-- 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. 

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 –

Pittsburgh and Western Pennsylvania 

Report No. 1C-YE-00-13-067 

 Date: 
-- 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. 

AUDIT REPORT 

 

 

 

 

 Report No. 1C-YE-00-13-067 Date: 

 

 Michael R. Esser 

 Assistant Inspector General 

 for Audits 

Federal Employees Health Benefits Program

Community-Rated Health Maintenance Organization

Aetna Open Access – Pittsburgh and Western Pennsylvania

Contract Number CS 2867 - Plan Code YE

Blue Bell, Pennsylvania
i 

 

 EXECUTIVE SUMMARY

 

 

 

 Report No. 1C-YE-00-13-067 Date: 

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

Benefits Program (FEHBP) operations at Aetna Open Access – Pittsburgh and Western 

Pennsylvania (Plan). The audit covered contract years 2007 through 2011, and was conducted

from our offices located in Washington, D.C.; Cranberry Township, Pennsylvania; and 

Jacksonville, Florida. We found that the FEHBP rates were developed in accordance with 

applicable laws, regulations, and the Office of Personnel Management’s Rate Instructions to 

Community-Rated Carriers for the years audited. 

Federal Employees Health Benefits Program

Community-Rated Health Maintenance Organization

Aetna Open Access – Pittsburgh and Western Pennsylvania

Contract Number CS 2867 - Plan Code YE

Blue Bell, Pennsylvania
CONTENTS 

 Page 

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

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

II. OBJECTIVES, SCOPE, AND METHODOLOGY ......................................................... 3 

III. RESULTS OF THE AUDIT ............................................................................................ 5 

 

IV. MAJOR CONTRIBUTORS TO THIS REPORT ............................................................ 6 
1

I. INTRODUCTION AND BACKGROUND

Introduction 

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

at Aetna Open Access – Pittsburgh and Western Pennsylvania (Plan). The audit covered contract 

years 2007 through 2011, and was conducted from our offices located in Washington, D.C.; 

Cranberry Township, Pennsylvania; and Jacksonville, Florida. 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 1, 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 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 Healthcare and Insurance Office. The provisions of the Federal Employees Health 

Benefits Act are implemented by OPM through regulations codified in Chapter 1, 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 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 as of March 31 for each contract 

year audited. 

 

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2007 2008 2009 2010 2011

Contracts 893 1,274 1,628 1,807 1,943

Members 2,344 3,234 3,891 4,207 4,682

FEHBP Contracts/Members 

March 31
2

The Plan has participated in the FEHBP since 2002 and provides health benefits to FEHBP 

members in Pittsburgh and Western Pennsylvania. This is the first audit of the Plan conducted 

by our office. 

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

in subsequent correspondence. Since the audit concluded that the Plan’s rating of the FEHBP 

was in accordance with applicable laws, regulations, and OPM’s Rate Instructions to Community 

Rated Carriers (rate instructions), a draft report was not issued. 
3

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. 

Scope 

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 

2007 through 2011. For these years, the FEHBP paid approximately $62.4 million in premiums 

to the Plan, as shown on the chart above. 

OIG audits of community-rated carriers are designed to test carrier compliance with the FEHBP 

contract, applicable laws and regulations, and the 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 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 the 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 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 

$0

$2

$4

$6

$8

$10

$12

$14

$16

$18

$20

2007 2008 2009 2010 2011

Revenue $6.0 $9.7 $12.7 $15.0 $19.0

Millions

FEHBP Premiums Paid to Plan
4

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 conducted from our offices located in Washington, D.C.; Cranberry 

Township, Pennsylvania; 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 if the market price was actually charged 

to the FEHBP. Finally, we used the contract, the Federal Employees Health Benefits Acquisition 

Regulations, and the rate instructions to determine the propriety of the FEHBP premiums and the 

reasonableness and acceptability of the 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 policies and procedures, interviewed appropriate Plan officials, and 

performed other auditing procedures necessary to meet our audit objectives. 
5

III. RESULTS OF THE AUDIT

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

regulations, and the rate instructions for contract years 2007 through 2011. Consequently, the 

audit did not identify any questioned costs and no corrective action is necessary. 
6

IV. MAJOR CONTRIBUTORS TO THIS REPORT 

Community-Rated Audits Group 

, Auditor-in-Charge 

, Auditor –in-Charge 

, Lead Auditor 

, Lead Auditor 

, Lead Auditor 

, Auditor 

 Chief 

Senior Team Leader