FEHBP) operations at Aetna Open Access - Plan Code P3 (Plan) in Blue Bell, Pennsylvania. The audit covered contract years 2005 through 2008. The audit was conducted pursuant to the provisions of . Contract 2914; 5 U.S.C. Chapter 89; and 5 Code of Federal Regulations (CFR) Chapter 1, Part 890. The audit was performed by the Office of Personnel Management's (OPM) Office of the Inspector General, as established by the Inspector General Act of ] 978, as amended. Background The FEHBP was established by the Federal Employees Health Benefits 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 Center for Retirement and Insurance Services. The provisions of the Federal Employees Health Benefits Act are implemented by OPM through regulations codified in Chapter I, Part 890 ofTitIe 5, CFR. Health insurance coverage is provided through contracts with various health insurance carriers that provide service benefits, indemnity benefits, or comprehensive medical services. Community-rated carriers participating in the FEHBP are subject to various federal, state and local laws, regulations, and ordinances. ·While most carriers are subject to state jurisdiction, many are further subject to the Health Maintenance Organization Act of 1973 (Public Law 93 222), as amended (i.e., many community-rated carriers are federally qualified). In addition, participation in the FEHBP subjects the carriers to the Federal Employees Health Benefits Act and implementing regulations promulgated by OPM. The FEHBP should pay a market price rate, FEHBP Contracts/Members which is defined as the best rate offered to either March 31 of the two groups closest in size to the FEHBP. 46,000 In contracting with community-rated carriers, 41,000 OPM relies on carrier compliance with 36,000 appropriate laws and regulations and, 31,000 consequently, does not negotiate base rates. 26,000 21,000 OPM negotiations relate primarily to the level 16,000 of coverage and other unique features of the 11,000 FEHBP. 6,000 1,000 The chart to the right shows the number of 2005 2006 2007 2008 FEHBP contracts and members reported by the • Contracts 24,602 15,968 11,590 12,655 Plan for March 31 of each contract year audited. o Members 45,888 26,487 19,458 21,542 1 The Plan began participating in the FEHBP in 1982 and provides health benefits to FEHBP members throughout New Jersey and Pennsylvania. The last audit of the Plan conducted by our office was a full scope audit of contract years 2001,2003, and 2004. All issues related to that audit have been resolved. The preliminary results of this audit were discussed with Plan officials at an exit conference. Since the audit showed that the Plan's rating of the FEHBP was in accordance with the applicable laws, regulations, and instructions, we did not issue a draft report. 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. We conducted this performance audit in accordance with generally accepted government auditing standards. Those standards require that we plan and perform the audit to obtain sufficient, 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 FEHBP Premiums Paid to Plan This performance audit covered contract years 2005 through 2008 1 . For contract years 2005, 2006, and 2007, the FEHBP $300 paid approximately $457.8 million in $250 r/l premiums to the Plan. The premiums paid c for each contract year audited are shoMlon ~ $200 i $150 the chart to the right. $100 01G audits of community-rated carriers are $50 designed to test carrier compliance with the FEHBP contract, applicable laws and • Revenue $193.2 regulations, and aPM 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 systems and such other auditing procedures as we 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 an SSSG); and • the loadings to the FEHBP rates were reasonable and equitable. I The Subscription Income Report for 2008 was not available at the time this report was written. 3 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 infonnation systems involved. However, nothing came to our attention during our audit testing utilizing the computer generated data to cause us to doubt it;; reliability. We detem1ined that the data available was sufficient to achieve our audit objectives. Except as noted above, the audit was performed in accordance with generally accepted government auditing standards, issued by the Comptroller General of the United States. The audit fieldwork was conducted at our office in Jacksonville, Florida, during November and December 2008. 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 SSSGs, to detennine 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 systems. To gain an understanding ofthe internal controls in the Plan's rating system, we reviewed the Plan's rating system's policies and procedures, interviewed appropriate Plan officials, and performed other auditing procedures necessary to meet our audit objectives. 4 III. 'RESULTS OF 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 2005,2006,2007, and 2008. Consequently, we did not identify any questioned costs and there are no corrective actions necessary. 5 IV. MAJOR CONTRIBUTORS TO THIS REPORT Community-Rated Audits Group Auditor-In-Charge Auditor Chief Senior Tearn Leader 6
Audit of the Federal Employees Health Benefits Program Operations of Aetna Open Access
Published by the Office of Personnel Management, Office of Inspector General on 2009-02-03.
Below is a raw (and likely hideous) rendition of the original report. (PDF)