U.S. OFFICE OF PERSONNEL MANAGEMENT 

OFFICE OF THE INSPECTOR GENERAL 

OFFICE OF AUDITS 

Final Audit Report 

SUbject: 

AUDIT ON GLOBAL 


COORDINATION OF BENEFITS FOR 


BLUECROSS AND BLUESHIELD PLANS 


CONTRACT YEAR 2008 


Report No. lA-99-00-10-009 

Date: March 31, 2010 

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Office of the 

Inspector General 

UNITED STATES OFFICE OF PERSONNEL MANAGEMENT 


Washington, DC 20415 


AUDIT REPORT 

Federal Employees Health Benefits Program 


Service Benefit Plan Contract CS 1039 


BlueCross BlueShield Association 


Plan Code 10 


Global Coordination ofBenefits 


BlueCross and BlueShield Plans 


REPORT NO. lA-99-00-10-009 DATE: March 31, 2010 

~~ MIchael R. Esser 

Assistant Inspector General 

for Audits 

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


Washington, DC 20415 


Office of the 

Inspector General 

EXECUTIVE SUMMARY 


Federal Employees Health Benefits Program 


Service Benefit Plan Contract CS 1039 


BlueCross BlueShield Association 


Plan Code 10 


Global Coordinatjon ofBenefits 


BlueCross and BlueShield Plans 


REPORT NO. lA-99-00-107009 DATE: March 31, 2010 

This final audit report on the Federal Employees Health Benefits Program (FEHBP) operations 

at aU BJueCross and BlueShield (BCBS) plans questions $7,417,178 in health benefit charges. 

The BlueCross BIueShield Association (Association) and/or BCBS plans agreed with $4,296,158 

and disagreed with $3,121,020 of the questioned charges. 

Our limited scope audit was conducted in accordance with Government Auditing Standards. The 

audit covered health benefit payments for contract year 2008 as reported in the Annual 

Accounting Statement. Specifically, we reviewed claims incurred from October 1, 2007 through 

December 31, 2008 that were reimbursed in 2008 and potentially not coordinated with Medicare. 

We determined that the BCSS plans did not properly coordinate 14,773 claim line payments with 

Medicare as required by the FEHBP contract. As a result, the FEHBP was overcharged 

$7,417,178. When we notified the Association ofthese errors on October 1,2009, the claims 

were within the Medicare timely filing requirement and could be filed with Medicare for 

coordination of benefits. 

www.opm.gov www.usajobs.gov 
CONTENTS 


PAGE 

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


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


II. OBJECTIVE, SCOPE, AND METHODOLOGY ............................................................ 3 


III. 	 AUDIT FINDING AND RECOMMENDATIONS ......................................................... 5 


Coordination of Benefits with Medicare .................................................................... 5 


IV. MAJOR CONTRIBUTORS TO THIS REPORT .......................................................... ll 


V. SCHEDULES 

A. 	 UNIVERSE AND SAMPLE OF POTENTIALL Y UNCOORDINATED CLAIM 

LINES 

B. 	 SUMMARY OF QUESTIONED CHARGES 

APPENDIX 	 (BlueCross BlueShield Association reply, dated January 22, 2010, to the 

draft audit report) 
I. INTRODUCTION AND BACKGROUND 


INTRODUCTION 


This final audit report details .the findings, conclusions, and recommendations resulting from our 

limited scope audit of the Federal Employees Health Benefits Program (FEHBP) operations at all 

BlueCross and BlueShield (BCBS) plans. 

The audit was performed by the Office of Personnel Management's (OPM) Office of the Inspector 

General (OIG), as established by the Inspector General Act of 1978, as amended. 

BACKGROUND 

The FEHBP was established by the Federal Employees Health Benefits (FEHB) 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. OPM's Retirement and Benefits 

Office has overall responsibility for administration ofthe FEHBP. The provisions ofthe FEHB 

Act are implemented by OPM through regulations, which are codified in Title 5, Chapter 1, Part 

890 of the Code of Federal Regulations (CFR). Health insurance coverage is made available 

through contracts with various health insurance carriers. 

The BlueCross BlueShield Association (Association), on behalf of participating BCBS plans, has 

entered into a Goverrunent-wide Service Benefit Plan contract (CS 1039) with OPM to provide a 

health benefit plan authorized by the FEHB Act. The Association delegates authority to 

participating local BCBS plans tlrroughout the United States to process the health benefit claims 

of its federal subscribers. There are approximately 63 local BCBS plans participating in the 

FEHBP. 

The Association has established a Federal Employee Program (FEp l

) Director's Office in 

Washington, D.C. to provide centralized management for the Service Benefit Plan. The FEP 

Director's Office coordinates the administration of the contract with the Association, member 

BlueCross and BlueShield plans, and OPM. 

The Association has also established an FEP Operations Center. The activities ofthe FEP 

Operations Center are perfonned by CareFirst BCBS, located in Washington, D.C. These 

activities include acting as fiscal intermediary between the Association and member plans,· 

verifying subscriber eligibility, approving or disapproving the reimbursement of local plan 

payments ofFEHBP claims (using computerized system edits), maintaining a history file of all 

FEHBP claims, and maintaining an accounting of all program funds. 

Compliance with laws and regulations applicable to the FEHBP is the responsibility of the 

management for the Association and each BCBS plan. Also, management of each BCBS plan is 

responsible for establishing and maintaining a system of internal controls .. 

I Throughout this report, when we refer to "FEP" we are referring to the Service Benefit Plan lines of business at the 

Plan. When we refer to the "FEHBP" we are referring to the program that provides health benefits to federal 

employees. 
Findings from our previous global coordination of benefits audit of all BeBS plans (Report No. 

lA-99-00-09-011, dated July 20,2009) for contract year 2007 are in the process of being 

resolved. 

Our preliminary results ofthe potential coordination of benefit errors were presented in detail in 

a draft report, dated October 1,2009. The Association's comments offered in response to the 

draft report were considered in preparing our final report and are included as the Appendix to 

this report. Also, additional documentation provided by the Association and BeBS plans was 

considered in preparing our final report. 

2 

II. OBJECTIVE, SCOPE, AND METHODOLOGY 


OBJECTIVE 


The objective of this audit was to determine whether the BCBS plans complied with contract 

provisions relative to coordination of benefits with Medicare. 

SCOPE 

We conducted our limited scope perfolTIlance audit in accordance with generally accepted 

government auditing standards. Those standards require that we plan and perform the audit to 

obtain sufficient and appropriate evidence to provide a reasonable basis for our findings and 

conclusions based on our audit objective. We believe that the evidence obtained provides a 

reasonable basis for our findings and conclusions based on our audit o~jective. 

The audit covered health benefit payments for contract year 2008 as reported in the BlueCross 

and BlueShield FEHBP Annual Accounting Statement. Specifically, we reviewed claims 

incurred from October 1, 2007 through December 31, 2008 that were reimbursed in 2008 and 

potentially not coordinated with Medicare. Based on our claim error reports, we identified. 

565,331 claim lines, totaling $66,114,553 in payments, that potentially were not coordinated with 

Medicare. From this universe, we selected and reviewed 36,421 claim lines, totaling $24,000,153 

in payments, for coordination of benefits with Medicare. When we notified the Association of 

these potential errors on October 1,2009, the claims were within the Medicare timely filing 

requirement and could be filed with Medicare for coordination of benefits. 

We did not consider each BCBS plan's: internal control structure in pi arming and conducting our 

auditing procedures. Our audit approach consisted mainly of substantive tests of transactions 

and not tests of controls. Therefore, we do not express an opinion on each BCBS plan's system 

of internal controls taken as a whole . 

.We also conducted tests to determine whether the BeBS plans had complied with the contract 

and the laws and regulations governing the FEHBP as they relate to coordination of benefits. 

The results of our tests indicate that, with respect to the items tested, the BeBS plans did not 

fully comply with the provisions of the contract relative to coordination of benefits with 

Medicare. Exceptions noted in the areas reviewed are set forth in detail in the "Audit Finding 

and Recommendations" section of this report. With respect to the items not tested, nothing came 

to our attention that caused us to believe that the BCBS plans had not complied, in all material 

respects, with those provisions. 

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

the FEP Director's Office, the FEP Operations Center, and the BeBS plans. Due to time 

constraints, we did not verify the reliability of the data generated by the various information 

systems involved. However, while utilizing the computer-generated data during our audit 

testing, nothing came to our attention to cause us to doubt its reliability. We believe that the data 

was sufficient to achieve our audit objective. 

3 

The audit was performed at our offices in Washington, D.C.; Cranberry Township, Pennsylvania; 

and Jacksonville, Florida from October 1, 2009 through March 5, 2010. 

METHODOLOGY 

To test each BCBS plan's compliance with the FEHBP health benefit provisions related to 

coordination of benefits with Medicare, we selected a judgmental sample of potential 

uncoordinated claim lines that were identified in a computer search. Specifically, we selected for 

review 36,421 claim lines, totaling $24,000,153 in payments, from a universe of 565,331 claim 

lines, totaling $66,114,553 in payments, that potentially were not coordinated with Medicare (See 

Schedule A for our sample selection methodology). 

The claim samples were submitted to each applicable BCBS plan for their review and response. 

F or each plan, we then conducted a limited review oftheir agreed responses and an expanded 

review of their disagreed responses to deterinine the appropriate questioned amount. We did not 

project the sample results to the universe of potential uncoordinated claim lines. 

The determination of the questioned amount is based on the FEHBP contract, the Service Benefit 

Plan brochure, the Association's FEP administrative manual, and various manuals and other 

documents available from the Center for Medicare and Medicaid Services that explain Medicare 

benefits. 

4 

III. AUDIT FINDING AND RECOMMENDATIONS 


Coordination ofBenefits with Medicare $7,417,178 

The BCBS plans did not properly coordinate 14,773 claim line payments, totaling $8,726,668, 

with Medicare as required by the FEHBP contract. As a result, the FEHBP paid as the primary 

insurer for these claims when Medicare was the primary insurer. Therefore, we estimate that the 

FEHBP was overcharged by $7,417,178 for these claim lines. 

The 2008 BlueCross and BlueShield Service Benefit Plan brochure, page 113, Primary Payer 

Chart, illustrates when Medicare is the primary payer. In addition, page 23 ofthat brochure 

states, "We limit our payment to an amount that supplements the benefits that Medicare would 

pay under Medicare Part A (Hospital Insurance) and Medicare Part B (Medical Insurance), 

regardless ofwhether Medicare pays." 

Contract CS 1039, Part II, section 2.6 states, "(a) The Carrier shall coordinate the payment of 

benefits under this contract with the payment of benefits under Medicare ... (b) The Carrier 

shall not pay benefits under this contract until it has detennined whether it is the primary 

carrier ...." Also, Part III, section 3.2 (b )(1) states, "The Carrier may charge a cost to the 

contract for a contract term if the cost is actual, allowable, allocable, and reasonable ... [and] 

on request, document and make available accounting support for the cost to justify that the cost 

is actual, reasonable and necessary; and (ii) determine the cost in accordance with: (A) the 

terms of this contract ...." 

In addition, Contract CS 1039, Part II, ~ectjon 2.3(g) states, "Ifthe Carrier or aPM detennines 

that a Member's claim has been paid in error for any reason ... the Carrier shall make a prompt 

and diligent effort to recover the erroneous payment ...." 

For claims incurred from October 1, 2007 through December 31, 2008 and reimbursed in 2008, 

we performed a computer search and identified 565,331 claim lines, totaling $66,114,553 in 

payments, that potentially were not coordinated with Medicare. From this universe, we selected 

for review a sample of 36,42] claim lines, totaling $24,000,153 in payments, to detennine 

whether the BCBS plans complied with the contract provisions relative to coordination of 

benefits (COB) with Medicare. When we submitted our sample of potential COB errors to the 

Association on October 1,2009, the claims were within the Medicare timely filing requirement 

and could be filed with Medicare for coordination of benefits. 

GeneraIJy, Medicare Part A covers 100 percent of inpatient care in hospitals, skilled nursing 

facilities and hospice care. For each Medicare Benefit Period, there is a one-time deductible, 

foHowed by a daily copayment beginning with the 61 st day. Beginning with the 91 st day ofthe 

Medicare Benefit Period, Medicare Part A benefits may be exhausted, depending on whether the 

patient elects to use their Lifetime Reserve Days. For the uncoordinated Medicare Part A claims, 

we estimate that the FEHBP was overcharged for the total claim payment amounts. When 

applicable, we reduced the questioned amount by the Medicare deductible andlor Medicare 

copayment. 

5 

Medicare Part B pays 80 percent ofmost outpatient charges and professional claims after the 

calendar year deductible has been met. Also, Medicare Part B covers a portion of inpatient 

facility charges for ancillary services such as medical supplies, diagnostic tests, and clinical 

laboratory services. Based on our experience, ancillary items accolint for approximately 30 

percent of the total inpatient claim payment. Therefore, we estimate that the FEHBP was 

overcharged 25 percent for these inpatient claim lines (0.30 x 0.80 = 0.24 ~ 25 percent). 

We separated the uncoordinated claims into the following six categories based on the clinical 

setting and whether Medicare Part A or B should have been the primary payer. 

• 	 Categories A and B consist of inpatient claims that should have been coordinated with 

Medicare Part A. In a small number of instances where the BCBS plans indicated that 

Medicare Part A benefits were exhausted, we reviewed the claims to determine whether there 

were any inpatient services that were payable by Medicare Part B. For these claim lines, we 

only questioned the services covered by Medicare Part B. 

• 	 Categories C and D include inpatient claims with ancillary items that should have been 

coordinated with Medicare Part B. When we could not reasonably determine the actual 

overcharge for a claim line, we questioned 25 percent of the amount paid for these inpatient 

claim lines. In a small number of instances where the BeBS plans indicated that members 

had Medicare Part B only and priced the claims according to the Omnibus Budget 

Reconciliation Act of 1990 pricing guidelines, we reviewed the claims to determine whether 

there were any inpatient services that were payable by Medicare Part B. 

• 	 Categories E ,and F include outpatient and professional claims where Medicare Part B should 

have been the primary payer. When we could not reasonably determine the actual 

overcharge for a claim line, we questioned 80 percent ofthe amount paid for these claim 

lines. " 

From-these six categories, we selected for review a sample of claim lines that potentially were 

not coordinated with Medicare (See Schedule A for our sample selection methodology). Based 

on our review, we identified 14,773 claim lines, totaling $8,726,668 in payments, where the 

FEHBP paid as the primary insurer when Medicare was the primary insurer. We estimate that 

the FEHBP was overcharged $7,417,178 for these claim line payments.2 

2 In addition, there were 7,128 claim lines, totaling $3,980,789 in payments, with COB errors that were identified 

by the BCBS plans before the start ofour audit (Le., October 1,2009) and adjusted on or before the plans' 

response due date (Le., December 31, 2009) to our audit information request. Since these COB errors were 

identified by the BCBS plans before the start of our audit and adjusted by the plans' response due date to our audit 

request, we did not question these COB errors in the final report. 

6 
The following table details the six categories of questioned uncoordinated claim lines: 

Category . 

Claim 

Lines 

Amount 

Paid 

Amount 

Questioned 

Category A: Medicare Part A Primary for 

Inpatient (lIP) Facility 234 $4,296,846 $4,296,846 

Category B: Medicare Part A Primary for 

Skilled NursingIHome Health Care (HHC)/ 

Hospice Care 

4,937 $901,072 $901,072 

Category C: Medicare Part B Primary for 

Certain lIP Facility Charges 102 $858,328 $217,875 

Category D: Medicare Part B Primary for 

Skilled Nursing/HHClHospice Care 65 $280,882 $77,717 

Category E: Medicare Part B Primary for 

Outpatient (OIP) Facility and Professional 7,688 $1,548,594 $1,246,056 

Category F: Medicare Part B Primary for OIP 

Facility and Professional (Participation Code F) 1,747 $840,946 $677,612 

Total 14,773 $8,726,668 $7,417,178 

Our audit disclosed the following for the COB errors: 

• 	 For 11,205 (76 percent) ofthe claim lines questioned, there was no special information on 

the FEP national claims system to identify Medicare as the primary payer when the claims 

were paid. However, when the Medicare information was subsequently added to the FEP 

national claims system, the BCBS plans did not review and/or adjust the patient's prior 

claims back to the Medicare effective dates. 

• 	 For 3,568 (24 percent) ofthe claim lines questioned, there was special information present on 

the FEP national claims system to identify Medicare as the primary payer when the claims 

were paid. An incorrect Medicare Payment Disposition Code was used for 90 percent of 

these claims. The Medicare Payment Disposition Code identifies Medicare's responsibility 

for payment on each charge line of a claim. Per the FEP Administrative Manual, the 

completion of this field is required on all claims for patients who are age 65 or older. We 

found that codes E, F, and N were incorrectly used. An incorrect entry in this field causes 

the claim line to be excluded from coordination of benefits with Medicare. 

Ofthe $7,417,178 in questioned charges, $3,121,020 (42 percent) were identified by the BeBS 

plans before the start of our audit (i.e., October 1, 2009). However, since the BCBS plans had 

not completed the recovery process and/or adjusted these claims by the plans' response due date 

(i.e., December 31,2009) to the audit information request, we are continuing to question these 

COB errors. The remaining questioned charges of$4,296,158 (58 percent) were identified as a 

result of our audit. 

7 
Association's Response: 

In response to the draft audit report, the Association states, "After reviewing the OIG Draft Audit 

Report and listing of potentially uncoordinated Medicare COB claims ... there was a total of 

$4,610,894 ... ofthe questioned amount that was not coordinated with Medicare. Ofthis 

amount, $2,520,614 in claim payments were made correctly when the claim was initially paid; 

however, the claim was not adjusted upon subsequent processing of Medicare coverage 

infonnation. To date Plans have received $1,238,256 in claim payment errors. Recovery has 

been initiated on the remaining overpayments and the Plans will co]}tinue to pursue these 

overpayments ... 

To the extent that claim payment errors did occur or were not identified, these payments were 

good faith erroneous benefit payments and fall within the context ofCS 1039, Section 2.3 (g). 

Any benefit payments the Plans are unable to recover are allowable charges to the Program. In 

addition, as good faith erroneous payments, lost investment income does not apply to the 

payments identified in the finding. 

Our analysis of payment errors indicated the following: 

• 	 Claims were processed incorrectly because the claims examiner failed to use the Medicare 

Summary Notice (MSN) submitted by the provider to process the claim correctly. This 

resulted in claims being paid as 'not covered by Medicare' when the MSN indicated that 

Medicare had made payments on the claims. 

• 	 Claims were processed incorrectly because the claims examiner processed a claim submitted 

by the provider that did not include the MSN which documents whether Medicare denied the 

services. This also resulted in claims being paid as 'l1ot covered by Medicare' or 'provider 

not covered by Medicare' when the MSN indicated that Medicare had made payments on the 

claims. 

• 	 Claims that were provided to the Plans on either the retroactive enrollment reports, the FEP 

Director's Office on-Hne Uncoordinated Medicare application or the FEP Operations Center 

generated Ad-Hoc review reports were not worked before the start ofthe audit. 

• 	 The FEP Operations Center Ad-Hoc reports used to identify various uncoordinated Medicare 

claims ... did not identify all ofthe appropriate claims for Plans to review and adjust. 

In order to continue to improve the FEP Program's Medicare COB processing, FEP will continue 

with our current COB Action Plan, with modification as necessary ...." 

8 

Regarding the contested amount, the Association states that "the claims were paid correctly as 

discussed below: 

• 	 Claims totaling $2,805,889 are contested because recovery had been initiated in accordance 

with CS 1039,2.3 (g) but not comph;ted or were uncollectible at the time the Draft Audit 

Report response was provided. The majority ofthese claims were also paid correctly based 

upon the Medicare information that was on file at the time of initial payment .... 

Documentation to support the contested amounts and the initiation of overpayment recovery 

before the audit has been provided." 

DIG Comments: 

After reviewing the Association's response and additional documentation provided by the BCBS 

plans, we revised the questioned charges from our draft report to $7,417,178. Based on the 

Association's response and the BCBS plans' additional documentation, we determined that the 

Association and/or plans agree with $4,296,158 and disagree with $3,121,020. 

Although the Association agrees with $4,610,894 in its response, the BCBS plans' 

documentation only supports concurrence with $4,296,158. For these uncontested COB errors, 

we disagree with the Association's comments that the payments were good faith erroneous 

benefit payments. When the Medicare information was subsequently added to the claims 

system, the BCBS plans did not review and/or adjust the patients' prior claims back to the 

Medicare effective dates. Since the BeBS plans did not take the proper action to immediately 

correct the overpayments, we do not believe the BeBS plans acted in good faith to recover these 

overpayments. 

Based on the Association's response andlor the BeBS plans' documentation, $3,121,020 ofthe 

contested amount represents COB errors where recovery efforts were initiated by the plans 

before the audit started. However, the BCBS plans had not recovered these overpayments and 

adjusted the claims by the plans' response due date to our audit information request. Since these 

overpayments had not been recovered and returned to the FEHBP by the plans' response due 

date, we are continuing to question this amount in the final report. 

Recommendation 1 

We recommend that the contracting officer disallow $7,417,178 for uncoordinated claim 

payments and verify that the BCBS plans return all amounts recovered to the FEHBP. 

Recommendation 2 

Although the Association has developed a corrective action plan to reduce COB findings, we 

recommend that the contracting officer instruct the Association to ensure that all BCBS plans are 

following the corrective action plan. 

9 

Recommendation 3 

We recommend that the contracting officer require the Association to ensure that the BCBS plans 

have procedures in place to review an claims incurred back to the Medicare effective dates when 

updated, other party liability infonnation is added to the FEP national claims system. When 

Medicare eligibility is subsequently reported, the plans are expected to immediately determine if 

already paid claims are affected and, if so, to initiate the recovery process within 30 days. 

Recommendation 4 

We recommend that the contracting officer require the Association to revise and correct the 

procedures regarding the input of Medicare Payment Disposition Codes. We also recommend 

that the software used for handling claims received electronically be reviewed to verify that it 

creates the appropriate value for Medicare Payment Disposition Codes. These corrective actions 

.should ensure that the FEP system will utilize the special infonnatlon when it is present to 

properly coordinate these claims. 

10 

IV. MAJOR CONTRIBUTORS TO THIS REPORT 

Experience-Rated Audits Group 

Auditor-In-Charge 


Auditor-In-Charge 


Chief 

Infonnation Systems Audits Group 

Chief 

Senior InfonnationTechnology Specialist 

11 

SCHEDULE A 

V. SCHEDULES 

Coordination of Benefits with Medicare 


BlueCross and BlueShield Plans 


Claims Reimbursed in 2008 


UNIVERSE AND SAMPLE OF POTENTlALLY UNCOORDINATED CLAIM LINES 

UNIVERSE SAMPLE 

CATEGORY 

Number of 

Claims 

Number of Number of 

Claim Lines Patients 

COB Universe 

Total Payments 

Sa mple Selection. 

Methodology 

Number of 

Claims 

Number of 

Claim Lines 

Number of 

Patients Amounts Paid 

Estimated 

Overcharge 

Percentage 

Potential 

Overcharge 

Category A' Medicare Part A Primary for 

lIP Facility 725 726 562 $11,220,055 all patients 725 726 562 $11,220,055 100% $11,220,055 

Category B: Medicare Part A Primary for 

Skilled NursingiHHClHospice Care 4,523 14,525 1,473 $2,835,753 patients with cumulative 

claims of$I,OOO or more 2,578 9,924 482 $2,467,972 100% $2,467,972 

Category C: Medicare Part B Primary for 

Certain IIP F acHity Charges 179 180 152 $1,844,266 patients with cumulative 

claims of$2,500 or more 170 171 143 $1,825,968 25% $456,492 

Category D' Medicare Part B Primary for 

Skilled NursingIHHClHospice Care 268 413 170 $354,099 patients with cumulatIve 

claims of$2,500 or mOTe 167 186 110 $777,718 25% $194,430 

Category E: Medicare Part B Primary for 

Outpatient Facility and Professional 13,966 25,598 3,767 $4,288,791 patients with cumulative 

claims onl,OOD or more 7,375 16,016 787 $3,513,361 80% $2,810,689 

Category F: Medicare Part B Primary for 

Outpatient Facility and Professional 

(Participation Code F) 

402,918 523,889 218,624 145,071,589 patients with cumulative 

claims of$5.000 or mOTe 4,704 9,398 415 14,195,080 80% $3,356,064 

Totals 422,579 565,331 $66,114,553 15,719 36,421 $24,000,153 $20,505,701 
SCHEDULEB 

Page I of 3 

Coordination of Benefits with Medicare 

BlueCross and BlueShield Plans 

Claims Reimbursed in 2008 

SUMMARY OF QUESTIONED CHARGES 

COB CategoTV A 

Plan Clatm Amount 

Site # Plan State Plan Name Lines Questioned 

003 NM: BCBS of New Me~ico 4 $24,458 

005 GA WellPoint BCBS of Georgia 4 $47,972 

006 MD CareFirst BCBS 3 $47,494 

007 LA BCBS of Louisiana 5 $5[ 976 

009 AL BCBS ofAlabama 5 S50,195 

010 lD BC ofldaho Health Service 1 $2,262 

011 MA BCBS of Massachusetts I S 19",059 

012 NY BCBS ofWestem New York 0 $0 

013 PA Highmark BCBS 0 SO 

015 TN BCBS ofTennessee 0 SO 

016 WY BCBS of Wyoming I $86,450 

017 IL BCBS of lIIinois 18 $462,561 

021 OH Ohio WellPoin! BCBS II S442,481 

024 SC BCBS ofSouth Carolma ° $0 

027 NH New Hampshire WellPoint BCBS 0 $0 

028 \IT BCBS of Vermont 0 $0 

029 TX BCBS ofTexas 9 $94,672 

030 CO Colorado WellPoint BCBS 8 $364,721 

031 [A Wellmark BCBS ofIowa 6 $85354 

032 MJ BCBS of MichiJ!an 3 SI,758 

033 NC BCSS of North Carolina 17 $226,657 

034 ND BCBS of Nonh Dakota 0 SO 

036 PA C3£ital BC 2 58,292 

037 MT BCBS of Montana I S5,912 

038 Hl BCBS of Hawaii 0 $0 

039 IN Indian~ WellPOint BCSS I $13,424 

040 MS BCBS of MississiDDi 2 $21,410 

COB Categorv B COB Catel(orv C COB Category D 

Claim Amount Claim Amount Claim Amount 

Lines Questioned Lines Questioned Lines Questioned 

I $77 0 SO 0 $0 

118 $11,771 1 $768 0 SO 

113 $44,418 2 $2,828 0 $0 

105 $8,590 0 SO 0 SO 

1 $5,490 8 S12,489 0 $0 

19 $2,901 0 SO I S978 

42 S3,741 1 $914 0 $0 

" 

0 SO a $0 0 SO 

0 so 0 SO 0 SO 

202 S33,547 0 $0 4 S7,102 

0 $0 0 $0 0 $0 

146 $14,754 2 $4,673 0 SO 

115 $48,539 7 $11,864 13 S17,356 

254 S39,064 0 $0 0 $0 

5 $10,154 0 $0 I $1,050 

0 SO 0 SO 0 SO 

308 535599 10 $18,425 0 $0 

208 $19,672 2 $8,947 I S1,668 

0 SO 0 $0 0 SO 

12 $1,918 3 $1,986 0 $0 

583 $61,072 9 SI9,514 0 SO 

[ $4,654 0 $0 0 SO 

0 $0 I $967 1 SI,197 

7 $1,159 0 SO 0 50 

0 SO 0 $0 0 SO 

14 li2,Dt 7 $8,659 4 55,117 

73 $68,759 a SO 0 SO 

COB Category E COB Category F 

Claim Amount Amount 

Lines Questioned Claim Lines Questioned 

75 $7,810 4 S2,054 

193 $67,451 3 $122 

88 $16,301 19 $9,499 

[82 $17,208 115 $56,5[6 

165 S104,977 330 $56,576 

0 SO 0 SO 

0 SO I S964 

12 SI,649 0 $0 

175 S46,634 0 $0 

175 $32,987 30 $2,759 

0 SO 0 SO 

251 $29,286 164 $28,491 

!3 S7,517 36 $8,775 

33 $4,735 0 $0 

0 SO 0 $0 

1 SI73 5 $3,154 

725 SIII,531 83 $47,523 

174 $65.125 6 512,188 

2 $2,686 0 SO 

2 SI,189 11 55,865 

592 $76,021 0 $0 

0 $0 0 $0 

12 5631 0 $0 

0 $0 I $81 

3 $243 0 SO 

135 557,241 9 $7,506 

478 $30,336 11 $357 

ALL COB Categories 

Claim Amount 

Lines Questioned 

84 S34,399 

324 $128,084 

225 S120,540 

407 S134,290 

509 $229,727 

21 $6,141 

45 $24,678 

12 $1,649 

175 S46,634 

411 $76,395 

t S86,450 

581 $539,765 

195 $536,532 

287 $43,799 

6 $11,204 

6 $3,327 

1,135 $307,750 

399 S472,321 

8 S88,040 

31 $12,716 

1,201 5383,264 

1 54,654 

16 SII,087 

9 $7,152 

3 5243 

170 $94,078 

564 5120,862 
Coordination of Benefits with Medicare 

BlueCross and BlueShield Plans 

Claiins Reimbursed in 2008 

SCHEDULEB 

Page 2 of3 

'SUMMARY OF QUESTIONED CHARGES 

COB Category A COB Category B COB Category C COB Category D COB Category E COB Category F ALL COB Categones 

Plan 

Site # Plan State Plan Name 

Claim 

Lines 

Amount 

Questioned 

Claim 

Lines 

Amount 

Questioned 

Claim 

Lines 

Amount 

Questioned 

Claim 

Lines 

Amount 

Questioned 

Claim 

Lines 

Amount 

Questioned Claim Lines 

Amount 

Questioned 

Claim 

Lines 

Amount 

Questioned 

041 FL BCBS ofFlonda 52 $503,283 685 S125,124 5 S7,67 I 2 SI,555 897 $104025 397 $231,635 2,038 S973 ,293 

042 MO BCBS ofKansas City I S935 4 $[[,899 I $2,432 1 $655 0 $0 34 $16,186 41 S32,107 

044 AR Arkansas BCBS 0 SO 0 SO 0 SO 0 SO 82 $8422 0 SO 82 $8,422 

045 KY Kentucky WellPoint BCBS 2 $12,621 63 $4544 2 $2,569 4 S4,975 25 S3,096 0 SO 96 $27,805 

047 WI WellPoint BCBS United ofWisconsin 0 $0 0 $0 0 SO 7 S2,274 70 $11,400 3S S21,385 ][2 S35,060 

048 NY Empire BCBS II 571,328 73 $8,287 0 SO 0 $0 920 S84,786 0 SO 1,004 $164,40] 

049 NJ Horizon BCBS ofNew Jersev I $52,395 249 S33,l46 8 S7,971 0 $0 296 $47,909 0 SO 554 $141,421 

050 CT Connecticut WellPoint BCBS I S937 6 $519 I SI,883 1 SI,050 0 SO 5 S268 [4 $4 657 

052 CA WeliPoint BC ofCalifornia 17 S889,649 167 S23,678 9 $38,428 2 S3,294 271. S61,013 16 $32,404 483 SI,048,466 

053 NE BCBS of Nebraska I S66,394 0 SO 0 $0 0 $0 18 S5,263 0 SO 19 S71,657 

054 WV Mountain State BCBS 0 SO 137 S17,399 0 $0 I :&439 0 $0 0 SO 138 $17,838 

055 PA Independence BC 5 S61 195 85 S9,313 5 $35,794 5 $6,103 0 SO 0 $0 100 S]]2,404 

056 AZ BCBS ofArizona 2 S27,637 18 S2607 0 SO 0 $0 77 $15,240 60 S28,506 157 $73,990 

058 OR Regence BCBS of Oregon 3 S35,642 149 S26,i90 0 SO 4 S4,895 22 SI,674 0 $0 178 $68,401 

059 ME Maine WellPoinl BCBS 0 $0 27 $3,570 0 SO 2 S6,405 6 $],674 24 S13,503 59 $25,152 

060 RI BCBS ofRhode Island 0 SO 48 $)1,067 0 $0 0 SO 0 $0 0 SO 48 S11,067 

061 NY Nevada WeliPoint BCBS 3 $103276 3 $2,835 0 $0 2 S2,250 39 $4,828 0 SO 47 SI13,189 

062 VA Virginia Well Point BCBS 0 SO 48 $29,448 0 SO 4 S3,120 34 $23,583 234 S32,918 320 $89,069 

066 UT Regence BCBS ofUtah 2 S28,096 147 S14,146 2 $1,535 2 $478 II S794 0 SO 164 $45,049 

067 CA BS ofCalifornia 0 $0 0 $0 0 SO 0 $0 789 S60,271 6 $641 795 $60,912 

069 WA Regence BS of Washington 0 $0 0 $0 0 SO 0 SO 16 $1,751 0 SO 16 SI,751 

070 AI< BCSS of Alaska I S54,743 0 SO a $0 0 SO 14 S5,042 34 S18,646 49 S78,431 

075 WA Premera BC 9 $143,944 3 S5,920 0 SO 0 SO 25 S4701 35 $l6,355 72 $170,920 

076 MO WeliPoint BCBS of Missouri 4 $46,802 21 $38,365 14 $25,070 0 SO -197 $38,495 0 SO 236 $148,732 

078 MN BCSS of Minnesota 5 S40,534 0 $0 0 SO 0 SO 77 S31,370 18 $2,983 100 $74,887 

079 NY BCSS of Central NY 4 $32,718 0 $0 0 $0 0 SO 45 $3,240 0 SO 49 $35,958 

082 KS BCBS of Kansas I S6,541 30 $),298 0 $0 0 $0 2 $318 0 SO J3 S10,157 

083 OK BCBS of Oklahoma ·2 $25,134 15 $1,632 0 SO 0 SO 108 S21,323 3 S4,762 128 S52851 
Coordination of Benefils with Medicare 

BlueCross and BlueShield Plans 

Claims Reimbursed in 2008 

SCHEDULEB 

Page 3 ofJ 

SUMMARY OF QUESTIONED CHARGES 

COB Catel!:orv A COB Category B COB Catel!:Orv C COB Category 0 COB Category E COB Cate!!orv F ALL COB Categories 

Plan Claim Amount Claim Ameum Claim Amount Claim Amount ClaIm Amount Amount Claim Amount 

Site N Plan State Plan Name Lines Questioned Lmes Questioned Lines Questioned Lines Questioned Lines Ouestioned Claim Lines Questioned Lines Questioned 

084 NY BCBS ofUtica-Waterto\.\lll 0 SO 7 $679 0 SO 0 $0 44 $3,053 0 SO 51 $,3,732 

085 DC CareFirsl BCBS 5 S35,934 595 S104,882 I SI,222 3 S5,756 59 $9,173 17 $14,956 680 S171,923 

088 PA BC of Northeastern Pennsylvania 0 $0 0 $0 1 $1,266 a SO 0 $0 0 SO I SI,266 

089 DE BCBS of Delaware 0 SO 0 $0 0 $0 0 SO a SO 0 SO a so 

092 DC CareFirst BCBS (Overseas) 0 SO 30 S4,515 0 SO 0 $0 52 SII,881 1 . S33 81 $16,429 

Totals 234 $4,296,846 4,937 5901,071 102 5217,875 65 S77,717 7,688 51,246,056 1,747 S677.612 14,773 57,417,178 
APPENDIX 


BlueCross BlueSbieJd 

Association 

Au Association of ludependent 

Blue Cross and Hlue Shield Plon 

January 22,2010 

Federal Employee Program 

roup Chief 


udits Group 


Office of the Inspector General 


U.S. Office of Personnel Management 

1900 E Street, Room 6400 

Washington, DC 20415-1100 

Reference: 	 OPM DRAFT AUDIT REPORT 

Tier VIII Global Coordination of Benefits 

Audit Report #1A-99-00-10-009 

(Report dated and received 10/1/09) 

Dear 

1310 GStreet, N.W. 

Washington, D.C. 20005 

202.942.1000 

Fax 202.942.1125 

This is in response to the above referenced U.S. Office of Personnel 

Management (OPM) Draft Audit Report concerning the Global 

Coordination of Benefits Audit for claims paid in 2008. Our comments 

concerning the findings in the report are as follows: 

Ali. 	 Coordination of Benefits with Medicare 

Questioned Amount - $20,505,701 

The OPM OIG submitted their sample of potential Medicate Coordination 

of Benefits errors to the Blue Cross Blue Shield Association (SCSS) on 

October 1,2009. The SCSS Association and/or the BCBS Plans were 

requested to review these potential errors and provide responses by 

January 15, 2010. These listings included claims incurred from October 

1, 2007 through December 31, 2008 but reimbursed in 2008. aPM OIG 

identified 565,331 claim lines totaling $66,114,553 in potential 

uncoordinated claims. From this universe OPM OIG selected a sample of 

36,421 claim lines with a potential overcharge of $20,505,701 to the 

Federal Employee Health Benefit Program . 

. Blue Cross Blue Shield Association Preliminary Response: 

After reviewing the OIG Draft Audit Report and listing of potentially 

uncoordinated Medicare COB claims totaling $20,505,701, there was a 

total of $4,610,894 or 23 percent of the questioned amount that was not 

coordinated with Medicare. Of this amount, $2,520,614 in claim payments 

were made correctly when the claim was initially paid; however, the claim 
~ Page 2 of4 

was not adjusted upon subsequent processing of Medicare coverage 

information. To date Plan's have recovered $1,238,256 in claim payment 

errors. Recovery has been initiated on the remaining overpayments and 

the Plans will continue to pursue these overpayments as required by CS 

1039, Section 2.3 (g)(I). 

To the extent that claim payment errors did occur or were not identified, 

these payments were good faith erroneous benefit payments and fall 

within the context of CS 1039, Section 2.3 (g). Any benefit payments the 

Plans are unable to recover are allowable charges to the Program. In 

addition, as good faith erroneous payments, lost investment income does 

not apply to the payments identified in the finding. 

Our analysis of payment errors indicated the following: 

• 	 Claims were processed incorrectly because the claims examiner failed 

to use the Medicare Summary Notice (MSN) submitted by the provider 

to process the claim correctly. This resulted in claims being paid as 

"not covered by Medicare" when the MSN indicated that Medicare had 

made payments on the claims. 

• 	 Claims were processed incorrectly because the claims examiner 

processed a claim submitted by the provider that did not include the 

MSN which documents whether Medicare denied the services. This 

also resulted in claim,S being paid as "not covered by Medicare" or 

"provider not covered by Medicare" when the MSN indicated that 

Medicare had made payments on the claims. 

• 	 Claims that were provided to the Plans on either the retroactive 

enrollment reports, the FEP Director's Office on-line Uncoordinated 

Medicare application or the FEP Operations Center generated Ad-Hoc 

review reports were not worked before the start of the audit. 

• 	 The FEP Operations Center Ad-Hoc reports used to identify various 

uncoordinated Medicare claims (I.e., home health, skilled nursing, 

claims with incurred dates prior to the start of the member's coverage 

but in effect at the time the member was discharged or claims that 

were coordinated as non-covered services) did not identify all of the 

appropriate claims for Plans to review and adjust. 

In order to continue to improve the FEP Program's Medicare COB 

processing, FEP will continue with our current COB Action Plan, with 

modification as necessary, to include the following: 

• 	 Additional monitoring of Medicare COB activity for the 15 Plans with 

the highest COB Medicare audit finding. 

• 	 Modification of the FEP Administrative Manual to provide better 

guidance on when the Medicare Participation "F" code should be used 
I!IIIII 


Page 3 of 4 

as well as when certain home health, skilled nursing and hospice 

claims should be coordinated. . 

• 	 Causal analysis of the confirmed overpayments to identify 

enhancements to improve the current Medicare edits. 

• 	 Request a re-evaluation by the FEP Administrative Policy Group of the 

development of an edit that would "defer inpatient facility claims for 

members with Medicare Part A when the Medicare Participation Code 

"F" is used and the amount payable is above a specific dollar threshold 

for all but Veterans Administration or Department of Defense Facility 

claims. 

• 	 Evaluation of the requirement to have all Plans' claims from the 

Uncoordinated Medicare on-line application reported as part of their 

overpayment recovery claims inventory. This will allow closer 

monitoring of Plans activity by the FEP Director's Office. 

• 	 Evaluation of a new deferral that would require all claims processed as 

non-covered by Medicare or as a non-covered Medicare provider to be 

reviewed to ensure that the claim is only processed when the provider 

has included a MSN substantiating that the service was not covered or 

that the provider is not a covered provider. 

• 	 Evaluation of the current Operations Center Ad Hoc reports to 

determine where improvements can be made" 

With respect to the remaining $15,866,781, our review indicated that the 

claims were paid correctly as discussed below: 

• 	 Claims totaling $2,805,889 are contested be"cause recovery had been 

initiated in accordance with CS1039, 2.3 (g) but not completed or were 

uncollectible at the time the Draft Audit Report response was provided. 

The majority of these claims were also paid correctly based upon the 

Medicare "information that was on file at the time of initial payment. 

• 	 Claims totaling $3,660,482 are contested because the claims were 

adjusted before the response to the Draft Audit Report was submitted. 

• 	 Claims totaling $222,903 were contested because Medicare A or B is 

secondary or there were no Part B charges. 

• 	 Claims totaling $226,743 did not require coordination because the 

Medicare benefits were exhausted at the time of payment or Medicare 

was secondary. 

• 	 Claims totaling $4,151,274 were services not covered by Medicare or 

Medicare denied these charges. 

• 	 Claims totaling $465,285 are contested because the services were 

provided by a non Medicare approved provider. 

• 	 Claims totaling $4,184,302 are contested for "other" reasons, including 

but not limited to the fact that claim was coordinated correctly when 

originally paid and no adjustment was required. 
Mr. John Hirschman 

January 22, 2010 

Page 4 of4 

Documentation to support the contested amounts and the initiation of 

overpayment recovery before the audit has been provided. In addition, we 

have attached a schedule listed as Attachment A that shows the amount 

questioned, contested, reason contested and amount recovered by each 

Plan location. The Plans will continue to pursue the remaining amounts 

as required by CS 1039, Section 2.3 (g)(I). Any benefit payments the Plan 

is unable to recover are allowable charges to the Program. In addition, as 

good faith erroneous payments, lost investment income does not apply to 

the payments identified in the finding. 

We appreciate the opportunity to provide our response to this Draft Audit 

Report and would request that our comments be included in their entirety 

as part of the Final Audit Report. 

Sincerely, 

Attachment 

cc: