oversight

Audit of the Compass Rose Health Plan's Pharmacy Operations as Administered by Express Scripts, Inc. for Contract Years 2012 through 2015

Published by the Office of Personnel Management, Office of Inspector General on 2018-08-16.

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 the Compass Rose Health Plan’s
      Pharmacy Operations as Administered by
               Express Scripts, Inc. for
         Contract Years 2012 through 2015

         Report Number 1H-06-00-17-026
                 August 16, 2018
             EXECUTIVE SUMMARY
                    Audit of the Compass Rose Health Plan’s Pharmacy Operations

                                As Administered by Express Scripts, Inc. 

Report No. 1H 06-00-17-026                                                                       August 16, 2018

Why Did We Conduct the Audit?            What Did We Find?
The objective of the audit was to        We determined that the Plan and the PBM need to strengthen
determine whether costs charged to the   procedures and controls related to the following audit areas:
Federal Employees Health Benefits
Program (FEHBP) and services             Administrative Fees Review
provided to its members were in
                                            •	 The PBM incorrectly billed the Plan for specialty pharmacy
accordance with the terms of U.S.
Office of Personnel Management                 claim administrative fees.
(OPM) Contract Number CS 1065
with the Compass Rose Health Plan        Pharmacy Claim Payments Review
(Plan), the Plan’s agreement with           •	 The PBM initially overcharged the Plan $85,854 for brand
Express Scripts, Inc. (PBM), and the           name mail order pharmacy claims paid between July 31,
applicable Federal regulations.                2014, and December 31, 2014.
What Did We Audit?                          •	 The Plan paid 161 pharmacy claims totaling $14,226 for
                                               dependents that were ineligible for coverage when the
The Office of the Inspector General
                                               prescription was filled.
(OIG) has completed a performance
                                            •	 The Plan did not provide the PBM with the appropriate
audit of the Plan’s pharmacy benefits
                                               provider listing to prevent payments to debarred providers.
operations as administered by the
PBM. Our audit included reviews of
administrative fees, claim payments,     Fraud and Abuse Program Review
fraud and abuse, performance                •	 The Plan did not report suspected fraud cases received from
guarantees, and pharmacy rebates               the PBM to the OPM OIG.
related to the FEHBP for contract
years 2012 – 2015. We conducted a        Performance Guarantees Review
fieldwork site visit from September 18
through 22, 2017, at the PBM’s office       •	 The Plan failed to notify the PBM of a performance
in St. Louis, Missouri. Additional             guarantee penalty due in the amount of $6,250 for contract
audit fieldwork was completed at our           year 2013.
offices in Washington, D.C. and
Cranberry Township, Pennsylvania.        In addition, we identified two opportunities for program
                                         improvements related to mail order dispensing fees/reduced copay
                                         and maintaining documentation to support copay overrides.

 Michael R. Esser
 Assistant Inspector General
 for Audits
                                                      i
	
                      ABBREVIATIONS

2012 Agreement     The Integrated Prescription Drug Program Agreement between
                   Compass Rose Health Plan and Express Scripts, Inc. for 2012-2014
2014 Amendment 1   Amendment (dated January 1, 2014) to the Integrated Prescription
                   Drug Program Agreement between Compass Rose Health Plan and
                   Express Scripts, Inc. for 2012-2014
2014 Amendment 2   Amendment (dated July 1, 2014) to the Integrated Prescription Drug
                   Program Agreement between Compass Rose Health Plan and
                   Express Scripts, Inc. for 2012-2014
2015 Agreement     The Integrated Prescription Drug Program Agreement between
                   Compass Rose Health Plan and Express Scripts, Inc. for 2015-2017
5 CFR 950          Title 5, Code of Federal Regulations, Chapter 1, Part 890
Act                Federal Employees Health Benefits Act
AWP                Average Wholesale Price
Contract           Contract Number CS 1065
CY                 Contract Years
FEHBP              Federal Employees Health Benefits Program
FWA                Fraud, Waste, and Abuse
FWA Report         Fraud, Waste and Abuse Recovery and Savings Data Reports
HIO                Healthcare and Insurance Office
OIG                Office of the Inspector General
OPM                U.S. Office of Personnel Management
PBM                Express Scripts, Inc.
Plan               Compass Rose Health Plan




                                      ii
	
                        TABLE OF CONTENTS
                                                                                                                       Page
	
       EXECUTIVE SUMMARY ......................................................................................... i
	

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

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

II.    OBJECTIVES, SCOPE, AND METHODOLOGY ..................................................3
	

III.   AUDIT FINDINGS AND RECOMMENDATIONS.................................................9
	

       A. ADMINISTRATIVE FEES REVIEW ....................................................................9
	

            1. Specialty Pharmacy Administrative Fees ..........................................................9
	

       B. PHARMACY CLAIM PAYMENTS REVIEW ....................................................10
	

            1. Pharmacy Claim Payment Errors .....................................................................10
	

            2. Over-Age Dependents......................................................................................11
	

            3. Debarment Listing ...........................................................................................13
	

       C. FRAUD AND ABUSE PROGRAM REVIEW.....................................................14
	

            1. Failure to Report Suspected Fraud, Waste and Abuse Cases ..........................14
	

       D. PERFORMANCE GUARANTEES REVIEW ......................................................15
	

            1. Performance Standard Penalty Payment ..........................................................15
	

       E. PHARMACY REBATES REVIEW......................................................................17
	

       F. PROGRAM IMPROVEMENT AREAS ...............................................................17
	

            1. Excess Mail Order Dispensing Fees/Reduced Copay......................................17
	

            2. Copay Override Documentation ......................................................................19
	

       APPENDIX (The Plan’s Response to the Draft Report, dated June 1, 2018)

       REPORT FRAUD, WASTE, AND MISMANAGEMENT
                            I. BACKGROUND

This report details the results of our audit of the Compass Rose Health Plan’s (Plan) pharmacy
operations as administered by Express Scripts, Inc. (PBM) for contract years (CY) 2012 through
2015. The audit was conducted pursuant to the provisions of Contract Number CS 1065
(Contract) between the U.S. Office of Personnel Management (OPM) and the Plan; the
Integrated Prescription Drug Program Agreements between the Plan and the PBM; Title 5,
United States Code, Chapter 89; and Title 5, Code of Federal Regulations, Chapter 1, Part 890
(5 CFR 890). The report covers a period in which the agreement between the Plan and the PBM
underwent significant changes. The original agreement, covering 2012 through 2014
(2012 Agreement), was amended twice; the first covering January 1, 2014, through June 30,
2014 (2014 Amendment 1), and the second covering July 1, 2014, through December 31, 2014
(2014 Amendment 2). The Plan and the PBM entered into a new agreement beginning in 2015
(2015 Agreement). The audit was performed by OPM’s Office of the Inspector General (OIG),
as established by the Inspector General Act of 1978, as amended.

The Federal Employees Health Benefits Program (FEHBP) was established by the Federal
Employees Health Benefits Act (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 (HIO) has overall responsibility for
administration of the FEHBP, including the publication of program regulations and agency
guidance. As part of its administrative responsibilities, the HIO contracts with various health
insurance carriers that provide service benefits, indemnity benefits, and/or comprehensive
medical services. The provisions of the Act are implemented by OPM through regulations
codified in 5 CFR 890.

Pharmacy Benefit Managers are primarily responsible for processing and paying prescription
drug claims. The services provided typically include retail pharmacy, mail order, and specialty
drug benefits. For drugs acquired through retail, the PBM contracts directly with approximately
50,000 retail pharmacies located throughout the United States. For maintenance prescriptions
that typically do not need to be filled immediately, the PBM offers the option of mail order
pharmacies. The PBM also provides specialty pharmacy services for members with rare and/or
chronic medical conditions. Pharmacy Benefit Managers are used to develop, allocate, and
control costs related to the pharmacy claims program.

The Plan entered into an Agreement with the PBM, located in St. Louis, Missouri, to provide
pharmacy benefits and services to its members for CYs 2012 through 2015. Section 1.11 of the
Contract with OPM includes a provision which allows for audits of the program’s operations.
Additionally, section 1.26(a) of the Contract outlines transparency standards that require the
                                               1                   Report No. 1H-06-00-17-026 

PBM to provide pass-through pricing based on its cost. Our responsibility is to review the
performance of the PBM to determine if the Plan charged costs to the FEHBP and provided
services to its members in accordance with the Contract, the Agreements, and Federal
regulations.

This report represents the OIG’s first audit of the Plan’s pharmacy operations as administered by
the PBM.

The results of our audit were discussed with Plan and PBM officials during a January 4, 2018,
exit conference. On May 2, 2018, we issued a draft report to the Plan and PBM for review and
comment. We considered the Plan’s draft report response when preparing the final report. The
Plan’s response is included as an Appendix to this report.




                                                2                   Report No. 1H-06-00-17-026
II. OBJECTIVES, SCOPE, AND METHODOLOGY

 OBJECTIVES

 The main objective of the audit was to determine whether the costs charged to the FEHBP and
 services provided to its members were in accordance with the terms of the Contract, the
 Agreements, and applicable Federal regulations.

 Our specific audit objectives were to determine if:

    Administrative Fees Review

    •	 The Plan paid the PBM administrative fees in accordance with their Agreement and if the
       fees were properly documented.

    •	 The Plan’s letter of credit account pharmacy benefit withdrawals were in accordance with
       the terms of the FEHBP contract.

    Pharmacy Claim Payments Review

    •	 Claims were paid for ineligible dependents age 26 and older.

    •	 Claims were paid for non-covered drugs.

    •	 Claims were paid for non-FEHBP members or members enrolled in an alternate plan
       code.

    •	 Claims were paid to debarred pharmacies.

    •	 The pricing elements for the retail, mail order, and specialty drug claims were transparent
       and paid correctly and in accordance with the Agreement.

    Fraud and Abuse Program Review

    •	 The Plan and the PBM complied with the requirements of the fraud, waste, and abuse
       Carrier Letter 2014-29 and if all suspected cases of fraud were being reported to OPM.




                                                 3		                Report No. 1H-06-00-17-026
      Performance Guarantees Review

      •	 The PBM’s performance reports and any associated penalties were properly calculated
         and submitted timely.

      Pharmacy Rebates Review

      •	 The pharmacy rebates related to the Plan were properly supported, accurately calculated,
         and remitted to the Plan in a timely manner.

SCOPE AND METHODOLOGY

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 and appropriate evidence to provide a reasonable basis for our findings and
conclusions based on the audit objectives. We believe that the evidence obtained provides a
reasonable basis for our findings and conclusions based on the audit objectives.

This performance audit included reviews of administrative fees, the fraud and abuse program,
performance guarantees, pharmacy claim payments, and pharmacy rebates related to the FEHBP
for CYs 2012 through 2015. The audit fieldwork was conducted from September 18, 2017,
through February 23, 2018, and was completed at our Washington, D.C. and Cranberry
Township, Pennsylvania offices.

The Plan is responsible for providing FEHBP members with medical and prescription drug
benefits. To meet this responsibility, the Plan collected total premium payments1 of
approximately                in CYs 2012 through 2015, of which approximately two-thirds was
paid by the government on behalf of Federal employees. Total pharmacy claims paid were
approximately                in CYs 2012 through 2015 (See below).

                                                    Total Drug          Drug Claims
                            Contract Year
                                                     Claims                Paid
                                  2012
                                  2013
                                  2014
                                  2015
                                  Total

1
    Total premium payments include monies for hospitalization, physician, and prescription drugs in the FEHBP.
                                                          4                      Report No. 1H-06-00-17-026
In planning and conducting the 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. Additionally,
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 of accounting records and other auditing procedures as we considered
necessary to determine compliance with the Contract, the Agreements and Federal regulations.
Exceptions noted in the areas reviewed are set forth in the “Audit Findings and
Recommendations” section of this report. 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 the audit, we relied to varying degrees on computer-generated data provided by
the Plan. Due to the 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 objectives.

To determine whether costs charged to the FEHBP and services provided to its members for CYs
2012 through 2015 were in accordance with the terms of the Contract and applicable Federal
regulations, we performed the following audit steps:

   Administrative Fees Review

   •	 We judgmentally selected and reviewed the largest administrative fee invoice for those
      fees covering 2012 and 2013 (outlined in the 2012 Agreement), 2014 (outlined in 2014
      Amendment 1), and 2015 (outlined in the 2015 Agreement) to determine if the fees were
      properly calculated and supported in accordance with the terms of the Agreements
      between the Plan and the PBM. Specifically, we selected three invoices, totaling
      $929,526, from a universe of    invoices, totaling            .

   Fraud and Abuse Program Review

   •	 We reviewed all potential fraud and abuse cases reported by the PBM to the Plan to
      determine if those cases were reported to OPM.



                                                5		                  Report No. 1H-06-00-17-026
    •	 We reviewed the Plan’s policies and procedures for fraud and abuse to ensure that they
       comply with OPM’s standards.

    Performance Guarantees Review

    •	 For each CY, we reviewed all performance guarantees to determine if the guarantees
       were met, reported accurately, and that any associated penalties were paid to the Plan
       timely.

    Pharmacy Claim Payments Review

    Unless stated otherwise, the claim samples below were selected from the complete claims
    universe of           claims, totaling            , for CYs 2012 through 2015.2

    •    We identified a universe of       members with claims for dependent children aged 26 or
         older, totaling          . From the universe we judgmentally selected 36 members, with
         claims totaling $127,329, for review and determined if the dependent children were
         eligible for coverage at the date of service of the claims. The samples were selected
         utilizing the following methodology:

         o	 Claims for all members with claims totaling $1,500 or more. Specifically, we
	
            selected 21 members with claims totaling $119,120; and
	

         o	 Claims for all remaining members with dependent children aged either 26 or 27, with
            claims totaling $250 or greater. Specifically, we selected 15 additional members with
            claims totaling $8,209.

    •	 During our review of the over-aged dependent universe, we identified a number of
       members with dependent children listed with ages 60 or greater. As a result, we
       judgmentally selected all members (11 members with claims totaling $3,432) for review
       to determine if the eligibility status listed (dependent child) was correct.

    •	 To determine if any claims were paid for non-covered drugs, we performed a query to
       identify all 33 National Drug Codes (NDC) that the Plan provided and indicated were not
       covered during the scope of the audit. For mail order and retail claims, we judgmentally



2
 These totals are obtained from the claims data files provided by the PBM and do not reconcile to the totals reported
by the Plan in the Annual Accounting Statements due to timing and the inclusion of reversals/credits in the PBM
data files.
                                                         6		                     Report No. 1H-06-00-17-026
    selected all claims with NDCs matching the PBMs exclusion list with claims totaling
    $5,000 or more. Specifically, the samples were selected as follows:
    o	 For mail order claims, we selected 3 NDCs with claims totaling $48,811, from a
        universe of 11 NDCs with claims totaling         .

    o	 For retail claims, we selected 9 NDCs with claims totaling $127,643, from a universe
       of 33 NDCs with claims totaling           .

•	 We reviewed all claims to determine if any were paid for non-FEHBP members or
   members enrolled in another FEHBP plan code.

•	 We reviewed all claims to determine if any payments were made to pharmacies debarred
   by the OIG’s Administrative Sanctions Office.

•   From the retail pharmacy claims universe of              claims, totaling             , we
    identified the top 25 retail pharmacies (by total amount paid) and judgmentally selected
    200 claims, totaling $22,376, from the top five pharmacies to determine if the claims
    were paid in accordance with the Plan’s benefit brochure and that the claim’s pricing
    elements were transparent in accordance with the Contract’s transparency standards.
    Specifically, we selected the sample using the following methodology:

    o	 From those claims paid for brand name drugs, we randomly selected five claims per
       year from each pharmacy selected. As a result, we reviewed 100 brand name drug
       claims totaling $20,153.

    o	 From those claims paid for generic drugs, we randomly selected five claims per year
       from each pharmacy selected. As a result, we reviewed 100 generic drug claims
       totaling $2,223.

•   From the specialty pharmacy claim universe of          claims, totaling             , we
    judgmentally selected 80 claims, totaling $156,571, to determine if the claims were paid
    in accordance with the Plan’s benefit brochure and that claim pricing elements were
    transparent in accordance with the Contract’s transparency standards. Specifically, we
    selected the sample using the following methodology:

    o	 From those specialty claims paid at retail pharmacies, we randomly selected 10
       claims per year from the top five pharmacies identified in the retail pharmacy claim
       review. This resulted in 40 retail pharmacy specialty claims totaling $18,440 being
       selected for review.


                                            7		                 Report No. 1H-06-00-17-026
       o	 From those specialty claims paid at mail order pharmacies, we randomly selected 10
          claims per year. As a result, we selected 40 mail order pharmacy specialty claims,
          totaling $138,131, for review.

   •	 We identified a universe of         mail order pharmacy claims totaling           .
      From this universe, we randomly selected 15 brand name and 15 generic claims from
      each CY (120 claims, totaling $39,842) to determine if the claims were paid in
      accordance with the Plan’s benefit brochure and that claim pricing elements were
      transparent in accordance with the Contract’s transparency standards.

   Pharmacy Rebates Review

       From CYs 2012 through 2014, we judgmentally selected the CY quarter with the largest
       amount of manufacturer rebates reported. Specifically, we selected three quarterly
       reports, with rebates totaling $3,931,478, from a universe of 12 quarterly reports, with
       total rebates reported of             . From these three quarterly reports we selected all
       therapeutic descriptions with net rebates totaling $100,000 or more, to determine if the
       rebates reported were calculated accurately and paid to the Plan. Specifically, we
       selected 12 therapeutic descriptions, totaling $3,070,349, from a universe of
       therapeutic descriptions, totaling            .

The samples that were selected and reviewed in performing the audit were not statistically based.
Consequently, the results could not be projected to the universe since it is unlikely that the
results are representative of the universe taken as a whole.




                                                8		                 Report No. 1H-06-00-17-026
III. AUDIT FINDINGS AND RECOMMENDATIONS

A. ADMINISTRATIVE FEES REVIEW

   1. Specialty Pharmacy Administrative Fees                                            Procedural

      The PBM incorrectly under-billed the Plan for specialty pharmacy claim administrative fees
      in CYs 2012 through 2014.

    The PBM incorrectly      The Plan and PBM Agreements set forth specific administrative fees
    under-billed the Plan    paid by the Plan (on a per claim basis) in CYs 2012 through 2015.
     for administrative      From January 1, 2012, through June 30, 2014, the fee structure
            fees.            included three tier levels (set forth in the 2012 Agreement).
                             Amendment 2 modified the fees to include only one tier level (which
      was continued in the 2015 Agreement). The Plan is billed administrative fees on a monthly
      basis.

      We reviewed a sample of administrative fee invoices to determine if they were in accordance
      with the various Agreements and if they were supported by verifiable information. We found
      that the PBM incorrectly billed the Plan each month for specialty pharmacy administrative
      fees for the period 2012 through 2014. We also noted that following the amendment the
      PBM did not apply fee increases in the billing system beginning in 2013 (2012 fee levels
      were maintained in the billings) and that the fee changes in the July 1, 2014, amendment
      were not applied fully until 2015.

      The PBM stated that the billing errors occurred because its system had limited logic that
      could not account for more than one administrative fee associated with specialty claims.
      Therefore, it had to manually quantify the number of claim lines for each invoice.

      Additionally, the PBM stated that its billing department was not aware of the fee changes and
      therefore they were not implemented. The PBM stated that it became aware of the problem
      following the implementation of Amendment 2. Beginning with the CY 2015 invoices, the
      PBM stated (and we confirmed) that it had corrected all problems and that the billings to the
      Plan were accurate. All financial discrepancies in the billings have been resolved between
      the Plan and PBM.

      Because the PBM’s administrative fee billing system was unable to accommodate multiple
      levels of fees and its billing department was unaware of fee changes, the PBM incorrectly
      billed the Plan for specialty pharmacy claim administrative fees in CYs 2012 through 2014.
                                                   9                  Report No. 1H-06-00-17-026
     Recommendation 1

     We recommend that the PBM implement controls that will ensure timely and accurate
     updates to the billing system when administrative fee changes occur.

     Plan Response:

     The Plan agrees with this recommendation and states that the PBM has implemented
     controls to help ensure timely and accurate updates to the billing system when
     administrative fee changes occur. Additionally, the Plan stated that it has implemented
     procedures for oversight of administrative fee changes.

B. PHARMACY CLAIM PAYMENTS REVIEW

  1. Pharmacy Claim Payment Errors                                                     Procedural

     The PBM initially overcharged the Plan $85,854 for mail order brand name pharmacy claims
     paid between July 31, 2014, and December 31, 2014.

     Schedule A, Section 2.1 of the 2012 Agreement (effective               The PBM initially
     through December 31, 2014) states that mail order pharmacy            overcharged the Plan
     claims will be paid at a certain percentage off of Average              $85,854 for mail
     Wholesale Price (AWP) for brand name drugs or Maximum                  order brand name
     Allowable Cost for generic drugs.                                     drug claims in 2014.

     2014 Amendment 2 (effective July 1, 2014) added Section 9 (Mail Order Pharmacy
     Component Discount Guarantee) to the above Agreement. This set an average discount
     guarantee off of AWP that was less than that set in the 2012 Agreement for mail order brand
     name drugs paid between July 1, 2014, and December 31, 2014. This amendment did not
     supersede the AWP discount for mail order drugs (Schedule A, Section 2.1 above).

     During our review of mail order pharmacy claims, we identified eight brand name drug
     claims (paid between July 31, 2014, and December 31, 2014) that paid at the guarantee rate
     set in 2014 Amendment 2, instead of the discount rate set in the 2012 Agreement (paid at a
     lesser discount). This resulted in an overcharge to the FEHBP of $85,854.

     The PBM stated that the error was the result of changes it made to the adjudication rates for
     mail order brand name pharmacy claims so that the rates would match the July 1, 2014,
     guarantee amendment. The PBM implemented this rate change on July 31, 2014.

                                                 10                   Report No. 1H-06-00-17-026
   Discussions with the Plan determined that the Mail Order Acquisition Cost Guarantee, set
   forth in the 2012 Agreement, ultimately corrected this overpayment and returned the $85,854
   to the FEHBP following the close of CY 2014.

   As a result, no monies are due to the FEHBP. However, the PBM’s use of the incorrect
   AWP discount caused the Plan to initially overpay $85,854 to the PBM.

   Recommendation 2

   We recommend that the PBM institute procedures to ensure that fixed discount rates in its
   adjudication system are set to the contracted rate(s) and not set to match guarantees.

   Plan Response:

   The Plan agrees with the recommendation and states that the PBM has affirmed that
   contracted rates are being utilized and internal controls have been applied to ensure
   guarantee and adjudication accuracy. Additionally, the PBM monitors internal processes
   and makes adjustments when necessary. The Plan also stated that it has implemented
   procedures to monitor compliance and accuracy.

2. Over-Age Dependents                                                                       $14,226

   The Plan paid 161 pharmacy claims, for 14 dependent children, that were ineligible for
   coverage when the prescription was filled. As a result, the FEHBP was overcharged
   $14,226.
                                                                          The Plan paid
   5 CFR 890.302(b)(1), states that “A child under the age of 26, or   pharmacy claims for
   a child of any age who is incapable of self-support because of a     ineligible over-age
   mental or physical disability which existed before age 26, is            dependents.
   considered to be a family member eligible to be covered” under
   the FEHBP.

   Section 2.3(g) of the Contract states that “It is the Carrier’s responsibility to proactively
   identify overpayments through comprehensive, statistically valid reviews and a robust
   internal control program.”

   Additionally, section 2.3(g)(12) of the Contract states, “In compliance with the provisions of
   the Contracts Dispute Act, the Carrier shall return to the Program an amount equal to the
   uncollected erroneous payment where the Contracting Officer determines that (a) the


                                                 11                    Report No. 1H-06-00-17-026
Carrier’s failure to appropriately apply its operating procedure caused the erroneous
payment ... .”

We reviewed a sample of claims for dependent children age 26 or older to determine if they
were eligible for coverage. From our sample, we found 14 dependents age 26 or older who
were not eligible for coverage on the dates of service. Of those identified, 12 were not
properly terminated upon turning age 26. The Plan was unable to provide supporting
documentation for a disability determination for the two remaining dependents.

The Plan stated that its third party administrator’s eligibility system does not systematically
terminate dependents upon turning 26 years of age. The Plan did conduct internal audits to
identify unallowable claims, which resulted in terminating some ineligible dependents.
However, the Plan did not initiate any recovery efforts for those claims that were
unallowable. In addition, the Plan failed to maintain proper documentation to support two
dependents who were permanently disabled.

By not systematically terminating dependents at age 26, failing to initiate recovery efforts for
those claims that were unallowable, and not maintaining proper documentation, the FEHBP
was overcharged $14,226.

Recommendation 3

We recommend that the Plan return $14,226 to the FEHBP for erroneous claim payments on
ineligible overage dependents.

Plan Response:

The Plan agrees with the recommendation and states that it has returned the amount in
question to the FEHBP.

Recommendation 4

We recommend that the Plan identify and initiate recoveries on all claims paid for ineligible
dependents.

Plan Response:

The Plan agrees with the recommendation and states that it has begun initiating recoveries
on all claims.


                                             12                   Report No. 1H-06-00-17-026 

    Recommendation 5

    We recommend that the Plan update its policies and procedures for identifying ineligible
    members to include systematically terminating dependents at age 26.

    Plan Response:

    The Plan agrees with the recommendation and states that it has implemented a policy and
    procedure for identifying ineligible members to include systematically terminating
    dependents at age 26.

 3. Debarment Listing                                                                Procedural

    The Plan did not provide the PBM with the OPM OIG’s debarment/suspension list to ensure
    that payments are not made for FEHBP pharmacy claims submitted by debarred providers.

The Plan did not provide    The OIG’s Guidelines for Implementation of FEHBP Debarment
    the OPM OIG’s           and Suspension Orders instructs FEHBP carriers, when dealing with
 debarment/suspension       FEHBP members and enrollees, to use OPM’s data for debarments.
    list to the PBM.
    Additionally, the above guidelines also instruct each FEHBP carrier to designate a member
    of its staff to serve as a point of contact with the OPM OIG on administrative sanction
    matters.

    During our review of the PBM’s debarment implementation procedures, we found that the
    PBM uses other Federal government exclusion lists in its system edits to ensure that claim
    payments are not made to debarred providers. However, it does not use OPM OIG’s
    debarment/suspension list.

    The Plan stated that it did not provide an OPM OIG debarment/suspension list to the PBM
    because access to OPM OIG’s debarment/suspension list was set up for a previous third party
    administrator. The Plan stated this has been corrected and that going forward it can directly
    access and communicate the list to its vendors, including the PBM.

    By not providing the PBM with the appropriate FEHBP debarment/suspension list, the Plan
    increased the risk of pharmacy claims being paid to debarred providers or pharmacies.




                                               13                   Report No. 1H-06-00-17-026 

     Recommendation 6

     We recommend that the Plan develop policies and procedures to ensure that its PBM receives
     the OPM OIG’s debarment/suspension list and that updates are provided timely.

     Plan Response:

     The Plan agrees with this recommendation and states that it has developed and
     implemented a process to ensure its PBM receives the OPM OIG's debarment/suspension
     list and updates.

C. FRAUD AND ABUSE PROGRAM REVIEW

  1. Failure to Report Suspected Fraud, Waste and Abuse Cases                          Procedural

     The Plan did not report to the OIG any of the suspected fraud, waste, and abuse (FWA) cases
     that the PBM identified for CYs 2012 through 2015.

     According to Carrier Letter 2011-13, the Plan’s Special Investigative Unit is required to
     submit a written notification to the OIG within 30 working days of becoming aware of an
     issue where there is a reasonable suspicion that a fraud has occurred or is occurring against
     the FEHBP. Reportable issues include the identification of              The Plan failed to
     emerging fraud schemes; suspected internal fraud or abuse by            report to the OPM
     Plan employees, contractors, or subcontractors; suspected fraud        OIG any suspected
     by providers who supply goods or services to members;                 fraud, waste or abuse
     suspected fraud by individual members; issues of patient harm;        cases identified by the
     and Plan participation in class action lawsuits. There is no                   PBM.
     financial threshold for these initial case notifications.

     Also, updated Carrier Letter 2014-29 states, “FEHBP Carriers are required to submit a
     written notification to [the OIG] within 30 working days when there is a potential reportable
     FWA that has occurred against the FEHB Program. [The OIG] considers a potential
     reportable FWA as, after a preliminary review of the complaint, the carrier takes an
     affirmative step to investigate the complaint … There is no financial threshold for these case
     notifications.”

     To determine if all suspected fraud cases were reported to the OIG, we reviewed a list of
     cases reported to the Plan by the PBM for CYs 2012 through 2015 and the annual Fraud,
     Waste and Abuse Recovery and Savings Data Reports (FWA Report) submitted to OPM by


                                                 14                   Report No. 1H-06-00-17-026 

     the Plan. We requested a list from the OIG’s Office of Investigations of case referrals from
     the Plan for the same period.

     Our review determined that during CYs 2012 through 2015, the PBM reported to the Plan
     eight suspected cases of FWA. The annual FWA Reports submitted to OPM by the Plan
     showed only three cases were opened and no cases were referred to the OIG during the same
     period.

     The Plan stated that it did not receive any referrals that it believed needed to be reported to
     the OIG. However, Carrier Letter 2011-13 clearly states that Plans are required to submit a
     written notification to the OPM OIG within 30 working days of becoming aware of an issue
     where there is a reasonable suspicion that a fraud has occurred or is occurring against the
     FEHBP.

     By not reporting any potential FWA cases to the OIG, the Plan adversely affected the OIG’s
     ability to investigate these cases and increased the risk of possible overcharges to the
     FEHBP.

     Recommendation 7

     We recommend that the Plan adopt procedures to ensure that it complies with all official
     FWA guidance in place at the time of reporting and continue to follow that guidance until
     such time of an official update or until a replacement is issued.

     Plan Response:

     The Plan agrees with this recommendation and stated that it has implemented an
     enhanced process per the most recent requirements from OPM.

D. PERFORMANCE GUARANTEES REVIEW

  1. Performance Standard Penalty Payment                                                     $6,250

     The Plan failed to notify the PBM of a performance guarantee penalty due for CY 2013. As
     a result, the PBM did not pay $6,250 in penalty payments to the Plan.




                                                  15                   Report No. 1H-06-00-17-026 

Section 5.3 of the 2012 Agreement states that upon receipt of the            The Plan failed to
Performance Standard Annual Report, the Plan will give the PBM             request a penalty due
written notice of its election to assess any applicable penalties due       from the PBM for a
from the PBM in the form of a Performance Standard Penalties                missed performance
Letter. The potential penalties ranged from $6,250 to $50,000                   guarantee.
per CY.

We reviewed all performance guarantees for CYs 2012 through 2015 to determine
compliance with the guarantees by the PBM and if any penalties due were actually paid to
the Plan. Our review found that the Plan did not notify the PBM of one guarantee that it
failed to meet.

The Plan stated that it did not receive the penalty payment because it failed to request it. The
Plan has since requested the missed payment. The Plan is working with the PBM to revise
the notification process to ensure that future penalties are not missed.

As a result of not notifying the PBM of the missed 2013 performance guarantee, the PBM
did not remit $6,250 in penalty payments to the Plan.

Recommendation 8

We recommend that the Plan provide confirmation of the penalty payment to OPM once
received.

Plan Response:

The Plan stated that the penalty payment was received from the PBM for the amount of
$6,250 via a check dated 10/24/2017.

OIG Comment:

The Plan should also provide documentation to support the return of the funds to the FEHBP
through its Letter of Credit Account.

Recommendation 9

We recommend that the Plan modify its Agreement with the PBM so that any penalty
payments due are automatically initiated within 30 days of the Performance Standard Annual
Report.


                                             16                    Report No. 1H-06-00-17-026 

     Plan Response:

     The Plan agrees with the recommendation and states that it is in the process of amending
     the current contract to automatically initiate payments for any penalties due within a
     mutually agreeable time period of receiving the Performance Standard Annual Report.

     Recommendation 10

     We recommend that the Plan implement policies and procedures to ensure tracking of all
     performance guarantees and associated penalties.

     Plan Response:

     The Plan agrees with the recommendation and states that it has implemented policies and
     procedures for tracking of all performance guarantees and associated penalties. Tracking
     of performance guarantees and associated penalties will be reviewed and internally
     audited as reports are received from the PBM. The PBM has confirmed reporting will be
     provided for all performance guarantees listed in the PBM contract. The PBM also agrees
     to assist in tracking of all performance guarantees and penalties. In addition, the Plan
     stated that it will randomly review performance guarantees and report findings to its
     Quality Improvement Committee.

E. PHARMACY REBATES REVIEW

  Our review determined that the PBM properly supported, calculated, and remitted pharmacy
  rebates to the Plan in accordance with the Contract and drug manufacturers’ agreements during
  the scope of the audit.

F. PROGRAM IMPROVEMENT AREAS

  1.		 Excess Mail Order Dispensing Fees/Reduced Copay
                                                                             Allowing a 30-day
     During the scope of our audit, we found that the PBM processed
                                                                            mail order supply at
     2,793 mail order claims with a 30-day supply that could have been
                                                                            the retail copay cost
     processed at a retail pharmacy with a lower dispensing fee.
                                                                             the FEHBP nearly
     Additionally, the PBM charged the members a single retail copay
                                                                           $50,000 in excess fees.
     for each of these claims, instead of the mail order copay shown in
     the benefit brochure.



                                                17		                Report No. 1H-06-00-17-026 

The 2012 Agreement specified average dispensing fees for both retail and mail order. In
addition, the Plan’s benefit brochure states that prescription drugs with up to a 31-day supply
can be filled using retail pharmacies at a retail copay. Prescription drugs with up to a 90-day
supply can be filled using mail order services at twice the retail copay.

During our pricing review of mail order pharmacy claims for CYs 2012 through 2015, we
identified 2,793 claims that were inappropriately processed at a lower retail copay. The mail
order copay should have been twice the amount of retail in accordance with the Plan’s
benefit brochure. Additionally, all of the claims were for a 30-day supply, which could have
been filled at a retail pharmacy with a dispensing fee averaging $12 less per fill. When we
asked the PBM why these mail order claims were processed for a 30-day supply at the lower
retail copay, the PBM provided an internal document indicating that mail order drugs less
than 31 days were allowed to process using a copay identical to that offered at retail.

After we disclosed this issue to the Plan, it was unaware that the PBM was filling 30-day
prescriptions using the mail order service with a retail copay. We also found that the Plan’s
benefit brochure was misleading, since it suggests that up to 31-day supplies should be filled
at a retail pharmacy, and it clearly shows mail order to be twice the copay of retail.

Because the PBM allowed 30-day mail order drugs at a retail copay, the FEHBP was
overcharged nearly $50,000 during the scope of our audit in excess dispensing fees and
reduced member copays.

Recommendation 11

We recommend that Plan direct the PBM to modify its claims system to ensure that all mail
order pharmacy claims are processed using the copay structure stated in the benefit brochure.

Plan Response:

The Plan agrees with the recommendation and states that it is working with the PBM to
ensure all prescriptions are processed using the copay structure stated in the benefit
brochure.

Recommendation 12

We recommend that OPM direct the Plan to modify its contract with the PBM to ensure that
members may only obtain prescriptions of less than 31 days at retail pharmacies unless
specifically approved by the Plan.


                                            18                   Report No. 1H-06-00-17-026 

      Plan Response:

      The Plan agrees with the recommendation and states that beginning with benefit year 2019
      members will only be able to obtain prescriptions for greater than 84-day supplies at mail
      order. All supplies less than 84-day must be filled at retail pharmacies. The Plan stated
      that this will not apply to specialty medications.

  2. Copay Override Documentation

      The Plan and PBM did not maintain sufficient documentation to support all copay overrides
      entered for Plan members.

 On average, the Plan       During our review of mail order pharmacy claims, we found a claim
   failed to document       where the copay applied was inconsistent with the copay shown in the
    reasons for copay       Plan’s benefit brochure. We determined that the claim in question
overrides for 68 percent    was paid in accordance with a copay override created by the PBM at
  of applicable claims.     the request of the Plan. Neither the Plan nor the PBM maintained
                            documentation to support this copay override. Therefore, we
      expanded our review to determine if the Plan and/or the PBM maintained proper
      documentation of copay overrides.

      The Plan may grant copay overrides in many cases; however, in all override cases it should
      maintain documentation to support its decisions. The Plan stated that during the scope of our
      audit there were no written procedures in place regarding the review and granting of override
      requests.

      We reviewed a sample of claims for members that received copay overrides during CYs 2012
      through 2015, to determine if support for the reason was maintained by the Plan or PBM.
      We found that the Plan and PBM did not maintain documentation on copay overrides for 68
      percent and 86 percent of the claim lines sampled, respectively. In addition, the Plan or its
      eligibility administrator (not the PBM), entered 76 percent of the claim line overrides into the
      Plan’s prior authorization system.

      The Plan and the PBM were able to provide documentation with specific explanations for the
      copay overrides increasingly over the years of our review (see table below). The Plan stated
      that due to security reasons, most of the discussions and approvals made by its eligibility
      administrator in 2012 and 2013 were made verbally and that documentation was not
      regularly maintained. Upon switching to a new administrator in 2014, procedures were
      changed with more documentation being maintained.


                                                  19                   Report No. 1H-06-00-17-026 

                                   Plan               PBM
                                                                   Prior Authorization
                              Override Reason    Override Reason
                                                                    Entered by Plan
                              Not Documented     Not Documented
                 2012              96%                95%                 88%
                 2013              93%                99%                 87%
                 2014              42%                78%                 65%
                 2015              13%                59%                 54%
             Weighted Avg.         68%                86%                 76%


Other specific issues identified in our review were:

       •	 Most of the copay overrides were set to terminate a year from the effective date,
          typically spanning across two calendar years (those for vacations or overseas trips are
          usually for much shorter terms).
       •	 Copay overrides for two members were provided open-ended (with termination dates
          in the year 2099).
       •	 Many of the overrides set the copay at a fixed dollar amount rather than
          systematically linking it to the current copay level in effect. Of the two open-ended
          overrides, one was set to a $60 copay, which was correct in 2012, but changed to $70
          copay in later years. Fixing the copay amount through an override is concerning due
          to the potential that the Plan’s copay structure can change from year to year.

   Discussions with the Plan indicated that it had no formal process in place to review copay
   overrides. However, after we addressed our concerns with the Plan, it began to work with
   the PBM in implementing internal reviews to ensure that records reflect the actual copay
   override reasons.

   Recommendation 13

   We recommend that the Plan implement procedures to improve its management of copay
   overrides to ensure that the reasons for the override are documented and maintained.

   Plan Response:

   The Plan agrees with the recommendation and states that it has implemented policies and
   procedures to improve management of copay overrides to ensure the reasons for the
   override are documented and maintained sufficiently.




                                                20		                Report No. 1H-06-00-17-026 

Recommendation 14

We recommend that the Plan require the PBM’s prior authorization system to more
accurately reflect the reason for copay overrides.

Plan Response:

The Plan agrees with the recommendation and states that processes have been
implemented to ensure the prior authorization system is accurately reflecting the reason
for copay overrides.

Recommendation 15

We recommend that the Plan ensure that no prior authorizations are permanently set at fixed
copay amounts, so that benefit changes from year to year take effect.

Plan Response:

The Plan agrees with the recommendation and states that it has implemented a policy and
procedure to ensure that no future prior authorizations are permanently set at fixed copay
amounts.

Recommendation 16

We recommend that the Plan establish policies and procedures to routinely review all copay
overrides to ensure that they are still valid and necessary.

Plan Response:

The Plan agrees with the recommendation and states that it has implemented policies and
procedures to routinely review copay overrides to ensure they are still valid and necessary.
In addition, it will routinely perform random reviews of copay overrides to ensure
compliance with procedures and report findings to its Quality Improvement Committee.




                                           21                  Report No. 1H-06-00-17-026 

                                       APPENDIX




June 1, 2018


Chief, Special Audits Group
Office of Personnel Management
Office of Inspector General

Dear           ,

Below is our response to your preliminary PBM Audit report. We appreciate the opportunity to
review your findings and recommendations and provide a response. We have put our response
directly below each recommendation. Please let us know if you need any additional information
for any of our responses. For recommendation 5, we have submitted re-payment of the $14,226
as part of our LOCA draw scheduled for today. We can provide you with confirmation once we
have it.

Questions or requests can be directed to me at                                     ,
     or                , Pharmacy Benefits Manager at                                     ,
              .

Thank you for your time, support and suggestions, all are much appreciated and are making us a
better Plan.

Sincerely,




Director, Health Plan Administration

                                    Deleted by the OIG 

                               Not relevant to the final report 


                                                                    Report No. 1H-06-00-17-026
A. ADMINISTRATIVE FEES REVIEW

    1. Specialty Pharmacy Administrative Fees                                                    Procedural

                                         Deleted by the OIG 

                                    Not relevant to the final report 



        Recommendation 23

        We recommend that the PBM implement controls that will ensure timely and accurate
        updates to the billing system when administrative fee changes occur.


        Plan Response:

        The Plan agrees with this recommendation. Compass Rose was assured by the PBM
        that controls have been implemented to help ensure timely and accurate updates to
        the billing system when administrative fee change occurs. Starting in 2015, the
        tiered pricing originally in the contract has been replaced with a single admin fee
        and an automated invoicing process. Additionally, the PBM performs a post
        implementation review of all administrative/ancillary fees entered to ensure
        completeness and accuracy of administrative fee setup. Compass Rose has also
        implemented procedures for oversight of administrative fee changes.

B. PHARMACY CLAIM PAYMENTS REVIEW

    1. Pharmacy Claim Payment Errors                                                                 $85,854

                                         Deleted by the OIG 

                                    Not relevant to the final report 


        Recommendation 4

        We recommend that the PBM institute procedures to ensure that fixed discount rates in its
        adjudication system are set to the rate(s) contracted and not set to match guarantees.




3
 Recommendations 1 and 3 from the draft report have been dropped. However, all recommendations listed in the
Appendix have maintained the original recommendation number referenced in that report.
                                                                             Report No. 1H-06-00-17-026
   Plan Response:

   The Plan agrees with the recommendation. The PBM affirms that contracted rates
   are being utilized and internal controls have been applied to ensure guarantee and
   adjudication accuracy. The PBM continues to monitor internal processes and make
   adjustments when necessary. Compass Rose has implemented oversight activity to
   monitor compliance and accuracy.

                                Deleted by the OIG
                           Not relevant to the final report

2.		 Over-Age Dependents                                                            $14,226

                                Deleted by the OIG
                           Not relevant to the final report 


   Recommendation 5 


   We recommend that the Plan return $14,226 to the FEHBP for erroneous claim payments
   on ineligible overage dependents.

   Plan Response:

   The Plan agrees with the recommendation and has returned to the FEHBP $14,226
   as part of the June 1, 2018, LOCA drawdown.

   Recommendation 6

   We recommend that the Plan identify and initiate recoveries on all claims paid for 

   ineligible dependents. 


   Plan Response:

   The Plan agrees with the recommendation and using our overpayment process as a
   guideline has begun initiating recoveries on all claims.

   Recommendation 7

   We recommend that the Plan update its policies and procedures for identifying ineligible
   members to include systematically terminating dependents at age 26.
                                                                Report No. 1H-06-00-17-026
     Plan Response: 


     The Plan agrees with the recommendation and has implemented a policy and
     procedure for identifying ineligible members to include systematically terminating
     dependents at age 26. Compass Rose identifies 26-year-old dependent children and
     coverage is terminated in a timely manner to prevent payment of claims for
     ineligible individuals. In addition, we are implementing an oversight process to
     verify timely terminations.

  3. Debarment Listing                                                             Procedural

                                  Deleted by the OIG
                             Not relevant to the final report

     Recommendation 8

     We recommend that the Plan develop policies and procedures to ensure that its PBM
     receives the OPM OIG’s debarment/suspension list and that updates are provided timely.

     Plan Response:

     The Plan agrees with this recommendation. Compass Rose has developed and
     implemented a process to ensure its PBM receives the OPM OIG's
     debarment/suspension list and updates. Compass Rose sends the list and updates to
     specific contacts at Express Scripts when received.

C. FRAUD AND ABUSE REVIEW

  1. Failure to Report Suspected Fraud, Waste and Abuse Cases                      Procedural

                                  Deleted by the OIG
                             Not relevant to the final report

     Recommendation 9

     We recommend the Plan adopt procedures to ensure that it complies with all official FWA
     guidance in place at the time of reporting and continue to follow that guidance until such
     time of an official update or until a replacement is issued.


                                                                 Report No. 1H-06-00-17-026
     Plan Response: 


     The Plan agrees with this recommendation and has implemented an enhanced process
     per the most recent requirements from OPM. Compass Rose is following this process
     and sending suspected FWA cases as required to OIG.

D. PERFORMANCE GUARANTEES REVIEW

  1. Performance Standard Penalty Payment                                            $6,250

                                  Deleted by the OIG 

                             Not relevant to the final report 


     Recommendation 10

     We recommend that the Plan provide confirmation of the penalty payment to OPM once
     received.

     Plan Response:

     The plan confirms the penalty payment was received from the PBM for the amount
     of $6,250 dated 10/24/2017 on check number         .

     Recommendation 11

     We recommend that the Plan modify its Agreement with the PBM so that any penalty
     payments due are automatically initiated within 30 days of the Performance Standard
     Annual Report.

     Plan Response:

     The Plan agrees with the recommendation. Compass Rose and the PBM in good
     faith are in the process of amending the current contract to automatically initiate
     payments for any penalties due within a mutually agreeable time period of receiving
     the Performance Standard Annual Report.

     Recommendation 12

     We recommend that the Plan implement policies and procedures to ensure tracking of all
     performance guarantees and associated penalties.
                                                             Report No. 1H-06-00-17-026
     Plan Response: 


     The Plan agrees with the recommendation. Compass Rose has implemented policies
     and procedures for tracking of all performance guarantees and associated penalties.
     Tracking of performance guarantees and associated penalties will be reviewed and
     internally audited as reports are received from the PBM. The PBM has confirmed
     reporting will be provided for all performance guarantees listed in the PBM
     contract. The PBM also agrees to assist in tracking of all performance guarantees
     and penalties. In addition, Compass Rose will randomly review performance
     guarantees and report findings to the Quality Improvement Committee (QIC).

E. PROGRAM IMPROVEMENT AREAS

  1. Excess Mail Order Dispensing Fees/Reduced Copay

                                  Deleted by the OIG 

                             Not relevant to the final report 


     Recommendation 13

     We recommend that Plan direct the PBM to modify its claims system to ensure that all
     mail order pharmacy claims are processed using the copay structure stated in the benefit
     brochure.

     Plan Response:

     The Plan agrees with the recommendation. Compass Rose is working with the PBM
     to ensure all prescriptions are processed using the copay structure stated in the
     benefit brochure. For benefit year 2019, only greater than 84-day supplies will be
     processed at mail order. Compass Rose will monitor claims to confirm all
     prescriptions are processed using the copay structure stated in benefit brochure.

     Recommendation 14

     We recommend that OPM direct the Plan to modify its contract with the PBM to ensure
     that members may only obtain prescriptions of less than 31 days at retail pharmacies
     unless specifically approved by the Plan.




                                                                  Report No. 1H-06-00-17-026
   Plan Response:

   The Plan agrees with the recommendation. Compass Rose in good faith will work
   with the PBM to ensure members may only obtain prescriptions for greater than 84-
   day supplies at mail order starting in benefit year 2019. All supplies less than 84-
   day must be filled at retail pharmacies. This does not apply to specialty
   medications. Current members utilizing mail order prescriptions for less than an
   84-day supply will be notified before Open Season regarding the plan change for
   2019 to prevent member disruption.

2. Copay Override Documentation

                               Deleted by the OIG 

                          Not relevant to the final report 


   Recommendation 15

   We recommend that the Plan implement procedures to improve its management of copay
   overrides to ensure that the reasons for the override are documented and maintained.

   Plan Response:

   The Plan agrees with the recommendation. Compass Rose has implemented a
   policy and procedure to improve management of copay overrides to ensure the
   reasons for the override are documented and maintained sufficiently. Compass
   Rose will monitor copay overrides to ensure the PBM is accurately reflecting the
   reason for copay overrides. In addition, Compass Rose will routinely randomly
   review select copay overrides to ensure compliance with procedures and report
   findings to the Quality Improvement Committee (QIC).

   Recommendation 16

   We recommend that the Plan require the PBM’s prior authorization system to more
   accurately reflect the reason for copay overrides.

   Plan Response:

   The Plan agrees with the recommendation. Compass Rose and the PBM have
   implemented processes to ensure the prior authorization system is accurately
   reflecting the reason for copay overrides. Compass Rose will monitor copay
                                                               Report No. 1H-06-00-17-026
overrides to ensure the PBM is accurately reflecting the reason for copay overrides.
In addition, Compass Rose will routinely randomly review select copay overrides to
ensure compliance with procedures and report findings to the Quality Improvement
Committee (QIC).

Recommendation 17

We recommend that the Plan ensure that no prior authorizations are permanently set at
fixed copay amounts, so that benefit changes from year to year take effect.

Plan Response:

The Plan agrees with the recommendation. Current fixed copay amounts will be
reset at plan year end to account for any benefit changes that take effect from year
to year. Any current copay override approved past the plan year will be reviewed
and updated. In addition, Compass Rose has implemented a policy and procedure
to ensure that no future prior authorizations are permanently set at fixed copay
amounts.

Recommendation 18

We recommend that the Plan establish policies and procedures to routinely review all
copay overrides to ensure that they are still valid and necessary.

Plan Response:

The Plan agrees with the recommendation. Compass Rose has implemented a
policy and procedure to routinely review copay overrides to ensure they are still
valid and necessary. In addition, Compass Rose will routinely randomly review
select copay overrides to ensure compliance with procedures and report findings to
the Quality Improvement Committee (QIC).




                                                           Report No. 1H-06-00-17-026 

          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