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 of Aetna Open Access
 

Plan Code JC
 

Report No. 1C-JC-OO-09-049 

Date: October 28. 2009

-CAUTION -­

This audit report has been distributed to Federal officials who are responsible for the administration of the audited program. This 

audit report may contain proprietary data which is protected by Federal law (18 U.S.c. 1905). Therefore, while this audit 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 that was redacted from the publicly 

distributed copy. 
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 JC
 

Blue Bell, Pennsylvania
 

Report No. 1C-,JC-Ofl-fl9-049 Date: october 28, 2009

The Office of the Inspector General performed an audit of the Federal Employees Health Benefits 

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

contract years 2005 through 2008 and was conducted at the Plan's office in Blue Bell. 

Pennsylvania. The audit showed that the Plan's ratings of the FEIIBP were developed in 

accordance with applicable laws, regulations, and the Office of Personnel Management's rating 

instructions for the years audited. 

www.opm.goY www.usaJobs.gOY 
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 2914 - Plan Code .IC
 

Blue Bell, Pennsylvania
 

Report No. 1C-.IC-OO-09-049 Da~: october 28, 2009 

~~
 Michael R. Esser 

Assistant Inspector General 

for Audits 

www.opm.gov 
CONTENTS
 

Page 

EXECUTfVE SUMMARY i
 

I. INTRODUCTION AND BACKGROUND 1
 

11. OBJECTIVES. SCOPE. AND METHODOLOGY 3
 

III. RESlJLTS OF Al][)[T 5
 

rv. 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 .lC (Plan) in Blue Bell, Pennsylvania. The audit covered 

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

Contract CS 2914; 5 U.S.c. Chapter 89; and 5 Code of Federal Regulations (CFR) Chapter L 

Part 890. 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 FEIIBP 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 IIealth 

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 health insurance 

carriers who 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 arc federally qualified). In addition, 

participation in the FEHEP subjects the carriers to the Federal Employees IIealth 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 r"EHBP. In contracting with 

community-rated carriers. Ol'M 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 

FFIIBP contracts and members reported by 

the Plan as of March 31 lor each contract 

year audited. 

FEHBP Contracts/Members
 

March 31
 

35,000 

30,000 

25,000 

20,000 

15,000 

10,000 

5,000 

a 

• Contracts 14,312 

o Members 31.940 
The Plan has participated in the FEHBP since] 983 and provides comprehensive medical 

services to the FEHBP as a mixed-model plan. Primary health care services are provided to Plan 

rnern bel's throughout the Connecticut, New York City, and Upstate New York areas. The last 

audit conducted by our office covered contract years 200],2003, and 2004. All noted exceptions 

were resolved and amounts questioned were returned to the Plan. 

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 of the FElIBP 

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

report. 
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. 

FEHBP Premiums Paid to Plan 

$125 

$120

II) 

c $115 

i 

$110

$105

$100 

• Revenue

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 2008. For these contract years the FEHBP 

paid approximately $474.3 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 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 of the 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 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 SSSGs); and 

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

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 

3
 
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 objectives. Except as noted above, the 

audit was conducted in accordance with generally accepted government auditing standards issued 

by the Comptroller General of the United States. 

The audit fieldwork was performed at the Plan's office in Blue Bell, Pennsylvania during 

June 2009. Additional audit work was completed at our offices in Washington, D.C. and 

Jacksonville, Florida. 

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 the SSSGs, to determine 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 ofthe Plan's rating 

system. 

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 FElIBP was in accordance with the applicable 

laws, regulations, and OPM's rating instructions to carriers for contract years 2005 through 2008. 

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 

Auditor-In-Charge 

Senior Team Leader 

Chief 

6