oversight

Audit of the Multi-State Plan Program Operations at Arkansas Blue Cross Blue Shield

Published by the Office of Personnel Management, Office of Inspector General on 2017-04-14.

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 MULTI-STATE PLAN PROGRAM
              OPERATIONS AT ARKANSAS BLUE CROSS BLUE
                              SHIELD


                                                 Report Number 1M-0F-00-16-058
                                                         April 14, 2017



                                                                  -- CAUTION --
This report has been distributed to Federal officials who are responsible for the administration of the subject program. This non-public version may
contain confidential and/or proprietary information, including information protected by the Trade Secrets Act, 18 U.S.C. § 1905, and the Privacy Act,
5 U.S.C. § 552.a. Therefore, while a redacted version of this report is available under the Freedom of Information Act and made publicly available on the
OIG webpage (http://www.opm.gov/our-inspector-general), this non-public version should not be further released unless authorized by the OIG.
                  EXECUTIVE SUMMARY
                                      Audit of the Multi-State Plan Program Operations at
                                                 Arkansas Blue Cross Blue Shield 

    Report No. 1M-0F-00-16-058                                                                                                                        April 14, 2017




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

    The primary objective of our audit                         Our audit of the 2015 MSP Program operations at ABCBS
    was to obtain reasonable assurance                         disclosed two procedural findings pertaining to enrollment.
    that Arkansas Blue Cross Blue Shield                       Specifically, we identified the following:
    (ABCBS) complied with the
    provisions of Contract                                          	 ABCBS did not accurately process a Healthcare Insurance
    MSP-BCBS-2015-02 (Contract) and                                    Casework System case.
    applicable Federal regulations for
    contract year 2015.                                             	 ABCBS’s automated system failed to send a Summary of
                                                                       Benefits and Coverage (SBC) to all enrollees and members
    What Did We Audit?                                                 from January to June 2015. In addition, ABCBS did not
                                                                       attempt to obtain valid addresses for members whose SBCs
    The Office of the Inspector General                                were subsequently sent and returned as undeliverable.
    has completed a performance audit of
    the Multi-State Plan (MSP) Program                         Our audit did not disclose any findings related to rates and benefits
    operations at ABCBS. Our audit of                          or contract quality assurance.
    ABCBS’s compliance with the 2015
    Contract and applicable regulations
    was conducted from August 29, 2016,
    through November 8, 2016, at
    ABCBS’s headquarters in Little
    Rock, Arkansas, and our offices in
    Cranberry Township, Pennsylvania,
    and Washington, D.C.


.

     _______________________
     Michael R. Esser
     Assistant Inspector General
     for Audits




                                                                                   i
            This report is non-public and should not be further released unless authorized by the OIG, because it may contain confidential and/or proprietary
                            information that may by protected by the Trade Secrets Act, 18 U.S.C. §1905, or the Privacy Act, 5 U.S.C. § 552.a.
                                                ABBREVIATIONS

        ABCBS                                    Arkansas Blue Cross Blue Shield
        Affordable Care Act                      The Patient Protection and Affordable Care Act
        Association                              Blue Cross Blue Shield Association
        BCBS                                     Blue Cross Blue Shield
        CIC                                      Change in Circumstance
        CFR                                      Code of Federal Regulations
        Contract                                 Contract MSP-BCBS-2015-02
        DHS                                      Department of Human Services
        HICS                                     Healthcare Insurance Casework System
        MSP                                      Multi-State Plan
        OIG                                      Office of the Inspector General
        OPM                                      U.S. Office of Personnel Management
        PHSA                                     Public Health Services Act
        SBC                                      Summary of Benefits and Coverage
        U.S.C.                                   United States Code




.
                                                                           ii
    This report is non-public and should not be further released unless authorized by the OIG, because it may contain confidential and/or proprietary
                    information that may be protected by the Trade Secrets Act, 18 U.S.C. § 1905, or the Privacy Act, 5 U.S.C. § 552a
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.        AUDIT FINDINGS AND RECOMMENDATIONS.................................................5

                 A. Enrollment................................................................................................................5

                        1. Healthcare Insurance Casework System ..........................................................5

                        2. Undeliverable Summary of Benefits and Coverage .........................................6

                 B. Rates and Benefits....................................................................................................8

                 C. Contract Quality Assurance .....................................................................................9

                 EXHIBIT A (Change in Circumstance Transactions Sample Selection Criteria and
                           Methodology)

                 EXHIBIT B (Healthcare Insurance Casework System Sample Selection Criteria and
                           Methodology)

                 EXHIBIT C (Formulary Inadequate Justification List Sample Selection Criteria and
                           Methodology)

                 APPENDIX (Blue Cross Blue Shield Association’s January 16, 2017, response to the
                           draft report)

                 REPORT FRAUD, WASTE, AND MISMANAGEMENT




 This report is non-public and should not be further released unless authorized by the OIG, because it may contain confidential and/or proprietary
                 information that may be protected by the Trade Secrets Act, 18 U.S.C. § 1905, or the Privacy Act, 5 U.S.C. § 552a.
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 Arkansas Blue Cross Blue Shield (ABCBS). The audit covered contract
year 2015. 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 MSP-BCBS-2015-02 (Contract);
the Patient Protection and Affordable Care Act (Affordable Care Act); Title 45 Code of Federal
Regulations (CFR), 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 ABCBS’s
management. Additionally, ABCBS’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. 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. Along with its participating licensees, the
Association offers 172 MSP options in 33 states and the District of Columbia. ABCBS was one
of 38 BCBS plans, or State-Level Issuers, participating in the MSP Program in 2015.

The Association is a national federation of 36 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
Americans. Nationally, the Association contracts directly with more than 96 percent of hospitals
and 92 percent of professional providers.

ABCBS is the largest health insurer in Arkansas. In addition to offering the three MSP options
(Bronze, Silver, and Gold) on the Federally Facilitated Marketplace, they offer health and dental

                                                                  1                                  Report No. 1M-0F-00-16-058
 This report is non-public and should not be further released unless authorized by the OIG, because it may contain confidential and/or proprietary
                 information that may be protected by the Trade Secrets Act, 18 U.S.C. § 1905, or the Privacy Act, 5 U.S.C. § 552a.
insurance policies for individuals and families with a full portfolio of health management tools
and resources designed to improve the health of all their members, no matter where they fall on
the care continuum. ABCBS is a not-for-profit mutual insurance company.

This is our first audit of ABCBS’s MSP Program. We selected ABCBS to audit based on the
fact that it has the largest enrollment and percentage of marketplace enrollment for an
independent BCBS state level issuer.

The preliminary results of this audit were discussed with ABCBS and the Association officials at
an exit conference and in subsequent correspondence. A draft report was also provided to the
Association for review and comment. The Association’s comments were considered in
preparation of this report and are included as an Appendix to the report.




                                                                 2                                  Report No. 1M-0F-00-16-058
This report is non-public and should not be further released unless authorized by the OIG, because it may contain confidential and/or proprietary
               information that may be protected by the Trade Secrets Act, 18 U.S.C. § 1905, or the Privacy Act, 5 U.S.C. § 552.a.
IV. OBJECTIVES,
II.  MAJOR CONTRIBUTORS
                SCOPE, ANDTO THIS REPORT
                          METHODOLOGY

 OBJECTIVES

 The primary objective of this performance audit was to obtain reasonable assurance that ABCBS
 was in compliance with the provisions of its Contract with OPM and applicable laws and
 regulations governing the MSP Program for contract year 2015. Specifically, we reviewed
 enrollment, rates and benefits, and contract quality assurance.

 SCOPE

 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 29, 2016, through November 8, 2016, at
 ABCBS’s headquarters in Little Rock, Arkansas, and our offices in Cranberry Township,
 Pennsylvania, and Washington, D.C.

 We obtained an understanding of ABCBS’s internal control structure and used this information
 to determine the nature, timing, and extent of our audit procedures. Our review of internal
 controls was limited to the procedures that ABCBS had in place for enrollment processing,
 prescription drug benefits, and patient safety standards. Because our audit was focused on
 internal controls over specific MSP processes, we will not express an opinion on the issuer’s
 system of internal controls as a whole.

 In conducting the audit, we relied to varying degrees on computer-generated data provided by
 ABCBS 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.

 METHODOLOGY

 We interviewed issuer personnel and reviewed supporting documentation related to the issuer’s
 compliance with new enrollee policies and procedures. Specifically, we evaluated how and if the


                                                                  3                                  Report No. 1M-0F-00-16-058
 This report is non-public and should not be further released unless authorized by the OIG, because it may contain confidential and/or proprietary
                 information that may be protected by the Trade Secrets Act, 18 U.S.C. § 1905, or the Privacy Act, 5 U.S.C. § 552a.
issuer mitigated the risk of members not receiving timely enrollment information. We tested a
judgmental sample of Change in Circumstance (CIC) transactions from January 2015 through
November 2015 to determine if the CIC transactions were processed both timely and accurately.
As part of the CIC transaction review, we also reviewed the Summary of Benefits and Coverage
(SBC) mail processing timeliness. The CIC transaction universe, samples, and selection
methodology are summarized in Exhibit A.

Similarly, we selected a judgmental sample of Healthcare Insurance Casework System (HICS)
cases from MSP HICS cases in 2015 to determine if these actions were processed timely and
accurately. The HICS case universe, samples, and selection methodology are summarized in
Exhibit B.

Additionally, we interviewed issuer personnel and reviewed supporting documentation related to
the Formulary Inadequate Justification List. We tested a judgmental sample of drugs listed on
the Formulary Inadequate Category/Class Count Supporting Documentation and Justification
List to verify the drugs listed within the justification section are covered through medical
benefits. The Formulary Inadequate Justification List universe, samples, and selection
methodology are summarized in Exhibit C.

Finally, we interviewed ABCBS personnel and reviewed supporting documentation related to the
issuer’s compliance with quality improvement and patient safety standards, along with the
submission of their 2015 Contract Quality Assurance Report.




                                                                 4                                  Report No. 1M-0F-00-16-058
This report is non-public and should not be further released unless authorized by the OIG, because it may contain confidential and/or proprietary
               information that may be protected by the Trade Secrets Act, 18 U.S.C. § 1905, or the Privacy Act, 5 U.S.C. § 552.a.
III. AUDIT FINDINGS AND RECOMMENDATIONS

 A. ENROLLMENT                                                                                                                Procedural

      1. Healthcare Insurance Casework System

            ABCBS was not fully in compliance with contractual requirements for enrollee
            processing within the exchange. Specifically, ABCBS did not accurately process a HICS
            case.

            Contract Section 6.7(a) requires ABCBS to develop, operate, and                                             Inaccurate
            maintain viable systems, processes, and procedures for the                                               processing of an
            timely, accurate, and valid enrollment and termination of enrollee                                       enrollment case
            coverage within each Exchange.                                                                             resulted in a
                                                                                                                      member being
            We determined that 1 HICS case out of our judgmental sample of                                           denied coverage.
            20 cases was processed inaccurately. Specifically, we
            determined that the HICS case was not accurately resolved due to ABCBS failing to
            update the           enrollment software system correctly when resolving the HICS
            case. This ultimately caused the member to be denied medical coverage in March of
            2015. Although the member never reported the error to ABCBS, the denial of coverage
            may have negatively impacted the member's ability to receive necessary care.

            As a result of the HICS case error identified above, ABCBS implemented a process
            improvement procedure, effective May 25, 2016, to ensure HICS case resolutions were
            being performed accurately. Though we reviewed this procedure, we did not evaluate its
            effectiveness.

            Issuer Response:

            ABCBS agrees with the audit finding. The Association states that ABCBS has
            “reviewed its procedures for the resolution of HICS cases to identify deficiencies in the
            controls over this process. Based on this review, ABCBS implemented a corrective
            action that modified and updated its procedure for processing HICS cases.”

            OIG Comment:

            Based on our review of the corrective action plan in response to the draft report, ABCBS
            implemented a process improvement procedure to track HICS case resolutions end-to-end



                                                                   5                                  Report No. 1M-0F-00-16-058
  This report is non-public and should not be further released unless authorized by the OIG, because it may contain confidential and/or proprietary
                 information that may be protected by the Trade Secrets Act, 18 U.S.C. § 1905, or the Privacy Act, 5 U.S.C. § 552.a.
          to ensure all actions are complete and the cases are being performed accurately. This
          procedure includes the Appeals Analyst verifying that all requested changes are made and
          all fields that impact member coverage are properly updated. We were able to review
          this procedure, but we did not evaluate its effectiveness.

          Recommendation 1

          We recommend that the Contracting Officer ensure ABCBS's HICS Resolution
          Procedures were implemented and direct them to maintain updates as necessary to ensure
          the accurate processing of HICS cases.

    2. Undeliverable Summary of Benefits and Coverage

          ABCBS was not fully in compliance with contractual and regulatory requirements to
          provide an SBC to enrollees in 2015. Specifically, ABCBS’s automated system failed to
          send SBCs to all enrollees and members from January to June 2015. In addition, ABCBS
          did not attempt to obtain valid addresses for members whose
                                                                            A system failure
          SBCs were subsequently sent and returned as undeliverable.
                                                                                prevented
                                                                              summaries of
          Contract Section 6.1(b)(3) requires ABCBS to provide
                                                                               benefits and
          enrollees and prospective enrollees with SBCs that comply
                                                                          coverage from being
          with Public Health Services Act (PHSA) §2715.
                                                                            sent to members
          PHSA§2715(d) requires health insurance issuers to provide
                                                                            from January to
          SBCs to enrollees at the time of application in either paper or
                                                                                June 2015.
          electronic form.

          45 CFR 147.200(a)(1)(iv)(A) states that upon receiving an application, health insurance
          issuers must provide SBCs to enrollees within seven days.

          According to ABCBS, SBCs were automatically triggered to be sent to enrollees when
          enrollment files were received. However, during our review of Change in Circumstance
          (CIC) transaction processing, 23 of 41 SBCs, or 56 percent, appeared to have been sent
          up to 134 days after receipt of the CIC application. ABCBS subsequently explained that
          on June 9, 2015, it identified a failure in its system automation that prevented Summary
          of Benefits and Coverage’s (SBCs) from being sent to all members for the first half of
          2015. They further explained that on June 12, 2015, the backlog of unsent SBCs was
          cleared. This gave the appearance of the unsent SBCs as being sent, which explains why
          the SBCs for the transactions we tested appeared to have been sent when they actually




                                                                 6                                  Report No. 1M-0F-00-16-058
This report is non-public and should not be further released unless authorized by the OIG, because it may contain confidential and/or proprietary
               information that may be protected by the Trade Secrets Act, 18 U.S.C. § 1905, or the Privacy Act, 5 U.S.C. § 552.a.
          were not sent. As a result, ABCBS was not in compliance with contractual and
          regulatory requirements to provide SBCs to enrollees within seven days, leaving
          enrollees and members at risk of not receiving important information regarding their
          coverage in a timely manner.

          Moreover, ABCBS did not have a procedure in place to follow up on SBCs that were
          returned as undeliverable after the automation failure was corrected. Per its procedure, if
          SBCs were returned as undeliverable, ABCBS shredded the information and did not
          conduct additional research to identify a correct address. ABCBS noted that it did not
          have the ability to store and return the corrected information back to the Federally
          Facilitated Marketplace and the Arkansas Department of Human Services (DHS), which
          were considered to be the systems of record for member information, including
          addresses. However, by not obtaining accurate mailing addresses, ABCBS did not fully
          comply with contractual and regulatory requirements to provide enrollees with SBCs,
          further putting enrollees at risk of not receiving important information related to their
          coverage.

          ABCBS did take corrective actions to address these issues. Regarding the system error,
          ABCBS independently took immediate steps to engage the automation on June 12, 2015.
          ABCBS stated that it continued to monitor the SBC delivery within the system manually
          until it released system improvements and monitoring controls in September 2015.
          ABCBS also implemented a policy for additional auditing measures in January 2016.
          Although we did not formally review the processes and
                                                                              Additional research
          procedures that ABCBS subsequently put in place, during our
                                                                              was not conducted
          review of the CIC transactions we did not identify any SBC
                                                                                 by ABCBS to
          issues after June 2015.
                                                                                identify correct
                                                                                 addresses for
          In addition, ABCBS revised its procedures for handling
                                                                                 undeliverable
          undeliverable SBCs as a result of our audit. The revisions
                                                                                 summaries of
          include following up with members to obtain valid mailing
                                                                                  benefits and
          addresses and updating the mailing addresses in ABCBS’s
                                                                                    coverage.
          systems. According to ABCBS, changes made to the mailing
          address are communicated to the Federally Facilitated Marketplace via reconciliation
          files. Similarly, ABCBS stated that it has been reporting to Arkansas DHS on private
          option members whose addresses need to be updated since the end of 2015. Furthermore,
          by the end of 2016, ABCBS planned to implement a tracking process to scan
          undeliverable mail for Exchange plans and place it in queues to be processed, as
          appropriate. Finally, we verified that electronic copies of the SBCs are available on the
          ABCBS website and member portals, which would help to mitigate the risk of members.



                                                                 7                                  Report No. 1M-0F-00-16-058
This report is non-public and should not be further released unless authorized by the OIG, because it may contain confidential and/or proprietary
               information that may be protected by the Trade Secrets Act, 18 U.S.C. § 1905, or the Privacy Act, 5 U.S.C. § 552.a.
          not receiving SBCs, but only if the members had a clear understanding and knowledge of
          this option for accessing the information.

          Issuer Response:

          ABCBS agrees with these audit findings. The Association states that “Based on the
          OIG recommendations, [ABCBS] implemented a corrective action to modify its Policies
          and Procedures to track and monitor SBC mail returned as undeliverable. The revised
          Procedures specifically address returned SBCs. The revised Policies and Procedures
          document the requirements to research and update returned mail for Exchange and
          Off-Exchange subscribers.”

          OIG Comment

          As stated above, ABCBS planned to implement a tracking process to scan undeliverable
          mail for Exchange plans and place the mail in queues to be processed. However, after
          exploring the impact of this process change, there was some concern with the potential of
          creating a longer turn-around time than the current process. Consequently, an immediate
          action plan to update the procedure to research and update returned mail was
          implemented to include training employees in the new procedure. We have reviewed the
          new procedure but were unable to test its effectiveness.

          Recommendation 2

          We recommend that the Contracting Officer verify that ABCBS implements the
          procedural changes made for obtaining and updating mailing addresses for contract year
          2015. During our audit, ABCBS revised its procedures for handling undeliverable SBCs.
          We reviewed the procedures and found them to sufficiently address the undeliverable
          SBC issue. However, we were unable to test the effectiveness of the procedures during
          this audit and will have to conduct further testing during future audits of ABCBS.

          Recommendation 3

          We recommend that the Contracting Officer verify that ABCBS implemented the new
          procedure for researching and updating undeliverable mail for Exchange plans.
    .




                                                                 8                                  Report No. 1M-0F-00-16-058
This report is non-public and should not be further released unless authorized by the OIG, because it may contain confidential and/or proprietary
               information that may be protected by the Trade Secrets Act, 18 U.S.C. § 1905, or the Privacy Act, 5 U.S.C. § 552.a.
B. RATES AND BENEFITS

    Based on our review, we concluded that ABCBS is in compliance with the Contract and
    applicable criteria for pharmacy drug benefits

C. CONTRACT QUALITY ASSURANCE

    Based on our review, we concluded that ABCBS is in compliance with the Contract and
    applicable criteria for patient safety requirements for hospitals and the 2015 contract quality
    assurance report.




                                                                 9                                  Report No. 1M-0F-00-16-058
This report is non-public and should not be further released unless authorized by the OIG, because it may contain confidential and/or proprietary
               information that may be protected by the Trade Secrets Act, 18 U.S.C. § 1905, or the Privacy Act, 5 U.S.C. § 552.a.
                                                                 EXHIBIT A

                                   Change in Circumstance (CIC) Transactions                                                                               

                                   Sample Selection Criteria and Methodology 


                                                                                                                                                          Results
                   Universe             Universe            Sample                     Sample Selection
  Review                                                                                                                      Sample Type               Projected to
                   Criteria            (Number)            (Number)                      Methodology
                                                                                                                                                       the Universe?

                Universe of
                 MSP CICs
                                                                              We assigned a number to
                     from
                                                                              each CIC Transaction in the
                  January -
                                                                              universe and used a random
                 November
                                                                              number generator from
                 2015. We
                                                                              Random.org to select our
                removed all
                                                                              sample, resulting in a
                     CIC
                                                                              random sample of 40 CIC
                transactions
                                                                              Transactions; however 2 of                       38 Random
                    with a
                                                                              the random numbers                                   and
    CIC           received
                                                                 41           generated were duplicates,                      3 Judgmental                     No
Transactions        date of
                                                                              therefore we dropped the                          based on
                 December
                                                                              duplicate transactions,                           HIOS ID.
                 2015 from
                                                                              leaving us a total of 38
                the original
                                                                              sampled transactions. We
                 universe to
                                                                              also judgmentally selected
                 reduce the
                                                                              three sample items by
                 likelihood
                                                                              picking the first transaction
                of reviewing
                                                                              listed for the HIOS ID based
                CICs related
                                                                              on nomenclature.
                   to 2016
                    plans.




                                                                                                               Report No. 1M-0F-00-16-058
           This report is non-public and should not be further released unless authorized by the OIG, because it may contain confidential and/or proprietary
                          information that may be protected by the Trade Secrets Act, 18 U.S.C. § 1905, or the Privacy Act, 5 U.S.C. § 552.a.
                                                               EXHIBIT B

                              Healthcare Insurance Casework System (HICS)                                                                                

                               Sample Selection Criteria and Methodology 


                                                                                                                                                      Results
         Universe            Universe            Sample                                                                       Sample
Review                                                               Sample Selection Methodology                                                 Projected to the
         Criteria           (Number)            (Number)                                                                       Type
                                                                                                                                                    Universe?


            2015                                                      We assigned a number to each
HICS        MSP                                                      case in the universe and used a
                                                      20                                                                      Random                         No
Cases       HICS                                                     random number generator from
            Cases                                                   Random.org to select our sample.




                                                                                                             Report No. 1M-0F-00-16-058
         This report is non-public and should not be further released unless authorized by the OIG, because it may contain confidential and/or proprietary
                        information that may be protected by the Trade Secrets Act, 18 U.S.C. § 1905, or the Privacy Act, 5 U.S.C. § 552.a.
                                                               EXHIBIT C

                                   Formulary Inadequate Justification List                                                                         

                                  Sample Selection Criteria and Methodology



                                                                                                                                                     Results
                       Universe             Universe            Sample                  Sample Selection                      Sample
   Review                                                                                                                                          Projected to
                       Criteria            (Number)            (Number)                   Methodology                          Type
                                                                                                                                                  the Universe?

  Formulary
  Inadequate
Category/Class           2015
                                                                                     We selected the first
    Count             Formulary
                                                                                     drug listed under the
  Supporting          Inadequate                                     19                                                     Judgmental                       No
                                                                                   Justification heading for
Documentation        Justification
                                                                                    each Category/Class.
      and                List
 Justification
     List




                                                                                                             Report No. 1M-0F-00-16-058
         This report is non-public and should not be further released unless authorized by the OIG, because it may contain confidential and/or proprietary
                        information that may be protected by the Trade Secrets Act, 18 U.S.C. § 1905, or the Privacy Act, 5 U.S.C. § 552.a.
                                                       APPENDIX



                                                                                                                              Federal Employee Program
                                                                                                                              1310 G Street, N.W.
                                                                                                                              Washington, D.C. 20005
                                                                                                                              202.626.4800

January 16, 2017

                      , Chief
Community-Rated Audits Group
U.S. Office of Personnel Management
Office of the Inspector General
1900 E Street NW, Rm. 6400
Washington, DC 20415-1100

Reference: OPM Draft Audit Report of the Multi-State Plan Program Operations
           Arkansas Blue Cross Blue Shield (ABCBS)
           Audit Report Number 1M-0F-00-16-058
           (Dated and received December 15, 2016)

Dear                     :

This is the BCBSA response to the above referenced U.S. Office of Personnel
Management (OPM) Draft Audit Report covering the Multi State Plan Program
operations at Arkansas Blue Cross Blue Shield.

Our comments concerning the recommendations in the draft report are as follows:

A. ENROLLMENT REVIEW

    1. Healthcare Insurance Casework System (HICS)                                                                Procedural

         Recommendation 1

         We recommend that the Contracting Officer direct ABCBS to review its HICS
         Resolution Procedures' effectiveness and direct them to update as necessary to



                                                                                                    Report No. 1M-0F-00-16-058
This report is non-public and should not be further released unless authorized by the OIG, because it may contain confidential and/or proprietary
               information that may be protected by the Trade Secrets Act, 18 U.S.C. § 1905, or the Privacy Act, 5 U.S.C. § 552.a.
         ensure the accurate processing of HICS cases.

          Plan Response: The plan agrees with this recommendation. The Plan reviewed
          its procedures for the resolution of HICS cases to identify deficiencies in the
          controls over this process. Based on this review, the Plan implemented a
          corrective action that modified and updated its procedure for processing HICS
          cases. Deleted by OIG - Not Relevant to the Final Report

    2. Undeliverable Summary of Benefits and Coverage(SBC) Procedural.

          Recommendation 2
          We recommend that the Contracting Officer verify that ABCBS implements the
          procedural changes made for obtaining and updating mailing addresses for
          contract year 2015. During our audit, ABCBS revised its procedures for handling
          undeliverable SBCs.

          We reviewed the procedures and found them to sufficiently address the
          undeliverable SBC issue. However, we were unable to test the effectiveness of
          the procedures during this audit and will have to conduct further testing during
          any future audits of ABCBS. Consequently, no further action is required of the
          Issuer to address this recommendation.

          Plan Response

          The Plan agrees with this recommendation.

          Recommendation 3

          We recommend that the Contracting Officer verify that ABCBS implements the
          planned updates to track the process for undeliverable mail for Exchange plans.

          Plan Response The plan agrees with this recommendation. Based on the OIG
          recommendations, the Plan implemented a corrective action to modify it Policies
          and Procedures to track and monitor SBC mail returned as undeliverable. The
          revised Procedures specifically address returned SBCs. The revised Policies
          and Procedures document the requirements to research and update returned
          mail for Exchange and Off-Exchange subscribers. Deleted by OIG - Not
          Relevant to the Final Report



                                                                                                    Report No. 1M-0F-00-16-058
This report is non-public and should not be further released unless authorized by the OIG, because it may contain confidential and/or proprietary
               information that may be protected by the Trade Secrets Act, 18 U.S.C. § 1905, or the Privacy Act, 5 U.S.C. § 552.a.
B. RATES AND BENEFITS REVIEW
     No recommendation

C. CONTRACT QUALITY ASSURANCE
     No Recommendation

We appreciate the opportunity to provide our response to this Draft Audit Report and
request that our comments be included in their entirety as an amendment to the Final
Audit Report.

Sincerely,




            , CISA, 

Managing Director, FEP Program Assurance

Attachment

cc: 	                              , OPM Contracting Officer
                             , Part C and D Compliance Officer, Arkansas BCBS
                               , Director, Government Programs Delivery, BCBSA




                                                                                                    Report No. 1M-0F-00-16-058
This report is non-public and should not be further released unless authorized by the OIG, because it may contain confidential and/or proprietary
               information that may be protected by the Trade Secrets Act, 18 U.S.C. § 1905, or the Privacy Act, 5 U.S.C. § 552.a.
                                                                                                                          



                                        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 report has been distributed to Federal officials who are responsible for the administration of the subject program. This non-public version
may contain confidential and/or proprietary information, including information protected by the Trade Secrets Act, 18 U.S.C. § 1905, and the
Privacy Act 5 U.S.C. § 552.a. Therefore, while a redacted version of this report is available under the Freedom of Information Act and made
publicly available on the OIG webpage (http://www.opm.gov/our-inspector-general), this non-public version should not be further released unless
authorized by the OIG.

                                                                                                                    Report No. 1M-0F-00-16-058