U.S. OFFICE OF PERSONNEL MANAGEMENT 

OFFICE OF THE INSPECTOR GENERAL 

OFFICE OF AUDITS 

Final Audit Report 

Subject: 

BLUECROSS BLUESHIELD OF MINNESOTA 

EAGAN, MINNESOTA 

Report No. lA-IO-78-10-002 

Date: March 30, 2010 

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UNITED STATES OFFICE OF PERSONNEL MANAGEMENT
 

Washington, DC 20415
 

Office of the 

Inspector General 

AUDIT REPORT 

Federal Employees Health Benefits Program
 

Service Benefit Plan Contract CS 1039
 

BlueCross BlueShield Association
 

Plan Code 10
 

BlueCross BlueShield of Minnesota
 

Plan Codes 2201720
 

Eagan, Minnesota
 

REPORT NO. lA-10-78-1O-002 DATE: March 30, 2010 

;;;IPgL-


Michael R. Esser 

Assistant Inspector General 

for Audits 

www.opm.gov www.usajobs.goY 
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
 

BlueCross BlueShield of Minnesota
 

Plan Codes 2201720
 

Eagan, Minnesota
 

REPORT NO. lA-1O-78-10-002 DATE: March 30, 2010 

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

at BlueCross BlueShield of Minnesota (Plan), in Eagan, Minnesota, questions $33,482 in health 

benefit charges and lost investment income (LII). The BlueCross BlueShield Association agreed 

(A) with this questioned amount. 

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

audit covered claim payments from January 1,2006 through June 30, 2009, as well as 

miscellaneous payments and credits from 2004 through 2008 as reported in the Annual 

Accounting Statements.' In addition, we reviewed the Plan's cash management practices related 

to FEHBP funds for contract years 2004 through 2008. Due to errors identified during our 

review offraud recoveries, we expanded our audit scope to also include fraud recoveries in 2009. 

Questioned items are summarized as follows: 

I For claim payments, we only performed a system review of claims paid from January 1, 2008 through June 30, 2009, 

and reviewed a listing of debarred providers to determine if any claims were inappropriately paid to these providers 

from January 1,2006 through June 30, 2009. 

www.opm.gov www.usajobs.gov 
HEALTH BENEFIT CHARGES
 

Claim Payments 

The audit disclosed no findings pertaining to claim payments. Overall, we concluded that the 

claims in our system review and debarred provider samples were paid in accordance with the 

FEHBP contract, the Service Benefit Plan brochure, the Plan's provider agreements, and/or the 

Association's Federal Employee Program administrative manual. 

Miscellaneous Payments and Credits 

• ProviderSettlements fA) $24,734 

The Plan overcharged the FEHBP for two provider settlements paid in 2007. As a result, the 

FEHBP is due $24,734, consisting of $21,932 for provider settlement overcharges and 

$2,802 for LII. 

• Fraud Recoveries and Health Benefit Refunds (A) $8,748 

The Plan did not return six fraud recoveries and three health benefit refunds to the FEHBP. 

As a result, the FEHBP is due $8,748, consisting of$8,153 for recoveries and refunds not 

returned and $595 for LII. 

CASH MANAGEMENT 

Overall, we concluded that the Plan handled FEHBP funds in accordance with Contract CS 1039 

and applicable laws and regulations, except for the audit findings pertaining to cash management 

notedin the "Miscellaneous Payments and Credits" section. 

11 
CONTENTS
 

PAGE 

EXECUTIVE SUMMARY ,	 .i
 

I. INTRODUCTION AND BACKGROUND	 1
 

II. OBJECTIVES, SCOPE, AND METHODOLOGy	 3
 

III. AUDIT FINDINGS AND RECOMMENDATIONS	 6
 

A. HEALTIl BENEFIT CHARGES	 6
 

1. Claim Payments	 6
 

2. Miscellaneous Payments and Credits	 ; 6
 

a. Provider Settlements	 6
 

b. Fraud Recoveries and Health Benefit Refunds	 7
 

B. CASH MANAGEMENT	 9
 

IV. MAJOR CONTRIBUTORS TO THIS REPORT	 10
 

V. SCHEDULE A - HEALTH BENEFIT CHARGES AND AMOUNTS QUESTIONED 

APPENDIX	 (BlueCross BlueShield Association reply, dated February 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 

BlueCross BlueShield of Minnesota (Plan). The Plan is located in Eagan, Minnesota. 

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 of the FEHBP. The provisions of the 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 BlueCross and 

BlueShield plans, has entered into a Government-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 BlueCross and BlueShield plans throughout the United 

States to process the health benefit claims of its federal subscribers. The Plan is one of 

approximately 63 local BlueCross and BlueShield plans participating in the FEHBP. 

The Association has established a Federal Employee Program (FEp I

) 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 of the FEP 

Operations Center are performed by CareFirst BlueCross BlueShield, 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 oflocal plan 

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

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

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. 

1
 
Compliance with laws and regulations applicable to the FEHBP is the responsibility of the 

Association and Plan management. Also, management of the Plan is responsible for establishing 

and maintaining a system of internal controls. 

All findings from our prior audit of the Plan (Report No. lA-10-78-05-005, dated September 15, 

2006) for contract years 1999 through 2003 were satisfactorily resolved, except for a finding 

related to claim payment errors, which is in the process of being resolved. 

The results of this audit were provided to the Plan in written audit inquiries; were discussed with 

Plan and/or Association officials throughout the audit and at an exit conference; and were 

presented in detail in a draft report, dated January 22, 2010. The Association's comments 

offered in response to the draft report were considered in preparing our final report and are 

included as an Appendix to this report. 

2
 
II. OBJECTIVES, SCOPE, AND METHODOLOGY
 

OBJECTIVES
 

The objectives of our audit were to determine whether the Plan charged costs to the FEHBP and 

provided services to FEHBP members in accordance with the terms of the contract. Specifically, 

our objectives were as follows: 

Health Benefit Charges 

•	 To determine whether the Plan complied with contract provisions relative to benefit 

payments. 

•	 To determine whether miscellaneous payments charged to the FEHBP were in 

compliance with the terms of the contract. 

•	 To determine whether credits and miscellaneous income relating to FEHBP benefit 

payments were returned promptly to the FEHBP. 

Cash Management 

•	 To determine whether the Plan handled FEHBP funds in accordance with applicable 

laws and regulations concerning cash management in the FEHBP. 

SCOPE 

We conducted our limited scope performance 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 objectives. We believe that the evidence obtained provides a 

reasonable basis for our findings and conclusions based on our audit objectives. 

We reviewed the BlueCross and BlueShield FEHBP Annual Accounting Statements as they 

pertain to Plan codes 220 and 720 for contract years 2004 through 2008. During the period, the 

Plan paid approximately $1.1 billion in health benefit charges (See Schedule A). 

Specifically, we reviewed approximately $9 million in claim payments made from January 1, 

2006 through June 30, 2009. In addition, we reviewed miscellaneous payments and credits, 

such as refunds and subrogation recoveries, and cash management for 2004 through 2008. Due 

to errors identified during our review of fraud recoveries, we expanded our audit scope to also 

include all fraud recoveries in 2009. 

2 For claim payments, we only performed a system review of claims paid from January 1,2008 through June 30, 2009, 

and reviewed a listing of debarred providers to determine if any claims were inappropriately paid to these providers 

from January 1,2006 through June 30, 2009. 

3 
In planning and conducting our audit, we obtained an understanding of the Plan's internal control 

structure to help determine the nature, timing, and extent of our auditing procedures. This was 

determined to be the most effective approach to select areas of audit. For those areas selected, 

we primarily relied on substantive tests oftransactions and not tests of controls. Based on our 

testing, we did not identify any significant matters involving the Plan's internal control structure 

and its operation. However, since our audit would not necessarily disclose all significant matters 

in the internal control structure, we do not express an opinion on the Plan's system of internal 

controls taken as a whole. 

We also conducted tests to determine whether the Plan had complied with the contract, the 

applicable procurement regulations (i.e., Federal Acquisition Regulations (FAR) and Federal 

Employees Health Benefits Acquisition Regulations (FEHBAR), as appropriate), and the laws 

and regulations governing the FEHBP. The results of our tests indicate that, with respect to the 

items tested, the Plan did not comply with all provisions ofthe contract and federal procurement 

regulations. Exceptions noted in the areas reviewed are set forth in detail in the "Audit Findings 

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

came to our attention that caused us to believe that the Plan 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 Plan. Due to. time constraints, we 

did not verify the reliability ofthe 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 objectives. 

The audit was performed at the Plan's office in Eagan, Minnesota from October 12 through 

October 23, 2009. Audit fieldwork was also performed at our office in Cranberry Township, 

Pennsylvania. 

METHODOLOGY 

We obtained an understanding of the internal controls over the Plan's claims processing and 

financial systems by inquiry of Plan officials. 

To test the Plan's compliance with the FEHBP health benefit provisions, we selected and 

reviewed a judgmental sample of 85 claims (referred to as our system review) that were paid 

during the period January 1,2008 through June 30, 2009. 3 In addition, we reviewed all debarred 

providers in Minnesota for the purpose of determining if any claims were inappropriately paid to 

3 For this period, we identified 2,622,517 claim lines, totaling $388,210,529 in payments, using a standard criteria 

based on our experience. From this universe, we selected and reviewed a judgmental sample of 85 claims 

(representing 1,308 claim lines) totaling $9,185,382 in payments. We selected our sample from an OIG-generated 

"Place of Service Report" (SAS application) that stratified the claims by place of service (POS), such as provider's 

office and payment category, such as $50 to $99.99. We judgmentally determined the number ofsample items to 

select from each POS stratum based on the stratum's total claim dollars paid. 

4
 
these providers. We used the FEHBP contract, the Service Benefit Plan brochure, the Plan's 

provider agreements, and the Association's FEP administrative manual to determine the 

allowability of benefit payments, The results ofthese samples were not projected to the universe 

. ofc1aims. 

We interviewed Plan personnel and reviewed the Plan's policies, procedures, and accounting 

records during our audit ofmiscellaneous payments and credits. For contract years 2004 through 

2008, we also judgmentally selected and reviewed 56 high dollar health benefit refunds, totaling 

$3,867,317 (from a universe of 8,531 refunds, totaling $10,337,994); 10 high dollar special plan 

invoices, totaling $4,350,884 in net payments (from a universe of 110 special plan invoices, 

totaling $7,700,165 in net payments); 19 provider settlements, totaling $1,321,823 in net 

payments (from a universe of 4,034 provider settlements, totaling $5,214,826 in net payments); 

and 8 fraud cases, totaling $8,087 in recoveries (from a universe of 12 fraud cases, totaling 

$17,333 in recoveries), to determine ifrefunds and recoveries were promptly returned to the 

FEHBP andif miscellaneous payments were properly charged to the FEHBP.4 In addition, we 

expanded our testing of fraud recoveries to also include two recoveries, totaling $5,341, from 

2009. The results of these samples were not projected to the universe ofmiscellaneous payments 

and credits. 

We also reviewed the Plan's cash management to determine whether the Plan handled FEHBP 

funds in accordance with Contract CS 1039 and applicable laws and regulations. 

4 See the audit findings for "Provider Settlements" (A2.a) and "Fraud Recoveries and Health Benefit Refunds" (A2.b) 

on pages 6 through 9 for specific details of our sample selection methodologies. 

5
 
III. AUDIT FINDINGS AND RECOMMENDATIONS
 

A. HEALTH BENEFIT CHARGES 

1. Claim Payments 

The audit disclosed no findings pertaining to claim payments. Overall, we concluded that 

the claims in our system review and debarred provider samples were paid in accordance 

with the FEHBP contract, the Service Benefit Plan brochure, the Plan's provider 

agreements, and/or the Association's Federal Employee Program administrative manual. 

2. Miscellaneous Payments and Credits 

a. Provider Settlements $24,734 

The Plan overcharged the FEHBP for two provider settlements paid in 2007. As a 

result, the FEHBP is due $24,734, consisting of $21 ,932 for provider settlement 

overcharges and $2,802 for lost investment income (LII). 

Contract CS 1039, Part III, section 3.2 (b)(l) states, "The Carrier may charge a cost to 

the contract for a contract term ifthe cost is actual, allowable, allocable, and 

reasonable." 

48 CFR 52.232-17(a) states, "all amounts that become payable by the Contractor ... 

shall bear simple interest from the date due ... The interest rate shall be the interest 

rate established by the Secretary ofthe Treasury as provided in Section 611 ofthe 

Contract Disputes Act of 1978 (Public Law 95-563); which is applicable to the period 

in which the amount becomes due, as provided in paragraph (e) ofthis clause, and 

. then at the rate applicable for each six-month period as fixed by the Secretary until 

the amount is paid." 

For the period 2004 through 2007, there were 4,034 provider settlements totaling 

$5,214,826 in net charges to the FEHBP. From this universe, we selected and 

reviewed a judgmental sample of 18 provider settlements, totaling $666,772 in net 

charges, for the purpose of determining whether the Plan properly charged or timely 

returned these settlements to the FEHBP. From each year, we selected settlements 

based on the following methodology: highest dollar corporate settlement credit, 

highest dollar corporate settlement charge, highest dollar FEP settlement credit, 

highest dollar FEP settlement charge, and highest FEP allocation rate. Ifthe same 

provider settlement was selected under more than one ofthese methodologies, then 

we only counted that settlement as one sample item. Also, there were no provider 

settlement payments and/or recoveries in 2008. 

6
 
In one instance, we determined that the Plan did not correctly allocate a provider 

settlement charge to FEP. Due to a clerical error made on the Plan's settlement 

allocation spreadsheet, the Plan incorrectly allocated 19.44 percent to FEP instead of 

4.4 percent, resulting in an overcharge of $11,249 to the FEHBP. As a result, we 

reviewed additional provider settlement allocations to determine whether there were 

similar errors. We found one additional settlement error, again due to a clerical error, 

where the Plan incorrectly allocated 22.98 percent to FEP instead of3.74 percent, 

resulting in an overcharge of $10,683 to the FEHBP. 

In total, the FEHBP is due $24,734, consisting of $21,932 for two provider settlement 

overcharges and $2,802 for LII on these overcharges. We calculated LII on the 

questioned provider settlement overcharges through the dates (October 21, 2009 and 

November 5, 2009) when the Plan deposited the funds into the FEP investment 

account. 

Association's Response: 

The Association agrees with this finding. The Association states that the Plan 

returned the questioned amount of $24,734 to the FEHBP on January 14,2010. In 

addition, the Association states, "The error was due to a clerical error and to reduce 

the risk of this occurring again, the Plan now uses MS Access instead of an Excel 

Spreadsheet to allocate and track provider settlements." 

Recommendation 1 

We verified that the Plan deposited a total of $21,932 into the FEP investment 

account on October 21,2009 and November 5, 2009 for these provider settlement 

overcharges. Therefore, we recommend that the contracting officer verify that the 

Plan returned these funds to the FEHBP letter of credit account (LOCA). 

Recommendation 2 

We recommend that the contracting officer verify that the Plan credited the FEHBP 

$2,802 for LII on the provider settlement overcharges. 

b. Fraud Recoveries and Health Benefit Refunds $8,748 

The Plan did not return six fraud recoveries and three health benefit refunds to the 

FEHBP. As a result, the FEHBP is due $8,748, consisting of $8,153 for recoveries 

and refunds not returned and $595 for LII. 

Contract CS 1039, Part II, Section 2.3 (i) states, "All health benefit refunds and 

recoveries, including erroneous payment recoveries, must be deposited into the 

working capital or investment account within 30 days and returned to or accounted 

for in the FEHBP letter of credit account within 60 days after receipt by the Carrier." 

7
 
48 CFR 52.232-17(a) states, "all amounts that become payable by the Contractor ... 

shall bear simple interest from the date due ... The interest rate shall be the interest 

rate established by the Secretary ofthe Treasury as provided in Section 611 ofthe 

Contract Disputes Act of 1978 (Public Law 95-563), which is applicable to the period 

in which the amount becomes due, as provided in paragraph (e) ofthis clause, and 

then at the rate applicable for each six-month period as fixed by the Secretary until 

the amount is paid." 

Fraud Recoveries 

For the period 2004 through 2008, there were 12 fraud recoveries totaling $17,333. 

From this universe, we selected and reviewed a judgmental sample of eight fraud 

recoveries, totaling $8,087, for the purpose of determining if the Plan returned these 

recoveries to the FEHBP in a timely manner. Our sample included four recoveries 

that were judgmentally selected and four recoveries that, according to the Plan, were 

not returned to the FEHBP. 

Based on our review, we determined that the Plan did not return four fraud recoveries, 

totaling $2,001, to the FEHBP. The Plan stated that these recoveries were not 

returned to the FEHBP due to a lack of communication between the Plan's 

departments after implementing the Association's "Fraud Information Management 

System" in 2005. 

As a follow-up step, we requested the Plan to review all 2009 FEP fraud recoveries to 

determine ifthere were similar problems. The Plan reported two fraud recoveries, 

totaling $5,341, during this period. Based on our review of the Plan's documentation, 

we determined that the Plan did not return these two recoveries to the FEHBP. <~ " 

. In total, the Plan did not return six fraud recoveries, totaling $7,342, to the FEHBP. 

We determined that the FEHBP is also due $497 for LII on these recoveries. We 

calculated LII on these questioned recoveries through the date (December 29,2009) 

when the Plan deposited the funds into the FEP investment account. 

Health Benefit Refunds 

For the period 2004 through 2008, there were 8,531 health benefit refunds (including 

subrogation recoveries) totaling $10,337,994. From this universe, we selected and 

reviewed a judgmental sample of 56 refunds, totaling $3,867,317, for the purpose of 

determining ifthe Plan returned refunds to the FEHBP in a timely manner. From 

each year in the audit scope, we selected all refunds greater than $20,000. 

Based on our review, we determined that the Plan did not return three health benefit 

refunds, totaling $811, to the FEHBP. Specifically, two refunds were not deposited 

into the FEP investment account and adjusted through the LOCA, and one refund was 

not adjusted through the LOCA. For the two refunds that were not deposited into the 

FEP investment account, we determined that the FEHBP is also due $98 for LII on 

8
 
these refunds. We calculated LII on these refunds through the date (December 4, 

2009) when the Plan deposited the funds into the FEP investment account. 

Association's Response: 

The Association agrees with this finding. The Association states that the Plan 

returned the questioned amount of$8,748 to the FEHBP on January 14,2010. In 

addition, the Association states, "The Plan's process has been revised to ensure timely 

. return ofFEHBP's portion of collected fraud recoveries and health benefit refunds to 

the Program." 

Recommendation 3 

We verified that the Plan deposited a total of $8,153 into the FEP investment account 

on various dates in December 2009 for the questioned fraud recoveries and health 

benefit refunds. Therefore, we recommend that the contracting officer verify that the 

Plan returned these funds to the LOCA. 

Recommendation 4 

We recommend that the contracting officer verify that the Plan credited the FEHBP 

$595 for LII on the questioned fraud recoveries and health benefit refunds. 

B. CASH MANAGEMENT 

Overall, we concluded that the Planhandled FEHBP funds in accordance with Contract CS 

1039 and applicable laws and regulations, except for the audit findings pertaining to cash 

management noted in the "Miscellaneous Payments and Credits" section. 

9
 
IV. MAJOR CONTRIBUTORS TO THIS REPORT 

Experience-Rated Audits Group 

Auditor-In-Charge 

Auditor 

Auditor 

Auditor 

Chief 

Senior Team Leader 

10
 
HEALTH BENEFIT CHARGES 2004 2005 2006 2007 2008 Total 

A. HEALTH BENEFIT CHARGES 

PLAN CODE 220/720* $172,945,156 $190,497,897 $212,906,910 $239,670,991 $268,831,675 $1,084,852,629 

MISCELLANEOUS PAYMENTS AND CREDITS 120,013 765,079 38,642 4,002,861 2,774,044 7,700,639 

-, 

TOTAL HEALTH BENEFIT CHARGES I $173 065,169 $191 262,976 . $212 945 552 $243 673,852 $271,605.719 $1,092 553 268 

AMOUNTS QUESTIONED 2004 2005 2006 2007 2008 2009 Total 

A. HEALTH BENEFIT CHARGES 

1. CLAIM PAYMENTS $0 $0 $0 $0 $0 $0 $0 

2. MISCELLANEOUS PAYMENTS AND CREDITS 

a. PROVIDER SETTLEMENTS** 0 0 0 22,681 1,083 970 24,734 

b. FRAUD RECOVERIES AND HEALTH BENEFIT REFUNDS* * 0 282 2,281 479 126 5,580 8,748 

B. CASH MANAGEMENT 0 0 0 0 0 0 0 

TOTAL AMOUNTS QUESTIONED I $0 $282 $2,281 $23,160 $1209 $6550 $33,482 

* We only reviewed claim payments from January 1,2006 through June 30,2009. 

** This audit finding also includes lost investment income. 

V. SCHEDULE A 

BLUECROSS BLUESHIELD OF MINNESOTA 

EAGAN, MINNESOTA 

HEALTH BENEFIT CHARGES AND AMOUNTS QUESTIONED 

II 
••

APPENDIX 

BlueCross BlueShield 

Association 

An Association of Independent 

Blue Cross and Blue Shield Plans 

February 22,2010 

Group Chief	 Federal Employee Program 

Experience-Rated Audits Group	 1510 G Street, N.W. 

Office of the Washington, D.C. 20005 Inspector General 

202.942.1000 U.S. Office of Personnel Management Fax 202.942.1125 

1900 E Street, Room 6400 

Washington, DC 20415-1100 

Reference:	 OPM DRAFT AUDIT REPORT 

MINNESOTA BLUE CROSS BLUE SHIELD 

Audit Report Number 1A-10-54-07-02 

(Dated and received January 22, 2010) 

Dear 

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

Management (OPM) Draft Audit Report covering the Federal Employees' Health 

Benefits Program (FEHBP) operations for Minnesota BlueCross BlueShield. Our 

comments concerning the findings in the report are as follows: 

AI 2a. Provider Settlements	 $24,734 

We do not contest this finding. The error was due to a clerical error and to reduce 

the risk of this occurring again, the Plan now uses MS Access instead of an 

Excel Spreadsheet to allocate and track provider settlements. 

The Plan returned $24,734 to the Program, consisting of $21,932 for two provider 

settlement overcharges and $2,802 for Lost Investment Income (L1I) via wire 

transfer on January 14, 2010. 

A12b. Fraud Recoveries and Health Benefit Refunds $8,748 

We do not contest this finding. The error was due to a process gap between 

Plan departments. The Plan's process has been revised to ensure timely return 

of FEHBP's portion of collected fraud recoveries and health benefit refunds to the 

Program. 

The Plan returned $8,748 to the Program, consisting of $8,153 for recoveries and 

refunds not previously returned and $595 for Lost Investment Income (L1I) via 

wire transfer on January 14, 2010. 
aPM Draft Audit Response 

February 22,2010 

Page 2 of 2 

We appreciate the opportunity to provide our response to each of the findings 

and request that our comments be included in their entirety as part of the Final 

Audit Report. 

Executive Director 

Program Integrity 

cc: