MEDICARE SECONDARY PAYER PROVISION

WORKING AGED IN COLORADO

JULY, 1986

CONTROL tP-07-86-00071

REGION VII 
OFFICE OF ANALYSIS AND

KASAS CITY, 
MISSOURI  INSPECTIONS 
OFFICE OF INSPECTOR GENERAL

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES  ............................................................................................................
. " . . . . . . . . . . . . . . . . . . . . . . . . . .
CONTENTS

Page 
EXECUTIVE SUMMARY

I. 
II. INTRODUCTION

III. SCOPE OF REVIEW 
IV. FINDINGS AND RECOMMENDATIONS

TABLE SUMMIZ ING DOLLAR EFFECT

V. 
OF REPORTED FINDINGS

VI. SUMMARY OF COMMENTS

SOLICITED AND RESPONSES
 EXECUT IVE SUMMRY 
The Office of Analysis and Inspections (OAI) conducted a program

inspection of the Medicare secondary payer provision as it rela

tes to working aged in Colorado under the Tax Equity and Fiscal

Responsibility Act of 1982. 
Health Care Financing Administration (HCFA) data indicated there
were 81 short-term hospitals in Colorado. Our inspection focused
on the 21 largest short term hospitals with 200 or more beds. 
Four hospitals in Colorado, all with 200 or more beds, were

selected for review in conjunction with the inspection on working

aged. 
The Colorado Foundation for Medical Care prepared for our 
office a list of 50 randomly selected beneficiary discharges from

each hospital for the period January 1, 1983 - June 30, 1984.

Results of the inspection indicated that six 
beneficiaries, who

had received Part A and B services and a seventh beneficiary who

had received Part B services, had not been identif 
ied as working
aged by the contractor or hospitals. 
Comparative data indicated that the four selected hospitals and

the 21 hospitals in the universe had similar character 
functional areas reviewed.  istics in

These four hospitals, therefore,
would be considered representative of the 21 hospitals for pur

poses of projecting an overpayment.

Based on the inspection, an actual overpayment of $36,
327 was

made by the Medicare program for Part A and B services rendered

ic iar ies  with the four selected hospitals.
to benef  assoc iated 
projected to the 21 hospitals in the universe, the overpayment
would be $4, 342, 446. Employer group health plans should have 
been the primary payer with Medicare being billed as the secon

dary payer. No attempt was made to project an overpayment to

those Colorado hospitals under 200 beds. 
We recommend that the HCFA Regional Office require the Colorado

Medicare contractors to fully implement current guidelines

according to Federal regulations, to ensure that correct Medicare

payments are made and to initiate recovery action for all

improper payments, retroactive to January 
1, 1983.

Subsequent to release of the draft report, HCFA and OAI discussed
each beneficiary case identified by OAI as working aged on a 
call. 
telephone conference  After documented ev idence was pre
sented and discussed by both HCFA and OAI, agreement was reached
that Medicare had incorrectly paid as the pr 
imary payer on each
cases. 
of the seven identified  One case had been dropped by OAI
from the list of beneficiaries.

-1
 Comments from the contractor, with HCFA' s conc  rrence, indicated 
that the Medicare Secondary Payer unit develops and reviews 
1983. 
working aged cases dating back to  Various methods are used 
to identify working aged including front end audits, development 
letters and a one-time mailing to potential working aged benefi
ciaries. 
In addition, hospitals have been given assistance 
through bulletins, credit balance letters, workshops and, the MSP 
uni t' s telephone number to assist them in obtaining essential
data to identify working aged. 
-2
 II. 
INTRODUCTION 
This report details the findings and recommendations that 
resu1 ted from this program inspection of the Medicare Secondary
Payer Prov is ion--Working Aged in Co10rado--conducted by the
Off ice of Ana1ys is and Inspections, Off ice of Inspector General. 
This inspection program was developed and implemented by the 
Inspections. 
Off ice of Ana1ys is and  Inspections are a major
function of OAI as part of its responsibility to minimize the 
opportuni ty for fraud, abuse, and waste in DHHS programs. 
Specifically, program inspections: 
(1 )  Examine specific program operations and/or reimbursement 
policies and the manner in which they are implemented to 
determine if they are contributing to fraud, abuse or 
and 
was te , 
( 2)  Demonstrate the significance of the inefficient or inef
fective policy or method of implementation and recommend 
changes which would improve program administration, 
contribute to ensuring that proper services are provided 
to eligible beneficiaries and/or save program dollars. 
The format of this program inspection report 
is of an exception
type; in that, only areas requiring improvement are presented.
No conclusions regarding the overall level of an organization 
performance should be drawn solely from this report. 
-3
 III. 
SCOPE OF REVIEW 
The Tax Equity and Fiscal Respons ibi1i ty Act of 1982, provided
that Medicare would be the secondary payer in cases where medical 
care can be paid by an employer group health plan. 
This would 
apply to those beneficiaries or their spouses, who were working,
were aged 65-69 and were a member of a plan covering those per
sons. 
Federal Regulations implementing this law were published 
i1 13, 1983. 
42 CPR 405. 340-344 on Apr  The regulations state
that, effective for services furnished after 1982, Medicare bene

fits (Part A and B) are secondary to benefits payable by an 
employer group health plan for any month in which an individual 
aged 65 through 69: 
(1 )  Is entitled to Part A benefits. 
(2 )  Is either employed or the spouse is employed and covered
under an employer group health plan. 
( 3)  The employer has 20 or more employees. 
The Colorado Foundation for Medical Care furnished the OAI

reg iona1 off ice with a 
list of 50 randomly selected inpatient
hospitals. 
discharges for each of the four selected  These 
discharges were for beneficiaries who were aged 65-69 and were

discharged during the review period, which was January 
June 30, 1984.  1, 1983 
Onsite visits were made to these four hospitals 
data. 
to obtain admission and payment  In addition, the Medicare
contractors furnished utilization and payment data on the 200 
beneficiaries in the sample, secondary payet log 
information and 
guidelines used to identify and process Medicare secondary payer 
cases. .
Ana1ysis of this data indicated that six beneficiaries or 
their spouses had Part A and B services billed to the Medicare 
program and a seventh beneficiary had Part B services. 
HCFA data indicated there were 81 short-term hospitals in
Colorado. 
This data also showed that 21 of these hospitals,
which included the four selected hospitals, had 200 or more beds.
The four hospitals reviewed were intended to represent this group 
of 21 hospitals, ret1ecting similar character 
istcs such as size,
scope of services, utilization and average length of stay. 
-4
 IV.  FINDINGS AND RECOMMENDATIONS 
Finding 1

Medicare paid as Pr 
imary Payer for Workinq Aged 
The inspection found that out of 200 beneficiary discharges at 
four selected hospitals, six beneficiaries had received Part A 
and B services and a seventh beneficiary, Part B services which 
had not been identified by the contractor or providers as working
aged. 
Based on contractor payment data, $36, 327 was paid by 
iciar ies as 
Medicare for these seven benef  primary payer, instead 
payer. 
of being the secondary  Projecting the overpayment in the 
sample to the universe of 21 hospitals, overpayments of
$4, 342, 446 would apply for the Medicare program. No attempt was
made to project an overpayment to hospitals under 200 beds. 
Comparative data was obtained and analyzed for the four selected 
hospi ta1s and the 21 hospitals in the universe. Functional areas 
reviewed indicated that the selected hospitals and the universe 
of hospitals compared similarly in every category. Therefore, 
these four hospitals would be considered representative of the 21 
hospitals for purposes of projecting an overpayment. 
Recommenda t ion 
We recommend that HCFA instruct the Medicare contractor to review 
all services provided resulting from working aged cover age
1983. 
beginning January  Applicable recovery should be made from 
third party payers or providers. 
Finding 2

Greater Detection Capabi1ity Needed By Medicare Contractor' 
i t 
Secondary Payer Un 
The Medicare contractors did not have the capability to identify 
all working aged as evidenced by the inspection s finding of
seven working aged not identif 
ied by the contractor. 
-5
 Recommendation 
We recommend that HCFA instruct the Medicare contractor to 
improve the secondary payer unit to more effectively identify and 
cases. 
correctly process MSP  This might involve such areas as 
the expanded training of staff and utilization of applicable

detection and control procedures.

Pinding 3

Improvement Needed By Hospita1s in Obtaininq Workinq Aged

Information 
Hospitals are not adequately obtaining critical information to 
identify working aged beneficiaries or their spouses.
Deficiencies noted were: 
(1 )  Lack of any information regarding employment status. 
(2 )  Lack of information regarding the date when the employee 
or spouse retired. This information is necessary in
order to determine the time per 
iod covered under the 
Employer Group Heal th Plan. 
( 3)  Failure to substantially investigate age and e1 ig ibi1 i ty
ic iary' s spouse. 
of the Medicare benef  Age of the spouse
would have indicated that the spouse was aged 65 and 
over and could have qualified as working aged. 
( 4)  Information obtained on other insurance or employment 
related insurance forms was not being transferred to the 
billing form submitted to the Intermediary. The
Intermediary was thereby unaware of possible Employer 
Group Health Plan coverage. 
Recommenda t ion 
HCFA should work with the Medicare contractors to assure that 
hospitals obtain essential information to identify working aged. 
-6
 . ,
TABLE SUMMARIZ ING DOLLAR EFFECT OF REPORTED FINDING

Overpayment Projection of
Medicare Paid as Pr 
imary Payer 
Ra ther Than Secondary 
Medicare  Amount Paid  Projected
Contractor 
in Sam  Over 
en t 
Colorado Blue Cross  $22, 176  $2, 650, 032 
Colorado Blue Shield  151  692  414 
$36, 327  $4, 342, 446 
-7
 VI. 
SUMM Y OF COMMENTS

SOLICITED AND RESPONSES

Comments were received from the Health Care Financing

Administration and the Medicare contractor. 
Hea1th Care Financing Administration

In its response to the draft report, HCFA concurred with the

contractor' s comments. The contractor  s fin
ciaries.  disagreed with OAI' 
dings that in each of the identified working aged beneficiaries

in the draft report, Medicare should have been the secondary

payer. 
One case had been dropped by OAI from the list of benef
OAI then requested supporting information from HCFA as to why
they believed Medicare had correctly paid as pr 
imary payer. 
telephone conference call was held to discuss each of the benefi
iar ies 
contained in the report. 
Subsequent to the conference call, HCFA concurred with OAI on 
each of the beneficiaries identified as not having primary
coverage with Medicare. 
HCFA has instructed the contractor to 
begin appropriate recovery action and is working with the

contractor to achieve full implementation of the recommendations

in the report.

Blue Cross and Blue Shield of Colorado

The contractor disagreed with OAI' s findings that seven benefi
primary. 
ciaries had other insurance as  The contractor agreed
with OAI on one beneficiary where Medicare was secondary. These 
beneficiary cases had been developed in full by the contractor
and Medicare was considered pr imary wi thin HCFA' s guidelines on
working aged. Subsequent discussion by HCFA and OAI resulted 
HCFA concurring with OAI on the findings on each beneficiary. 
The contractor has taken steps to identify and process working 
aged cases. These include the use of front-end audits and deve
lopment letters being sent to beneficiaries. The contractor
working with hospitals to ass 
ist them in obtaining more pertinent 
information so as to more adequately identify working aged bene
ficiaries. 
Bulletins, credit balance letters, workshops and the
MSP contact points are being utilized to assist hospitals 
in this

identif ication process. 
-8
 /--

"-... """'
DEPARTMENT OF HEALTH 8L HUMAN SERVICES  Health Care Financing 
Administration. Region VIII 
Refer to:  Memorandum 
Date:  June 27, 1986 
From:  Administrator 
Associate Regional 
Division of Financial Operations 
Subject:	 COLORADO - Medicare Secondary Payer Provisions, Working Aged in Colorado 
(CN- 07-86-0007l) (Draft) 
To:	 Regional Inspector General for Analysis and Inspections 
Region VII, Kansas City 
Please refer to our memorandum of June 3, 1986 to you, subject as above. Our 
Division of Program Operations has reviewed available data at the contractor, Blue
Cross and Blue Shield of Colorado, and now concurs with your findings regarding
beneficiaries identified as not 
having primary coverage with Medicare. In  with 
line 
your  earlier  request, we had already removed beneficiary Jesus Cano s name from 
your list. 
The contractor has been instructed to begin appropriate recovery 	 action.  As noted
in our June 3
, 1986 letter to you,  achieve
we will be working with the contractor to 
full implementation of the recommendations set forth in your report. 
Please direct any inquiries you may have to me at FTS 564-2641 , or Ben Wilson at 
FTS 564-2646. 
C. Salazar, Jr. 
RECE\VED

err ,,:: 
'RAC
'" GE.NE 
\\,:S?c.li  , . 
. " .... ..  " -
J .. 
J,  i.  DEPARTMENT OF HEALTH 8L HUMAN SERVICES  Health Care Financing 
Administration, Region VIII 
Refer to:  Memorandum 
June 3, 1986 
Date: 
Associate Regional Administrator 
From:  Division of Financial Operations 
COLORADO - Medicare Secondary Payer Provisions, Working Aged in Colorado
Subject:  (CN- 07 -86-00071) (Draft) 
Regional Inspector General for Analysis and Inspections
To:  Region VII, Kansas City 
In acordance with your request, we have 
reviewed the subject draft report. Some
revisions may need to be made to your report as a result of the attached comments
made by the contractor. Our Division of Program Operations has reviewed the
contractor s comments and agrees with those comments. 
We wil be working with the contractor to achieve full implementation of the
recommendations set forth in your report, once an agreement has been reached. 
Please direct any inquiries you may 
2646, hEavxe ttoe mne ast iFToS n56 4-126456,. E xtension 14 , or
Ben Wilson at FTS 564-
Attachment 
v/ 
lNsp %.f:IC 
OF? Q

GfNfRAV  .. -
CONTRACTOR FOR

MEDICARE 
El,, 
Blue Cross and Blue Shield of Colorado 
700 Broadway

Denver, Colorado 80273 
13031831.2661 
Toll Free, 1,80.332-6681 
May 16,  1986 
Mr. C. Salazar, Jr.

Associate Regional Administrator

Division of Financial Operations 
Hea 1 th Care Finane ing Adm i n i strat ion 
Reg i on V I I , 
Federal Office Building

1961 Stout Street

Denver , CO 80294 
SUBJECT:  MED I CARE SECONDARY PAYER PROV I S ION - WORKI NG AGED I N COLORADO 
Dear Mr. Salazar: 
The Apr i  29, 1986 report prepared by t e Off ice of the I nspector Genera I 
Office of Analysis and Inspection entitled, "Medicare Secondary Payer 
Prov is ion  - Working Aged in Colorado" (CN-P-07-86-00071) has been reviewed 
by staff  and our findings and recommendations are as follows: 
First of all, we disagree with the findings on the seven bene
ficiaries that were identified as having other insurance as 
primary. The only case that Medicare is secondary on is Ezra 
Goodloe, HIC 521-09-9359A , which resulted in an overpayment of 
38. 
$882. Credit activity has been establ ished on this case. 
The projection of overpayments, therefore, should be approximately 
$105,  not the $4, 571, 193; thus, it is significantly lower. 
000, 
The other cases were developed in full, and Medicare is the primary
payer within the guidel 
ines specified by HCFA as "working aged" 
FIND I NG I AND FIND I NG I I : 
We have an established Medicare Secondary Payer unit that handles all 
MSP activities. Working aged cases are developed and services are 
services. 
reviewed dating back to January 1983  Recovery action is taken 
as required. To identify 
working aged cases, several methods are used
including front-
end audits and development letters are sent to the 
beneficiaries. A "one timer" was mailed in July 1985 to all beneficiaries 
between the ages of 65 through 69 requesting "working aged" information
(Attachment 1). 
As you note for FY 85, CPEP savings goals were met, and we are on schedule 
toward meeting the FY 86 CPEP working aged savings goals (Attachment 2), 
* 120,000 letters mailed.

IPO DtU MAY 1 '1  , j 
Letter to C. Salazar , Jr.

May 16, 1986

Page Two

FIND I NG I II : 
Hospitals have been given MSP information through bulletins, credit 
balance letters, workshops, and all providers have been given the 
telephone number to contact the MSP unit directly (Attachment 3). 
Thank you for the opportunity to respond to the Program Inspection Report. 
If you require additional information or wish to discuss any of the comments 
in our responses in more detail, please contact either Vicki Shaw, Manager 
of Medicare Suspense (831-2949)or Pam Archuletta, Supervisor of Medicare 
Coordination of Benefits (MSP) (831-2101). 
Sincere I y 
James B. Wanebo

rec tor 
D i 
aims 
Med i ca re C I 
J BW : ev 
Attachments
cc: 
Tom Gillgannon, Vice President, Government Operations