u.s. OFFICE OF PERSONNEL MANAGEMENT 

OFFICE OF THE INSPECTOR GENERAL 

OFFICE OF AUDITS 

Final Audit Report 

Subject: 

Audit of the Federal Employees Health Benefits
 

Program Operations at Aetna Open Access - Plan
 

Code PI
 

Report No. lC-PI-OO·10-045 

Date: October 19. 2010 

-- CAUTION -­

This audit report has been distributed to Federal officials wbo are respons.ible for the administration of the 

audited program. This audit report may contain proprietary data whicb is protected by Federal law (18 

U.S.C. 1905). Therefore, while tbis report is available under the Freedom of Information Act and made 

available to the public on the OIG webpage, caution needs to be exercised before releasing the report to the 

general public as it may contain proprietary information tbat was redacted from tbe publicly distributed 

copy. 
UNITED STATES OFFICE OF PERSONNEL MANAGEMENT
 

Washington, DC 20415
 

Office of the 

Inspector General 

AUDiT REPORT 

Federal Employees Health Benefits Program
 

Community-Rated Health Maintenance Organization
 

Aetna Open Access
 

Contract Number 2867 - Plan Code PI
 

Blue Bell, Pennsylvania
 

Report No. IC-PI-OO-IO-045 Date: October J 9 201 i 0

MichaelR~

Assistant Inspector General 

for Audits 

www.opm.gov www,usajobs.gov 
UNITED STATES OFFICE OF PERSONNEL MANAGEMENT 

Washington, DC 20415 

Office of the 

lnspcetor General 

EXECUTIVE SUMMARY
 

Federal Employees Healtb Benefits Program
 

Community-Rated Healtb Maintenance Organization
 

Aetna Open Access
 

Contract Number 2867 - Plan Code PI
 

Blue Bell, Pennsylvania
 

Report No. IC-PI-00-I0-045 Date: October 19, 2010 

The Oflice ofthe Inspector General perfonned an audit of the Federal Employees Heallh Benefits 

Program (FEHBP) operations at Aetna Open Access - Plan Code P1 (Plan). The audit covered 

CODll-aCt years 2005 through 2009 and was conducted at the Plan's office in Blue Bell, 

Pennsylvania. We found that the FEHBP rates were developed in accordance with applicable 

laws, regulations. and the Office ofPersonnel Management's raling instructions for the years 

audited. 

1 

WWw.opl1l.g0Y www.usajobs.go... 
CONTENTS
 

Page 

EXECUTIVE SUMMARY i
 

I. INTRODUCTION AND BACKGROUND 1
 

IT. OBJECTIVES, SCOPE, AND METHODOLOGY 3
 

III. RESULTS OF THE AUDIT 5
 

IV. MAJOR CONTRIBUTORS TO THIS REPORT 6
 
T. INTRODUCTION AND BACKGROUND
 

Introduction 

We completed an audit of the Federal Employees Health Benefits Program (FEHBP) operations 

at Aetna Open Access - Plan Code P I (Plan). The audit covered contract years 2005 through 

2009 and was conducted at the Plan's office in Blue Bell, Pennsylvania. The audit was 

conducted pursuant to the provisions of Contract CS 2867; 5 U.S.C. Chapter 89; and 5 Code of 

Federal Regulations (CFR) Chapter I, Part 890. The audit was performed by the Office of 

Personnel Management's (OPM) Office ofthe Inspector General (orG), as established by the 

Inspector General Act of 1978, as amended. 

Background 

The FEHBP was established by the Federal Employees Health Benefits Act (Public Law 86-382), 

enacted On September 28, 1959. The FEHBP was created to provide health insurance benefits 

for federal employees, annuitants, and dependents. The FEHBP is administered by OPM's 

Retirement and Benefits Office. The provisions of the Federal Employees Health Benefits Act 

are implemented by OPM through regulations codified in Chapter I, Part 890 of Title 5, CFR. 

Health insurance coverage is provided through cOntracts with various health insurance carriers 

that provide service benefits, indemnity benefits, or comprehensive medical services. 

Community-rated carriers participating in the FEHEP are subject to various federal, state and 

local laws, regulations, and ordinances. While most carriers are subject to state jurisdiction, 

many are further subject to the Health Maintenance Organization Act of 1973 (public Law 93­

222), as amended (i.e., many community-rated carriers are federally qualified). In addition, 

participation in the FEHBP subjects the carriers to the Federal Employees Health Benefits Act 

and implementing regulations promulgated by OPM. 

The FEHBP should pay a market price rate, FEHBP ConlractsiMembers 

which March 31 is defined as the best rate offered to 

either of the two groups closest in size to 

the FEHBP. In contracting with 

community-rated carriers, OPM relies On 

carrier compliance with appropriate laws 

and regulations and, consequently, does not 

negotiate base rates. OPM negotiations 

relate primarily to the level of coverage and 

other unique features ofthe FEHBP. 

The chart to the right shows the number of 

FEHBP contracts and members reported by 

the Plan as of March 31 for each contract 

year audited. 

10,000 

8,000 

6,000 

4,000 

2,000 

o 

2005 

• Contracts 2.958 

o Members 6,893 

2006 2007 

3,700 3,849 

8,594 8,829 

2008 2009 

3,615 3,188 

7,735 6,376 

1
 
The Plan has participated in the FEHBP since 2004 and provides health benefits to FEHBP 

members throughout Austin and San Antonio, Texas. This was the first audit of the Plan 

conducted by our office. 

The preliminary results ofthis audit were discussed with Plan officials at an exit conference and 

through subsequent correspondence. Since the audit showed that the Plan's rating ofthe FEHBP 

was in accordance with applicable laws, regulations, and instructions, we did not issue a draft 

report. 

2
 
II. OBJECTIVES, SCOPE, AND METHODOLOGY
 

Objectives 

The primary objectives of the audit were to verifY that the Plan offered market price rates to the 

FEHBP and to verifY that the loadings to the FEHBP rates were reasonable and equitable. 

Additional tests were performed to determine whether the Plan was in compliance with the 

provisions of the laws and regulations governing the FEHBP. 

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, 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. 

This performance audit covered contract years 2005 through 

2009. For these years, the FEHBP paid approximately 

$148.1 million in premiums to the Plan. The premiums paid 

for each contract year audited are shown on the chart to the 

right. 

OlG audits of commwlity-rated carriers are designed to test carrier compliance with the FEHEP 

contract, applicable laws and regulations, and OPM rate instructions. These audits are also 

designed to provide reasonable assurance of detecting errors, irregularities, and illegal acts. 

We obtained an understanding ofthe Plan's internal control structure, but we did not use this 

information to determine the nature, timing, and extent of our audit procedures. However, the 

audit included such tests ofthe Plan's rating system and such other auditing procedures 

considered necessary under the circumstances. Our review of internal controls was limited to the 

procedures the Plan has in place to ensure thai: 

•	 The appropriate sinlilarly sized subscriber groups (SSSG) were selected; 

•	 the rates charged to the FEHBP were the market price rates (i.e., equivalent to the best 

mte offered 10 SSSGs); and 

•	 the loadings to the FEHEP rates were reasonable and equitable. 

3 

FEHBP Premiums Paid to Plan 

$40 

• Revenue 
In conducting the audit, we relied to varying degrees on computer-generated billing, enrollment, 

and claims data provided by the Plan. 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 testing utilizing the computer-generated data to cause us to doubt its reliability. We believe 

that the available data was sufficient to achieve our audit objecti.ves. Except as noted above, the 

audit was performed in accordance with generally accepted government auditing standards, 

issued by the Comptroller General ofthe United States. 

The audit fieldwork was performed at the Plan's office in Blue Bell, Pennsylvani.a, during May 

20 JO. Additional audit work was completed at our offices in Jacksonville, Florida, and 

Washington, D.C. 

Methodology 

We examined the Plan's federal rate submissions and related documents as a basis for validating 

the market price rates. Further, we examined claim payments to verifY that the cost data used to 

develop the FEHBP rates was accurate, complete, and valid. In addition, we examined the rate 

development documentation and billings to other groups, such as the SSSGs, to determine if the 

market price was actually charged to the FEHBP. Finally, we used the contract, the Federal 

Employees Health Benefits Acquisition Regulations, and OPM's Rate Instructions to 

Community-Rated Carriers to determine the propriety of the FEHBP premiums and the 

reasonableness and acceptability ofthe Plan's rating system. 

To gain an understanding ofthe internal controls in the Plan's rating system, we reviewed the 

Plan's rating system's policies and procedures, interviewed appropriate Plan officials, and 

performed other auditing procedures necessary to meet our audit objectives. 

4
 
III. RESULTS OF mE AUDIT
 

Our audit showed that the Plan's rating of the FEHBP was in accordance with applicable Jaws, 

regulations, and OPM's rating instructions io carriers for contract years 2005 through 2009. 

Consequently, the audit did not identify any questioned costs and no corrective action is 

necessary. 

5
 
IV. MAJOR CONTRIBUTORS TO THIS REPORT 

Community-Rated Audits Group 

Auditor-in-Charge 

~uditor

Auditor 

Chief 

Senior Team Leader 

6