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US OFFICE OF PERSONNELMANAGE:MENT 

.QFFICEOF THE INSPECTOR GENERAL. 

OFFIQEOFAUDITS 

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This audit report hlls.been distributed to Federal and non-Federal officials whIt are responsible for th~ administration of . 

tile audited contract. This report may contaiil proprietary data which is protected by Federal law (I8 U.S.c. 1905); . 

therefore, while this report is avallableundertheFr~dont of Information Act, caution needs to be exerdsed before 

. I'eleasingthe reportto thegener:tlpublic.· . . . . 
UNITED STATES OFFICE OF PERSONNEL MANAGEMENT
 

Washington, DC 20415
 

Office of the 

Inspector Uencral 

AUDIT REPORT
 

Federal Employees Health Benefits Program
 

Community-Rated Health Maintenance Organization
 

Aetna Open Access
 

Contract Number 1766 - Plan Code IN
 

Blue Bell, Pennsylvania
 

Report No. lC-JN~OO-09-012 Date: February 3, 2009 

MichaelR. Esser 

Assistant Inspector General 

for Audits 

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

Washington, DC 20415
 

Office of the 

Inspector General 

EXECUTIVE SUMMARY
 

Federal Employees Health Benefits Program
 

Community-Rated Health Maintenance Organization
 

Aetna Open Access
 

Contract Number 1766 - Plan Code IN
 

Blue BeU, Pennsylvania
 I 

Report No. lC-JN-OO-09-012 Date: Febraury 3, 2009 

The Office of the Inspector General performed an auditofthe Federal Employees Health 

Benefits Program (FEHBP) operations at Aetna Open Access - Plan Code IN. The audit 

covered contract years 2006 through 2008 and was conducted at our field office in Jacksonville, 

Florida. We found that the FEHBP rates were developed in accordance with the Office of 

Personnel Management's rules and regulations in 2006,2007, and 2008. 

www.usaJobs,goy www.opm.gov 
CONTENTS
 

Page 

EXECU'fIVE SUMMARY i
 

1. INTRODUCTION AND BACKGROUND I
 

II. OBJECTIVES, SCOPE, AND METHODOLOGy 3
 

III. RESULTS OF AUDIT 5
 

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

Introduction 

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

ofAetna Open Access - Plan Code IN (Plan) in Blue Bell, Pennsylvania. The audit covered 

contract years 2006 through 2008. The audit was conducted pursuant to the provisions of 

Contract 1766; 5 U.S.C. Chapter 89; and 5 Code of Federal Regulations (CFR) Chapter 1, Part 

890. The auditwas perfonned by the Office ofPersonne1 Management's (OPM) Office ofthe
 

Inspector General, 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 Center for Retirement and Insurance Services. The provisions ofthe Federal Employees 

Health Benefits Act are implemented by aPM through regulations codified in Chapter 1, 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 FEHBP 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 su~jects the carriers to the Federal Employees Health Benefits Act 

and implementing regulations promulgated by OPM. 

The FEHBP should pay a market price rate, FEHBP Contracts/Members
 

which March 31
 is defined as the best rate offered to either 

ofthe 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. 

aPM negotiations relate primarily to the level 

of coverage and other unique features of the 

FEHBP. 

The chart to the right shows the number of 

FEHBP contracts and members reported by the 

Plan for March 31 of each contract year audited. 

1 

130,000 

110,000 

90,000 

70,000 

50,000 

30.000 

10,000 

• Contracts 

o Members 

2006 

52,280 

114,203 

2007 

52,689 

114,501 

2008 

51,397 

111,085 
The Plan began participating in the FEHBP in 1982 and provides health benefits to FEHBP 

members throughout Washington D.C., Maryland, and Virginia. The last audit of the Plan 

conducted by our office was a full scope audit of contract years 2003 through 2005. As a result 

ofthat audit, we found that the Plan's rating ofthe FEHBP was in accordance with the applicable 

laws, regulations, and aPM rating instructions for the years audited. 

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

Since the audit showed that the Plan's rating ofthe FEHBP was in accordance with the 

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 detennine 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 

2006 through 2008'. For contract years 2006 

and 2007, the FEHBP paid approximately 

$792.8 million in premiums to the Plan. The 

premiums paid for each contract year audited 

are shown on the chart to the right. 

OIG audits of community-rated carriers are 

designed to test carrier compliance with the 

FEHBP 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 of the Plan's internal control structure, but we did not use this 

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

audit included such tests ofthe Plan's rating systems and such other auditing procedures as we 

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

procedures the Plan has in place to ensure that: 

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

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

rate offered to an SSSG); and 

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

J The Subscription Income Report for 2008 was not available at the time this report was completed.
 

3
 

FEHBP Premiums Paid to Plan 

$450 

$400 

$350 

$300 

$250 

$200 

$150 

$100 

$50 

• 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 ofthe data generated by 

the various infonnation 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 

determined that the data available was sufficient to achieve our audit objectives. 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 conducted at our Jacksonville, Florida, field office during November 

and December 2008. 

Methodology 

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

the market price rates. In addition, we examined the rate development documentation and 

billings to other groups, such as SSSGs, to detennine ifthe 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 of the Plan's rating 

systems. 

To gain an understanding of the 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 AUDIT
 

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

laws, regulations, and OPM's rating instructions for contract years 2006, 2007, and 2008. 

Consequently, we did not identify any questioned costs and there are no corrective actions 

necessary. 

5
 
IV. MAJOR CONTRIBUTORS TO THIS REPORT 

Community-Rated Audits Group 

Auditor-In-Charge 

Auditor 

Group Chief 

Senior Team Leader 

6