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·.·l1S OFFICE OF PERSONNEL MANAGEMENT 

QFFICEOFTHE INSPECTOR GENERAL·· 

OFFICE OF AUDItS 

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~-CAUTION~ Thisllud.it reporlhas~bceildistfi"lJted io Federal Cifficiaiswhollre respDiisible (orthelld!JIinistratiDn olthe audited progra~. This audit 

report. may c:ontainproprietary da(a whic:hjsprCitec:tedbyFederalia~(18 U.S.C .i!iOs); therefore. while .Ihis audit report isavliilable· 

undertlie Freedom oflnfor!JIation Acl.cautionneed~ to be exerCised bdorereJeasingthereport 10 the general public. 
UNITED STATES OFFICE OF PERSONNEL MANAGEMENT
 

Washington, DC 2~415
 

Office of the 

Inspector General 

AUDIT REPORT
 

Federal Employees Health Benefits Program.
 

Community-Rated Health Maintenance Organization
 

Aetna Open Access
 

Contract Number 2914 - Plan Code P3
 

Blue Bell, Pennsylvania
 

Report No. lC-P3-00-09-013 Date: February 3, 2009 

Michael R. Esser 

Assistant Inspector General. 

for Audits 

www.opm.goY www.usaJobs.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 2914 - Plan Code P3
 

Blue Bell~ Pennsylvania
 

Report No. lC-P3-00-09-013 Date: February 3. 2009 

The Office ofthe Inspector General performed an audit ofthe Federal Employees Health 

Benefits Program (FEHBP) operations at Aetna Open Access - Plan Code P3. The audit covered 

contract years 2005 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 ofPersonne1 

Management's rules and regulations in 2005, 2006, 2007, and 2008. 

www.opm.gov www.usa)obs.gov 
CONTENTS
 

Page 

EXECUTIVE SUMMARY i
 

I. INTRODUCTION AND BACKGROUND 1
 

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 ofthe Federal Employees Health Benefits Program (FEHBP) operations 

at Aetna Open Access - Plan Code P3 (Plan) in Blue Bell, Pennsylvania. The audit covered 

contract years 2005 through 2008. The audit was conducted pursuant to the provisions of 

. Contract 2914; 5 U.S.C. Chapter 89; and 5 Code ofFederal Regulations (CFR) Chapter 1, Part 

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

Inspector General, as established by the Inspector General Act of ]978, 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 of the Federal Employees 

Health Benefits Act are implemented by OPM through regulations codified in Chapter I, Part 

890 ofTitIe 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 subjects the carriers to the Federal Employees Health Benefits Act 

and implementing regulations promulgated by OPM. 

The FEHBP should pay a market price rate, 

which 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 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. 

FEHBP Contracts/Members
 

March 31
 

46,000 

41,000 

36,000 

31,000 

26,000 

21,000 

16,000 

11,000 

6,000 

1,000 

2005 2006 2007 2008 

• Contracts 24,602 15,968 11,590 12,655 

o Members 45,888 26,487 19,458 21,542 

1
 
The Plan began participating in the FEHBP in 1982 and provides health benefits to FEHBP 

members throughout New Jersey and Pennsylvania. The last audit of the Plan conducted by our 

office was a full scope audit of contract years 2001,2003, and 2004. All issues related to that 

audit have been resolved. 

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

Since the audit showed that the Plan's rating of the 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 determine whether the Plan was in compliance with the 

provisions ofthe 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 

FEHBP Premiums Paid to Plan 

This performance audit covered contract 

years 2005 through 20081

. For contract 

$300 years 2005, 2006, and 2007, the FEHBP 

paid approximately $457.8 million in $250 r/l premiums c to the Plan. The premiums paid $200 for each contract year audited are shoMlon i $150 the chart to the right. 

$100 

01G audits of community-rated carriers are $50 

designed to test carrier compliance with the 

FEHBP contract, applicable laws and • Revenue 

regulations, and aPM 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
 

information 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. 

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

3
 

$193.2 

I 
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 infonnation systems involved. However, nothing came to our attention during our 

audit testing utilizing the computer generated data to cause us to doubt it;; reliability. We 

detem1ined 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 of the United States. 

The audit fieldwork was conducted at our office in Jacksonville, Florida, 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 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 of the Plan's rating 

systems. 

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 AUDIT
 

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

laws, regulations, and OPM's rating instructions for contract years 2005,2006,2007, 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 

Auditor-In-Charge 

Chief 

Senior Tearn Leader 

6