oversight

FEHBP 2014 thru 2016 Operations at HealthPartners in Minneapolis, Minnesota

Published by the Office of Personnel Management, Office of Inspector General on 2017-09-29.

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

              AUDIT OF
           HEALTHPARTNERS
        MINNEAPOLIS, MINNESOTA

         Report Number 1D-V3-00-17-005
               September 29, 2017
              EXECUTIVE SUMMARY
                                           Audit of HealthPartners

Report No. 1D-V3-00-17-005                                                                         September 29, 2017


 Why did we conduct the audit?             What did we find?

 We conducted this limited scope audit     Our limited scope audit disclosed no significant findings pertaining
 to obtain reasonable assurance that       to the Plan’s cash management activities and practices. Overall, we
 HealthPartners (Plan) is complying        determined that the Plan handled FEHBP funds in accordance with
 with the provisions of the Federal        Contract CS 2875 and applicable laws and regulations concerning
 Employees Health Benefits Act and         cash management in the FEHBP. Accordingly, this final report
 regulations pertaining to cash            contains no questioned charges or recommendations.
 management that are included, by
 reference, in the Federal Employees
 Health Benefits Program (FEHBP)
 contract. Specifically, the objective
 of our audit was to determine whether
 the Plan handled FEHBP funds in
 accordance with Contract CS 2875
 and applicable laws and regulations
 concerning cash management in the
 FEHBP.

 What did we audit?

 Our audit covered the Plan’s cash
 management activities and practices
 related to FEHBP funds from 2014
 through June 30, 2016. Specifically,
 we reviewed the Plan’s letter of credit
 account drawdowns, treasury offsets,
 interest income transactions, and
 dedicated FEHBP bank account
 activity and balances.




  _______________________
  Michael R. Esser
  Assistant Inspector General
  for Audits                                          i
                ABBREVIATIONS

Contract   Contract CS 2875
FEHB       Federal Employees Health Benefits
FEHBP      Federal Employees Health Benefits Program
HMO        Health Maintenance Organization
LOCA       Letter of Credit Account
OIG        Office of the Inspector General
OPM        U.S. Office of Personnel Management
Plan       HealthPartners




                               ii
                         TABLE OF CONTENTS

                                                                                                                       Page

        EXECUTIVE SUMMARY ......................................................................................... i

        ABBREVIATIONS ..................................................................................................... ii 


I.	     BACKGROUND ..........................................................................................................1 


II.	    OBJECTIVE, SCOPE, AND METHODOLOGY ....................................................3

III.	   RESULTS OF AUDIT.................................................................................................5

        REPORT FRAUD, WASTE, AND MISMANAGEMENT

                                 I. BACKGROUND
This final audit report details the findings, conclusions, and recommendations resulting from our
limited scope audit of the Federal Employees Health Benefits Program (FEHBP) operations at
HealthPartners (Plan). The Plan is located in Minneapolis, Minnesota.

The audit was performed 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 Benefits (FEHB) 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. OPM’s Healthcare and Insurance
Office has overall responsibility for administration of the FEHBP. The provisions of the FEHB
Act are implemented by OPM through regulations, which are codified in Title 5, Chapter 1,
Part 890 of the Code of Federal Regulations. Health insurance coverage is made available
through contracts with various health insurance carriers.

The Plan is an experience-rated health maintenance organization (HMO) that provides health
benefits to federal enrollees and their families.1 Enrollment is open to all federal employees and
annuitants that live or work in the Plan’s service area, which includes Minnesota and the
surrounding communities in Western Wisconsin, Northern Iowa, and Eastern North and South
Dakota.

The Plan’s contract (CS 2875) with OPM is experience-rated. Thus, the costs of providing
benefits in the prior year, including underwritten gains and losses that have been carried forward,
are reflected in current and future years’ premium rates. In addition, the contract provides that in
the event of termination, unexpended program funds revert to the FEHBP Trust Fund. In
recognition of these provisions, the contract requires an accounting of program funds be
submitted at the end of each contract year. The accounting is made on a statement of operations
known as the Annual Accounting Statement.

Compliance with laws and regulations applicable to the FEHBP is the responsibility of the Plan’s
management. Also, management of the Plan is responsible for establishing and maintaining a
system of internal controls.


1
 Members of an experience-rated HMO plan have the option of using a designated network of providers or using
out-of-network providers. A member’s choice in selecting one healthcare provider over another has monetary and
medical implications. For example, if a member chooses an out-of-network provider, the member will pay a
substantial portion of the charges and covered benefits may be less comprehensive.


                                                        1                    Report No. 1D-V3-00-17-005
All findings from our prior audit of the Plan (Report No. 1D-53-00-09-029, dated April 29,
2010), covering contract years 2004 through 2008, have been satisfactorily resolved.

The results of this audit were discussed with the Plan officials throughout the audit and at an exit
conference on May 23, 2017. Since our audit disclosed no significant findings, a draft report
was not issued.




                                                  2                  Report No. 1D-V3-00-17-005
II. OBJECTIVE, SCOPE, AND METHODOLOGY

OBJECTIVE

The objective of our audit was to determine if the Plan handled FEHBP funds in accordance with
Contract CS 2875 and applicable laws and regulations concerning cash management in the
FEHBP.

SCOPE

We conducted our limited scope performance audit in accordance with generally accepted
government auditing standards. Those standards require that we plan and perform the audit to
obtain sufficient and 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 objective.

The audit covered the Plan’s cash management activities and practices related to FEHBP funds
from 2014 through June 30, 2016. Specifically, we reviewed the Plan’s letter of credit account
(LOCA) drawdowns, treasury offsets, interest income transactions, and dedicated FEHBP bank
account activity and balances to determine if the Plan handled FEHBP funds in accordance with
the contract and applicable laws and regulations concerning cash management in the FEHBP.2

In planning and conducting our audit, we obtained an understanding of the Plan’s internal control
structure to help determine the nature, timing, and extent of our auditing procedures. This was
determined to be the most effective approach to select areas of audit. For those areas selected,
we primarily relied on substantive tests of transactions and not tests of controls. Based on our
testing, we did not identify any significant matters involving the Plan’s internal control structure
and its operations. However, since our audit would not necessarily disclose all significant
matters in the internal control structure, we do not express an opinion on the Plan’s system of
internal controls taken as a whole.

We also conducted tests to determine whether the Plan had complied with the contract
provisions, the applicable procurement regulations (i.e., Federal Acquisition Regulations and
Federal Employees Health Benefits Acquisition Regulations, as appropriate), and the laws and
regulations governing the FEHBP that relate to cash management of FEHBP funds. The results
of our tests indicate that, with respect to the items tested, the Plan complied with all applicable

2
 During the scope of our audit, the Plan did not have a working capital deposit. (Note: Based on OPM’s “Letter of
Credit System Guidelines” (dated May 2009), a working capital deposit is recommended but not required.)

                                                        3                     Report No. 1D-V3-00-17-005
provisions of the contract and federal procurement regulations. With respect to the items not
tested, nothing came to our attention that caused us to believe that the Plan had not complied, in
all material respects, with those provisions.

In conducting our audit, we relied to varying degrees on computer-generated data provided by
the Plan. Due to time constraints, we did not verify the reliability of the data generated by the
various information systems involved. However, while utilizing the computer-generated data
during our audit, nothing came to our attention to cause us to doubt its reliability. We believe
that the data was sufficient to achieve our audit objective.

The audit was performed at our office in Jacksonville, Florida from February 1, 2017, through
May 23, 2017.

METHODOLOGY

To test the Plan’s compliance with contract provisions relative to cash management activities,
we selected and reviewed a judgmental sample of 25 LOCA drawdown amounts, totaling
$10,372,406 (from a universe of      LOCA drawdowns, totaling $                , during the
period 2014 through June 30, 2016), for the purpose of determining if the Plan’s LOCA
drawdowns were appropriate and adequately supported.3 The sample results were not projected
to the universe of LOCA drawdowns. We also reviewed the Plan’s treasury offsets and interest
income transactions from 2014 through June 30, 2016, as well as the Plan’s dedicated FEHBP
bank account activity during the scope and balance as of June 30, 2016.




3
 Our sample included 6 high dollar LOCA drawdown amounts (totaling $2,964,826) from September 2014, 7 high
dollar LOCA drawdown amounts (totaling $2,098,920) from July 2015, and 12 high dollar LOCA drawdown
amounts (totaling $5,308,660) from June 2016.

                                                     4                    Report No. 1D-V3-00-17-005
IV. MAJOR III. RESULTS OF AUDIT
           CONTRIBUTORS   TO THIS REPORT

 Our limited scope audit disclosed no significant findings pertaining to the Plan’s cash
 management activities and practices. Overall, we concluded that the Plan handled FEHBP funds
 in accordance with Contract CS 2875 and applicable laws and regulations concerning cash
 management in the FEHBP. Accordingly, this final report contains no questioned charges or
 recommendations.




                                               5                 Report No. 1D-V3-00-17-005
                                                                             



              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
  
                                                                             
                                                                             




                                                         Report No. 1D-V3-00-17-005