oversight

Audit of the MetLife Federal Dental Plan as Administered by the Metropolitan Life Insurance Company for Contract Years 2009-2013

Published by the Office of Personnel Management, Office of Inspector General on 2015-06-02.

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 METLIFE FEDERAL DENTAL PLAN
                     AS ADMINISTERED BY
         THE METROPOLITAN LIFE INSURANCE COMPANY
           FOR CONTRACT YEARS 2009 THROUGH 2013

                                          Report Number 1J-0F-00-14-075
                                                   June 2, 2015



                                                             -- CAUTION --
This audit report has been distributed to Federal officials who are responsible for the administration of the audited program. This audit report
may contain proprietary data which is protected by Federal law (18 U.S.C. 1905). Therefore, while this audit report is available under the Freedom
of Information Act and made available to the public on the OIG webpage (http://www.opm.gov/our-inspector-general), caution needs to be exercised
before releasing the report to the general public as it may contain proprietary information that was redacted from the publicly distributed copy.
           EXECUTIVE SUMMARY 

        Audit of the MetLife Federal Dental Plan as Administered by the Metropolitan Life 

                        Insurance Company for Contract Years 2009 through 2013 

Report No. 1J-0F-00-14-075          Combined Federal Campaigns                        June 2, 2015




Why Did We Conduct the Audit?            What Did We Find?

The main objective of the audit was to   We determined that the Plan needs to strengthen its procedures and
determine if the costs charged to the    controls related to performance guarantees, administrative
Federal Employees Dental and Vision      expenses, and claims processing. Our audit identified three areas
Insurance Program and services           requiring improvement.
provided to MetLife Federal Dental
Plan (Plan) subscribers were in          1.	 Performance Guarantees – The Plan’s 2009 through 2013
accordance with the terms of the             annual performance results were inaccurately reported to OPM
Metropolitan Life Insurance                  due to calculation errors.
Company’s (MetLife) contract with        2.	 Administrative Expenses – The Plan’s administrative expenses
the U.S. Office of Personnel                 reported in its 2009 through 2013 certified annual accounting
Management and Federal regulations.          statements were understated by $1,610,920.
                                         3.	 Claims Processing – The Plan’s 2009 through 2013 benefit
What Did We Audit?                           brochures erroneously listed a covered benefit as being
                                             excluded.
The Office of the Inspector General
has completed a performance audit of
the responsibilities of the Plan in
regards to cash management,
performance guarantees, rate
proposals, administrative expenses,
and claims processing for contract
years 2009 through 2013. Our audit
was conducted from September 15
through 26, 2014, at MetLife’s offices
in Oriskany, New York and
Bridgewater, New Jersey. Additional
audit work was completed at our
offices in Washington, D.C. and
Cranberry Township, Pennsylvania.


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

Act 	        Federal Employee Dental and Vision Benefits Enhancement Act of
             2004
ADA          A
             	 merican Dental Association
Contract 	   Contract Number OPM-06-00060-6
FAR 	        Federal Acquisition Regulation
FEDVIP 	     Federal Employees Dental and Vision Insurance Program
MetLife 	    Metropolitan Life Insurance Company
OIG 	        Office of the Inspector General
OPM 	        U.S. Office of Personnel Management
Plan 	       MetLife Federal Dental Plan
PPA 	        Prior Period Adjustment
SIU 	        Special Investigation Unit




                                  ii
IV. MAJOR CONTRIBUTORS  TO THIS REPORT
          TABLE OF CONTENTS

                                                                                                                               Page 

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


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


I.	     INTRODUCTION AND BACKGROUND.................................................................1


II.	    OBJECTIVES, SCOPE, AND METHODOLOGY ...................................................2 


III.	   AUDIT FINDINGS AND RECOMMENDATIONS..................................................6


        A. CASH MANAGEMENT ..........................................................................................6 


        B. PERFORMANCE GUARANTEES .........................................................................6 

           1. Inaccurate Performance Reporting .....................................................................6 


        C. RATE PROPOSALS ................................................................................................7 


        D. ADMINISTRATIVE EXPENSES............................................................................8 

           1. Misstated Expenses in the Annual Accounting Statements ................................8 


        E. CLAIMS PROCESSING .........................................................................................10 

           1. Error in Benefit Brochures.................................................................................10 


IV.	    MAJOR CONTRIBUTORS TO THIS REPORT ....................................................12 


        APPENDIX...................................................................................................................13


        REPORT FRAUD, WASTE, AND MISMANAGEMENT ......................................15 

 IV. I.MAJOR
        INTRODUCTION
             CONTRIBUTORS
                     AND BACKGROUND
                          TO THIS REPORT

Introduction
This final report details the findings and conclusions resulting from our audit of the MetLife
Federal Dental Plan (Plan) as administered by the Metropolitan Life Insurance Company
(MetLife) for contract years 2009 through 2013. The audit was performed by the U.S. Office of
Personnel Management’s (OPM) Office of the Inspector General (OIG), as authorized by the
Inspector General Act of 1978, as amended.

Background
The Federal Employees Dental and Vision Insurance Program (FEDVIP) was created on
December 23, 2004, by the Federal Employee Dental and Vision Benefits Enhancement Act of
2004 (Act). The Act provided for the establishment of programs under which supplemental
dental and vision benefits are made available to Federal employees, retirees, and their
dependents.

OPM has the overall responsibility to maintain the FEDVIP website, act as a liaison and
facilitate the promotion of FEDVIP through Federal agencies, be responsive to the carrier’s
requests for information and assistance, and perform functions similar to an insurance
commission to include the review and approval of rates, forms, and education material.

OPM’s Contracting Office contracts with MetLife to administer the Plan, which provides dental
insurance coverage to Federal beneficiaries. MetLife’s responsibilities under Contract Number
OPM-06-00060-6 (the Contract) are carried out at its offices located in Oriskany, New York and
Bridgewater, New Jersey. Section I.11 of the Contract includes a provision, Inspection of
Services – Fixed Price, which allows for audits of the Plan’s operations. Compliance with the
laws and regulations applicable to the FEDVIP, including establishing and maintaining a system
of internal controls, is the responsibility of MetLife’s management.

Our previous audit of the Plan (Report Number 2A-II-00-09-019), dated January 12, 2010,
covered testing of application controls over claim benefit payments, premiums, and cash
management activities for contract years 2007 and 2008. All recommendations from the prior
audit have been satisfactorily resolved.

The initial results of our current audit were discussed with plan officials during our exit
conference on September 25, 2014. A draft report was provided to MetLife for review and
comment on December 22, 2014. MetLife’s response to the draft report was considered in the
preparation of this final report and is included as an Appendix.




                                               1                           Report No. 1J-0F-00-14-075
 IV. MAJOR CONTRIBUTORS
 II. OBJECTIVES, SCOPE, AND TO THIS REPORT
                            METHODOLOGY

Objectives
The primary purpose of this audit was to obtain reasonable assurance that MetLife has
administered the Plan in compliance with the Contract.

Our audit objectives included:

   Cash Management
      	 To determine if the premium earned, as reported in the Plan’s annual accounting
         statements, reconciled to the monthly premium invoices.
      	 To determine if the premium received, as documented in the Plan’s premium received
         schedule, reconciled to the Plan’s bank statements and the funds transfer reports
         generated by BENEFEDS (an enrollment and premium processing system for
         FEDVIP).
      	 To determine if the paid claims disbursements, as reported in the Plan’s annual
         accounting statements, reconciled to the Plan’s bank statements and operational claim
         reports.

   Performance Guarantees
      	 To determine if the Plan’s performance results that were reported to OPM reconcile,
         used the appropriate measurement, and were accurately supported by source
         documentation.

   Rate Proposals
      	 To determine if the Plan’s enrollment and claims, that were reported to OPM as part
         of the annual rate renewal process, were accurate and supported by source
         documentation.

   Administrative Expenses
     	 To determine if the Plan’s administrative expenses were actual, allocable, reasonable,
        and allowable in compliance with the Contract and Subpart 31.2 of the Federal
        Acquisition Regulation (FAR 31.2).

   Claims Processing
       To determine if the Plan paid claims in accordance with the terms of the Contract.
       To determine if claim overpayment recoveries were processed correctly in the Plan’s
         claims system and reported to OPM in the Plan’s annual accounting statements.




                                               2	                          Report No. 1J-0F-00-14-075
       	 To determine if fraud recoveries by the Plan’s Special Investigation Unit (SIU) were
          processed correctly in the Plan’s claims system and reported to OPM in the Plan’s
          annual accounting statements.

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.

The audit covered contract years 2009 through 2013. MetLife administers the Plan from its
offices located in Oriskany, New York and Bridgewater, New Jersey. The audit fieldwork was
conducted at MetLife’s offices from September 15 through 26, 2014. Additional audit work was
completed at our Cranberry Township, Pennsylvania, and Washington, D.C. offices.

In conducting our 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 audit testing, nothing came to our attention to cause us to doubt its reliability. We believe
that the data was sufficient to achieve our audit objectives.

We considered the Plan’s internal control structure in planning the audit procedures. We gained
an understanding of the management procedures and controls to the extent necessary to achieve
our audit objectives. We relied primarily on substantive testing rather than tests of internal
controls. The audit included tests of accounting records and other auditing procedures we
considered necessary to determine compliance with the Contract 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. Since our audit would not necessarily disclose all significant matters in
the internal control structure, we do not express an opinion on MetLife’s system of internal
controls taken as a whole.

To accomplish our audit objectives, we performed the following procedures:

   Cash Management
      	 We verified the calculations used by the Plan to determine the required premium for
         each Plan option and rating region. Then, we compared those amounts to what was
         reported to OPM in the Plan’s 2009 through 2013 annual accounting statements.



                                                 3	                           Report No. 1J-0F-00-14-075
      Additionally, we reconciled the premium rates that were used to calculate the billings
      to the rates provided by OPM’s Office of Actuaries for contract years 2009 through
      2013.
   	 For contract years 2009 through 2013, we judgmentally selected a sample of 20
      weeks of premiums received (totaling $141,210,122 out of a universe of
      $1,728,490,312) from the Plan’s premiums received schedule and reconciled the cash
      deposits to supporting bank statements and the funds transfer reports generated by
      BENEFEDS. Our sample methodology included selecting the two highest weeks of
      premium received and the two lowest weeks of premium received from each contract
      year.
   	 For contract years 2009 through 2013, we judgmentally selected a sample of 30 batch
      transactions for claim payments totaling $13,333,911 (out of a universe of 80,281
      transactions totaling $1,492,193,744) from the Plan’s financial system and reconciled
      the transactions to the Plan’s bank statements and operational claims reports. Our
      sample methodology included selecting the three highest dollar and three lowest
      dollar transactions from each contract year.

Performance Guarantees
    We reviewed all of the performance guarantee results submitted by the Plan to OPM
      for contract years 2009 through 2013 by reconciling performance data to source
      documentation, ensuring that the source documentation was appropriate for each
      measuring method, and verifying the calculations the Plan used to determine its
      results.

Rate Proposals
    We reviewed the rate proposals for the two most recent contract years under review
      (2012 and 2013) to verify that the enrollment and claims reported to OPM reconciled
      to source documentation.

Administrative Expenses
   For the most recent contract year under review (2013), we selected a sample of 100
     transactions totaling $926,893 (out of a universe of 2,286 transactions totaling
     $8,396,353) from the Plan’s general ledger and reconciled the transactions to
     supporting documentation to determine if they were in compliance with FAR 31.2.
     Our sample methodology included a random sample of 75 accounts payable
     transactions (totaling $919,859) from the general ledger and a judgmental sample of
     the 25 highest dollar transactions (totaling $7,034) that were charged to the two
     natural accounts for travel, meals, and entertainment.
   For contract years 2009 through 2013, we selected a judgmental sample of 17 cost
     centers (out of a universe of 43 cost centers) that the Plan used to charge expenses to


                                            4	                          Report No. 1J-0F-00-14-075
          the FEDVIP and submitted a questionnaire to Plan personnel to certify each cost
          center’s allowability, allocability, and reasonableness. Our sample methodology
          included selecting all 10 indirect cost centers for corporate overhead and all 7 direct
          cost centers that were listed in the Plan’s general ledger but not included in the
          “approved” cost center list provided by the Plan during pre-audit.
       	 For contract years 2009 through 2013, we selected a judgmental sample of 17 natural
          accounts (out of a universe of 230 natural accounts) that the Plan used to charge
          expenses to the FEDVIP and submitted a questionnaire to Plan personnel to certify
          each natural account’s allowability, allocability, and reasonableness. Our sample
          methodology included selecting all natural accounts with descriptions that appear to
          contain unallowable costs under the terms of the Contract and FAR 31.2.
       	 Using the Plan’s cost accounting reports for 2013, the most recent contract year under
          review, we reconciled all out-of-system adjustments for direct expenses to supporting
          documentation in order to determine if the adjustments were compliant with
          FAR 31.2.

   Claims Processing
      	 For the most recent contract year under review (2013), we judgmentally selected a
         sample of 120 claims totaling $769,971 (out of a universe of 2,813,054 claims
         totaling $346,706,726) from the Plan’s claims system to verify that the claims were
         processed in accordance with the terms of the Contract and the Plan’s policies and
         procedures. Our sample methodology included selecting the 10 highest paid claims
         from each month.
      	 For the most recent contract year under review (2013), we judgmentally selected a
         sample of 25 claim overpayment recoveries totaling $44,470 (out of a universe of
         2,854 claim overpayment recoveries totaling $571,384) from the Plan’s claims system
         to verify that the recoveries were properly supported and credited to the FEDVIP.
         Our sample methodology was based on the 25 highest dollar recoveries.
      	 We reviewed all SIU claim recoveries that the Plan reported to OPM in its SIU
         activity report for contract year 2013, the most recent contract year under review, to
         verify that the recoveries were properly supported and credited to the FEDVIP.

The samples mentioned above, 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.




                                                5	                          Report No. 1J-0F-00-14-075
    IV. AUDIT
  III.   MAJOR  CONTRIBUTORS
              FINDINGS       TO THIS REPORT
                       AND RECOMMENDATIONS

A. CASH MANAGEMENT

  The results of our review showed that the Plan had sufficient policies and procedures in place to
  ensure that premiums earned, premiums received, and claim payments were properly accounted
  for and reported to OPM.

B. PERFORMANCE GUARANTEES

  1. Inaccurate Performance Reporting                                                   Procedural

     The Plan’s 2009 through 2013 annual performance results were inaccurately reported to
     OPM due to calculation errors.

     Part I, Section C (VI)(B)(28) of the Contract lists the Plan’s proposed performance
     guarantees with general descriptions and measuring methods for each guarantee.
     Additionally, it states, “MetLife and OPM will need to mutually agree upon appropriate
     performance guarantees and MetLife’s expectation is that such
     guarantees would be set forth in a written agreement between
     MetLife and OPM.”                                                               The Plan
                                                                                   inaccurately
                                                                               reported its annual
     To satisfy the Contract’s requirement for a written agreement,                performance
     MetLife submits to OPM an annual letter certifying the Plan’s               results to OPM.
     performance guarantees for the current contract year, along with a
     proposal for the next contract year’s guarantees and goals, which is
     approved by OPM. We reviewed the 2008 (to identify the 2009 proposed guarantees and
     goals) through 2012 performance guarantee letters and determined that the guarantees and
     goals were the same for each year. The guarantees were a blend of quantitative and
     qualitative measures, such as claims processing accuracy, call center abandonment rate, and
     provider network development. There were a total of 10 guarantees (8 quantitative and 2
     qualitative measures) for each year.

     We reconciled the Plan’s 2009 through 2013 annual performance results, as reported to
     OPM, to source documentation to determine if the results were accurate. We found that the
     Plan’s performance met or exceeded the goals for all guarantees for each year. However, of
     the 40 guarantees with quantitative measures (8 per year for five years), we identified 20
     instances, across all years, where the Plan’s reported results differed from the source
     documentation. These variances ranged from a fraction of a percentage up to one percent and



                                                  6                            Report No. 1J-0F-00-14-075
     included performance areas such as payment accuracy, claim disposition, call center services,
     and customer satisfaction surveys.

     Upon notification of the reconciliation variances, MetLife stated, “A calculation error on an
     internal business unit spreadsheet resulted in minor discrepancies between the performance
     result and the number reported to OPM. The current process is for the monthly results to be
     compiled in a spreadsheet for quarterly reporting to OPM. The results are reviewed against
     the data in the spreadsheet before reporting to OPM.” Therefore, MetLife was reporting
     annual performance results using rounded monthly and quarterly summary data instead of
     directly tabulating its results from source documentation.

     We acknowledge that the discrepancies were minor in amount. However, should MetLife
     continue calculating annual performance from rounded numbers, there is a risk that it could
     misreport the results for a guarantee that it failed to achieve.

     Recommendation 1

     We recommend that the Contracting Officer require MetLife to update its policies and
     procedures to ensure that the Plan’s annual performance results are calculated from raw data
     and not the monthly and quarterly results that have been rounded.

     MetLife’s Comments:

     MetLife agrees with the recommendation and has updated its procedures accordingly.

     OIG Comments:

     We obtained and reviewed the Plan’s updated procedures and believe they are sufficient to
     address our recommendation, pending the Contracting Officer’s approval.

C. RATE PROPOSALS

  The results of our review showed that the Plan had sufficient policies and procedures in place to
  ensure that its claims and enrollment data reported to OPM as part of the annual rate proposal
  process was accurate.




                                                  7                            Report No. 1J-0F-00-14-075
D. ADMINISTRATIVE EXPENSES

  1. Misstated Expenses in the Annual Accounting Statements                              Procedural

      The Plan’s administrative expenses reported in its 2009 through 2013 certified annual
      accounting statements were understated by $1,610,920.

      Part IV, Section K.9(a) of the Contract requires MetLife to prepare and submit to OPM an
      annual accounting statement summarizing the financial results of its FEDVIP operations.

      Additionally, Part IV, Section K.9(b)(1) of the Contract states that administrative expenses
      incurred and reported to OPM must be in accordance with Subpart 31.2 of the FAR and the
      terms of the Contract.

      Finally, Part IV, Section K.9(a)(3) of the Contract states that, based on the results of a
      government audit, the Plan’s annual accounting statements should be adjusted by amounts
      found to be improperly allocated, unallowable, overpaid, or underpaid.

     We conducted a review of the Plan’s administrative expenses reported to OPM for 2009
     through 2013, including samples of its general ledger transactions, cost centers, natural
     accounts, and out-of-system adjustments, to determine if the expenses were allowable in
    Non-compliance 
       accordance with Subpart 31.2 of the FAR and the terms of the Contract.
     with the FAR 
        While completing our review, MetLife provided us with a financial
       resulted in         analysis it conducted internally, in late 2013 and early 2014 (revised in
       MetLife’s           January 2015 in response to our draft report), on its 2009 through 2013
    understating its       administrative expenses. MetLife’s analysis identified $2,111,715 in
   2009 through 2013
                           expenses that were unallowable, unallocable, and/or unreasonable, as
   annual accounting
     statements by 
       well as $3,722,635 in allowable expenses that were incurred but not
      $1,610,920. 
        charged or reported to OPM (net understatement of $1,610,920). We
                           reviewed the details supporting MetLife’s analysis, including the
     calculations, allocation methodology, and additional shared cost centers, to determine if the
     information presented was reliable. We also identified $316,714 in unallowable costs from
     our review of a sample of expenses, which matched MetLife’s analysis. Based on these
     reviews, we found MetLife’s analysis to be reliable, thereby requiring prior period
     adjustments (PPAs) to be reported to OPM for all five years.

      MetLife reported that the misstated expenses were the result of not adhering to the
      requirements of FAR 31.2. Additionally, MetLife stated that it did not file a PPA for the
      misstated annual accounting statements because, “Based on the financial reporting format in
      place prior to 2014, and due to the immaterial amounts of these items and the fact that they



                                                   8                           Report No. 1J-0F-00-14-075
had no impact on the premium rates for the program, MetLife did not believe it was required
to send PPAs to the Contracting Officer.” Finally, MetLife stated, “In May 2014, OPM
emailed MetLife a new income statement format for the certified financial statements which
included a PPA exhibit. Accordingly, MetLife now has a procedure in place where the
certified financial statements are reviewed and the PPA exhibit is updated for any prior
period adjustments that are found.”

As a result of understated administrative expenses in MetLife’s 2009 through 2013 certified
annual accounting statements, OPM relied on financial information that was inaccurate when
approving each year’s premium rates.

Recommendation 2

We recommend that the Contracting Officer direct MetLife to revise its cost accounting
policies and procedures to ensure compliance with FAR 31.2 and the terms of the Contract.
If MetLife is unsure of how to account for certain expenses or a provision of the FAR, it
should obtain guidance from the Contracting Officer.

MetLife’s Comments:

MetLife agrees with the recommendation and stated that its procedures have been updated.

OIG Comments:

We obtained and reviewed the Plan’s updated policies and procedures and believe they are
sufficient to address our recommendation, pending the Contracting Officer’s approval.

Recommendation 3

We recommend that the Contracting Officer direct MetLife to file PPAs for the Plan’s
misstated expenses reported to OPM in the 2009 through 2013 certified annual accounting
statements.

MetLife’s Comments:

MetLife agrees with the recommendation and will file a PPA exhibit with the Contracting
Office for the 2009 through 2013 plan years.




                                           9                           Report No. 1J-0F-00-14-075
     OIG Comments:

     We obtained and reviewed the Plan’s PPA exhibit and believe it is sufficient to address our
     recommendation, pending the Contracting Officer’s approval.

     Recommendation 4

     We recommend that the Contracting Officer review MetLife’s PPA procedures to verify
     compliance with OPM’s reporting requirements and to ensure that unallowable expenses are
     removed and allowable expenses are reported.

     MetLife’s Comments:

     MetLife agrees with the recommendation and will submit the 2014 FEDVIP certified
     financial statements using the new format provided by OPM. Additionally, it has instituted
     new procedures to ensure that the financial statements are reviewed and updated for any
     PPAs.

     OIG Comments:

     We obtained and reviewed the Plan’s updated procedures and believe they are sufficient to
     address our recommendation, pending the Contracting Officer’s approval.

E. CLAIMS PROCESSING

  1. Error in Benefit Brochures                                                         Procedural

     The Plan’s 2009 through 2013 benefit brochures erroneously excluded coverage for an
     allowable benefit, American Dental Association (ADA) code D6057, related to custom
     abutments.

     The Plan’s benefit brochures state, “This brochure is the official statement of benefits. No
     oral statement can modify or otherwise affect the benefits, limitations, and exclusions of this
     brochure.” Section 5 of the brochure identifies covered and non-covered dental services and
     supplies. For the years in question, the brochure incorrectly listed ADA code D6057 as a
     non-covered service.

     We reviewed a sample of 120 claims paid in 2013 to reconcile information in MetLife’s
     claims system to supporting documentation, including ADA code eligibility, payment
     accuracy, and member coverage eligibility. Our review identified 22 claims with payments



                                                 10                            Report No. 1J-0F-00-14-075
made for ADA code D6057, which was listed in the benefit brochures as a non-covered
service. We reviewed MetLife’s rate negotiation letters submitted to OPM for 2009 through
2013 and determined that ADA code D6057 was added as a covered benefit for 2009 and
therefore should have been listed as a covered benefit in the brochures.
MetLife confirmed that ADA code D6057 was a covered benefit since
2009 and it was correctly programmed as a covered service in its
                                                                           The Plan’s 2009
claims system. When we pointed out the error, MetLife agreed and
                                                                            through 2013
explained that it also found the error after publishing the 2013 benefit  benefit brochures
brochure, which it corrected for 2014. We reviewed the Plan’s 2014        did not accurately
benefit brochure and verified that the code was listed as a covered      reflect benefits that
benefit.                                                                    were covered.

As a result of listing ADA code D6057 as a non-covered service in its 2009 through 2013
benefit brochures, members enrolled in the Plan and providers administering services to Plan
members likely thought that this service was not covered and may have avoided the
procedure.

Recommendation 5

We recommend that the Contracting Officer direct MetLife to implement policies and
procedures for updating the Plan’s annual benefit brochure to ensure that it accurately lists
covered and non-covered benefits prior to publication.

MetLife’s Comments:

MetLife agrees with the recommendation and has updated its policies and procedures.

OIG Comments:

We obtained and reviewed the Plan’s updated policies and procedures and believe they are
sufficient to address our recommendation, pending the Contracting Officer’s approval.




                                            11                            Report No. 1J-0F-00-14-075
 IV. MAJOR CONTRIBUTORS TO THIS REPORT

Special Audits Group

                   , Auditor-In-Charge

                , Auditor




                 , Group Chief,               


              , Senior Team Leader 





                                         12       Report No. 1J-0F-00-14-075
                                                                                      Appendix


200 Park Avenue
40th Floor
                                                                            MetLife
New York, NY 10166

March 17, 2015


Group Chief                                                             Vice President
Special Audits Group                                                    National Accounts
1900 E Street, NW
Washington, DC 20415

Re: Audit Report Number 1J-0F-00-14-075


The following is in response to the five recommendations contained in the draft report dated
December 22, 2014.

Recommendation 1

MetLife is in agreement with the recommendation. MetLife has updated its procedures
accordingly.

Recommendation 2

MetLife is in agreement with the recommendation. MetLife has updated its policies and
procedures accordingly.

Recommendation 3

MetLife is in agreement with the recommendation. MetLife will file a Prior Period Adjustment
(PPA) exhibit with the Contracting Officer covering the 2009-2013 plan years.

Recommendation 4

MetLife is in agreement with this recommendation. MetLife will be submitting the 2014
FEDVIP certified financial statements using the new format that OPM sent to MetLife in May
2014. MetLife has instituted a procedure whereby the certified financial statements are reviewed
and the PPA exhibit is updated for any prior period adjustments that are found.


                                               13                           Report No. 1J-0F-00-14-075
Recommendation 5

MetLife is in agreement with the recommendation. MetLife has updated its policies and
procedures accordingly.

Sincerely,


                 


Copy to:                    (Metlife);                      (Metlife) 





                                             14                           Report No. 1J-0F-00-14-075
                                                                                                                       



                                     Report Fraud, Waste, and 

                                         Mismanagement 

                                               Fraud, waste, and mismanagement in
                                            Government concerns everyone: Office of
                                                the Inspector General staff, agency
                                             employees, and the general public. We
                                           actively solicit allegations of any inefficient
                                                 and wasteful practices, fraud, and
                                            mismanagement related to OPM programs
                                           and operations. You can report allegations
                                                       to us in several ways:


                      By Internet:              http://www.opm.gov/our-inspector-general/hotline-to-
                                                report-fraud-waste-or-abuse


                       By Phone:                Toll Free Number:                              (877) 499-7295
                                                Washington Metro Area:                         (202) 606-2423


                         By Mail:               Office of the Inspector General
                                                U.S. Office of Personnel Management
                                                1900 E Street, NW
                                                Room 6400
                                                Washington, DC 20415-1100
                   
                                                                                                                       
                                                                                                                       




                                                          -- CAUTION --
This audit report has been distributed to Federal officials who are responsible for the administration of the audited program. This audit report
may contain proprietary data which is protected by Federal law (18 U.S.C. 1905). Therefore, while this audit report is available under the Freedom
of Information Act and made available to the public on the OIG webpage (http://www.opm.gov/our-inspector-general), caution needs to be exercised
before releasing the report to the general public as it may contain proprietary information that was redacted from the publicly distributed copy.

                                                                       15                                        Report No. 1J-0F-00-14-075