oversight

Multi-State Plan Program Operations at Blue Cross Blue Shield of Michigan

Published by the Office of Personnel Management, Office of Inspector General on 2016-02-16.

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

                 MULTI-STATE PLAN PROGRAM OPERATIONS
                 AT BLUE CROSS BLUE SHIELD OF MICHIGAN
                                                Report Number 1M-0C-00-15-052
                                                       February 16, 2016




                                                                 -- 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 

                               Multi-State Plan Program Operations at 

                                Blue Cross Blue Shield of Michigan 

Report No. 1M-0C-00-15-052                                                                   February 16, 2016




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

The primary objective of our audit      Our audit of the 2014 MSP Program operations at BCBS of
was to obtain reasonable assurance      Michigan disclosed no significant findings pertaining to fraud and
that Blue Cross Blue Shield of          abuse reporting, rates and benefits, enrollment, contract quality
                                        assurance, and data and information security. Accordingly, this
Michigan (BCBS of Michigan)
                                        final report contains no recommendations.
complied with the provisions of
Contract MSPP-2014 and applicable
Federal regulations for contract year
2014.

What Did We Audit?
                                        .
The Office of the Inspector General
has completed a performance audit of
the Multi-State Plan (MSP) Program
operations at BCBS of Michigan.
Our audit covered contract year 2014
and was conducted in August 2015 at
BCBS of Michigan’s offices in
Detroit, Michigan.




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

Affordable Care Act   The Patient Protection and Affordable Care Act
Association           Blue Cross Blue Shield Association
BCBS                  Blue Cross Blue Shield
BCBS of Michigan      Blue Cross Blue Shield of Michigan
HICS                  Healthcare Insurance Casework System
HIPAA                 Health Information Portability and Accountability Act
MSP                   Multi-State Plan
OIG                   Office of the Inspector General
OPM                   U.S. Office of Personnel Management
PII                   Personally Identifiable Information




                                      ii
IV. MAJOR CONTRIBUTORS TO THIS REPORT
          TABLE OF CONTENTS

                                                                                                                         Page 

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


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


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


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


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


  IV.	    MAJOR CONTRIBUTORS TO THIS REPORT ....................................................6 


          REPORT FRAUD, WASTE, AND MISMANAGEMENT

IV. MAJOR CONTRIBUTORS
            I. BACKGROUND
                       TO THIS REPORT

This final report details the results of our performance audit of the Multi-State Plan (MSP)
Program operations at Blue Cross Blue Shield of Michigan (BCBS of Michigan). The audit
covered contract year 2014 and was conducted at BCBS of Michigan’s offices in Detroit,
Michigan. It was performed by the U.S. Office of Personnel Management's (OPM) Office of the
Inspector General (OIG), as established by the Inspector General Act of 1978, as amended.

The audit was conducted pursuant to the provisions of Contract MSPP-2014; The Patient
Protection and Affordable Care Act (Affordable Care Act); Title 45 Code of Federal Regulations
Chapter VIII, Part 800; and other applicable Federal regulations. Compliance with the contract
as well as laws and regulations applicable to the MSP Program is the responsibility of the Blue
Cross Blue Shield Association (Association) and BCBS of Michigan’s management.
Additionally, BCBS of Michigan’s management is responsible for establishing and maintaining a
system of internal controls and procedures. Due to inherent limitations in any system of internal
controls, errors or irregularities may nevertheless occur and not be detected.

The MSP Program was established by Section 1334 of the Affordable Care Act. Under the
Affordable Care Act, OPM was directed to contract with private health insurers to offer MSP
products in each state and the District of Columbia. MSP products may be phased in over four
years, with MSP products in at least 31 states in the first year; at least 36 states the second year;
at least 44 states the third year; and all 50 states and the District of Columbia in the fourth year.
OPM negotiates contracts with MSP Program Issuers, including rates and benefits, in
consultation with states and marketplaces. In addition, OPM will monitor the performance of
MSP Program Issuers and oversee compliance with legal requirements and contractual terms.
OPM’s office of National Healthcare Operations has overall responsibility for program
administration.

The Association, on behalf of participating Blue Cross Blue Shield (BCBS) plans, entered into a
contract with OPM to participate in the MSP Program. In accordance with requirements for the
first year of the MSP Program contract, participating plans offered 154 MSP options in 30 states
and the District of Columbia. BCBS of Michigan was 1 of 35 BCBS plans, or State-level
issuers, participating in the MSP Program in 2014.

The Association is a national federation of 37 independent, community-based and locally
operated BCBS companies. The Association grants licenses to independent companies to use the
trademarks and names in exclusive geographic areas. It operates and offers health care coverage
in all 50 states, the District of Columbia, and Puerto Rico, covering nearly 105 million




                                              1                               Report No. 1M-0C-00-15-052
Americans, and nationally, the Association contracts directly with more than 96 percent of
hospitals and 92 percent of professional providers.

BCBS of Michigan is a nonprofit mutual insurance company and is an independent licensee of
the Association. It is the largest health insurer in Michigan, serving 4.5 million people in the
state and an additional 1.3 million in other states. In addition to offering MSP options, BCBS of
Michigan offers traditional health plans, wellness based plans, and dental and vision plans.

This is our first audit of BCBS of Michigan’s MSP Program. We selected BCBS of Michigan
because the State of Michigan operates a partnership marketplace with the Federal Government.

The preliminary results of this audit were discussed with BCBS of Michigan and the Association
officials at an exit conference and in subsequent correspondence. Since the audit concluded that
BCBS of Michigan’s operation of the MSP Program was in accordance with Contract MSPP-
2014 and applicable laws and regulations, we did not issue a draft report.

We would like to convey our appreciation to BCBS of Michigan and the Association for
accommodating us and cooperating fully throughout the entire audit process.




                                            2                              Report No. 1M-0C-00-15-052
IV. OBJECTIVES,
II.  MAJOR CONTRIBUTORS
                SCOPE, ANDTO THIS REPORT
                          METHODOLOGY

 Objective
 The primary objective of this performance audit was to obtain reasonable assurance that BCBS
 of Michigan was in compliance with the provisions of its contract with OPM and applicable laws
 and regulations governing the MSP Program for contract year 2014. Specifically, we reviewed
 fraud and abuse reporting, rates and benefits, enrollment, contract quality assurance, and data
 and information security.

 Scope and Methodology
 We conducted this performance audit in accordance with generally accepted government
 auditing standards. Those standards required that we plan and perform the audit to obtain
 sufficient, appropriate evidence to provide a reasonable basis for our findings and conclusions
 based on our audit objectives. We believe that the evidence obtained provides a reasonable basis
 for our findings and conclusions based on our audit objectives.

 The audit fieldwork was performed from August 3, 2015 through August 7, 2015, at BCBS of
 Michigan’s offices in Detroit, Michigan. Additional fieldwork was conducted at our Cranberry
 Township, Pennsylvania field office.

 We obtained an understanding of BCBS of Michigan’s internal control structure, but we did not
 use this information to determine the nature, timing, and extent of our audit procedures. Our
 review of internal controls was limited to the procedures BCBS of Michigan had in place for
 fraud and abuse reporting; rate developments; ensuring compliance with required health and
 pharmacy benefits; processing enrollment; contract quality assurance; and compliance with the
 Health Insurance Portability and Accountability Act (HIPAA).

 Specifically, we obtained and reviewed BCBS of Michigan’s fraud and abuse report that was
 provided to OPM to determine its compliance with applicable criteria.

 To gain an understanding of BCBS Michigan’s internal controls over rates and benefits, we
 reviewed its policies and procedures related to its rate development. We reviewed
 documentation to ensure that the required essential health benefits and pharmacy benefits were
 covered. Additionally, we interviewed BCBS of Michigan personnel and reviewed
 documentation to determine why there was a rate discrepancy on the 2014 Marketplace and if the
 allowable age factor was used to determine the 2014 rates.

 We also interviewed BCBS of Michigan personnel and reviewed policies and procedures over its
 enrollment processing and reconciliations. We then tested a judgmental sample of Health



                                            3                             Report No. 1M-0C-00-15-052
Insurance Casework System (HICS) cases for auto-enrollment errors, updates, cancellations, and
terminations to determine if they were processed timely and accurately. Our judgmental sample
included 35 MSP HICS cases out of a universe of       MSP HICS cases from 2014. Based on 14
HICS case subcategories, we judgmentally selected 10 samples from subcategories that
contained a universe of 400 or more HICS cases, 20 samples from 4 subcategories that contained
a universe of 40 to 399 HICS cases, and 5 nomenclature samples from 5 subcategories that
contained less than 40 HICS cases. The results from our samples were not projected to the sample
universe. We performed walkthroughs on manual enrollment processes, such as the process for
addressing Direct Enrollment 834 errors, Rate Discrepancy Reports, Critical Bill Error Reports,
and the Write-Off Reports for 834s that do not automatically load into BCBS of Michigan’s
enrollment system. Lastly, we determined how BCBS of Michigan notifies new enrollees of
their effective date of coverage.

Additionally, we reviewed the official Quality Assurance Report that was provided to OPM to
verify that it contains all required elements.

To gain an understanding of BCBS of Michigan’s internal controls over compliance with the
HIPAA requirements for Standards for Electronic Transactions, we obtained and reviewed its
policies and procedures and the 2014 incident matrix. Additionally, we obtained and reviewed
the corrective actions contained in a previous external audit to ensure that BCBS of Michigan
has implemented steps to minimize the risk of PII (Personally Identifiable Information) being
mishandled.

In conducting the audit, we relied to varying degrees on computer-generated data provided by
BCBS of Michigan and the Association. We did not verify the reliability of the data generated
by the various information systems involved. However, nothing came to our attention during our
audit utilizing the computer-generated data to cause us to doubt its reliability.




                                           4                             Report No. 1M-0C-00-15-052
                 III. RESULTS OF THE AUDIT

Overall, we concluded that BCBS of Michigan was in compliance with the provisions of its
contract with OPM and applicable laws and regulations governing the MSP Program for contract
year 2014. Specifically, the results of our reviews related to fraud and abuse reporting, rates and
benefits, enrollment, contract quality assurance, and data and information security showed that
BCBS of Michigan:

    	 reported its fraud and abuse and contract quality assurance metrics in accordance with
       Contract MSPP-2014;

    	 offered MSP options that covered the appropriate essential health benefits and pharmacy
       benefits, quickly resolved a tobacco rating factor discrepancy on the Marketplace that
       occurred during open enrollment and had a low to no impact on MSP members, and
       appropriately applied the allowable age factor to its 2014 rates;

    	 accurately processed a sample of HICS cases, performed enrollment reconciliations on a
       regular basis, had policies and procedures for the manual enrollment processes in place,
       and implemented corrective actions to address notifying enrollees of their effective date
       of coverage; and

    	 had policies and procedures in place to protect PII, and responded to all of the
       recommendations from a prior external audit report with corrective action plans to
       address the issues.

Because our audit disclosed no findings, this final report contains no recommendations.




                                             5	                             Report No. 1M-0C-00-15-052
IV. MAJOR CONTRIBUTORS TO THIS REPORT

COMMUNITY-RATED AUDITS GROUP

           , Auditor-in-Charge

            , Lead Auditor




           , Senior Team Leader

            , Group Chief




                                  6   Report No. 1M-0C-00-15-052
                                                                                                                         



                                       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.

                                                                                                               Report No. 1M-0C-00-15-052