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01/12/1996 AuditAUDIT REPORT MONROE COUNTY GROUP INSURANCE CLAIMS PROCESSING January 12, 1996 Prepared by.- Internal Audit Department Clerk of the Circuit Court Danny L. Kolhage, Clerk Monroe County, Florida � Re: Audit of Monroe County Group Insurance Claims Processing Dear Mr, Kolhage: The Clerk's Internal Audit Department has completed an audit concerning the Group Insurance Claims Processing Function of the Employee Benefits Section of the Monroe County Human Resources Department, The audit scope was limited to an examination and evaluation of the adequacy and effectiveness of internal controls over Group Insurance Claims processing from October 1, 1993, through April 30, 1995. We wish to thank the Director of Human Resources and Employee Benefits Section person for their cooperation and assistance provided to us during the audit. We also wish acknowledge the time and information provided by Gallagher Bassett; Lee County, Florida; the Monroe County School Board during this audit, I The County Administration is currently in the process of implementing changes to policies and procedures to correct deficiencies found during the audit. In addition, the Administration. is currently negotiating a new contract for a Third Party Administrator for processing Group Insurance Claims. The Administration has indicated that audit recommendations will be considered for inclusion in the new co The audit report and the audit were completed with the assistance of Carie Bamberg, CPA and Jeffrey Allen, CPA. The accompanying audit report is provided for your information, Additional copies of the repol will be provided and/or distributed upon your request. 0 MMMM 1411MUNIMM"It :P irN: Iy .0. cc: Board of County Administrators (5) James Roberts, County Administrator Paula Rodriguez, Human Resources Director Sandee Carlile, Clerk's Finance Director AUDIT REPORT MONROE COUNTY GROUP INSURANCE CLAIMS PROCESSING TABLE OF CONTENTS 8 Egw�—#�s S1 Executive Summary ES1 - ESIO I. Scope and Objectives I II. Methodology 1-2 III. Background 2--9 IV. Conclusions 9-10 V. Audit Findings: A. The Group Insurance Claims Processing System Is Inefficient And Uneconomical 10-12 & Human Resources Department Salary Allocations Do Not Match Actual Workload 12 13 C. Inadequate Segregation of Duties 13-14 D. Inadequate Control of COBRA and Retiree Receipts 14 15 E. An Undeposited Check, Payable to Monroe County, Was Found in a Participant's File 15-16 F° Duplicate Claims Are Sent to Gallagher Bassett for Processing 16-- 17 G. Payments Were Made to Improper Payees 17--18 H. Payment Was Made for Services Not Covered in the Plan 18-19 I. An Improper Invoice Was Submitted and Paid 19 J. Deductible Was Applied to the Wrong Dependent 20 K Not All Claims Submitted to Gallagher Bassett Are Processed 21 L. Unpaid Claims 21 -22 8 AUDIT REPORT MONROE COUNTY GROUP INSURANCE CLAIMS PROCESSING TABLE OF CONTENTS M.. Ira be —# V Audit Findings: K Changes in Claims Review Procedures Were Not Adequately Communicated to Participants and Dependents 22 24 N. Inadequate Follow-Through Procedures for Claims Questioned By Participants 24- 25 0. Inadequate Documentation of Changes to Claims 25 -26 P. Review and Appeal Procedures for "Reasonable and Customary Charges" Are Not Adequately Explained to Participants 26.. 28 t® Claim For Are Not Completed and Filed in Accordance with the Medical Plan Document 28-30 R. Confidentiality of Claims Records Is Not Adequately Protected 30.- 31 S. Participant Files Are Not Adequate for Review of Prior Insurance Claims 31 -32 T. Eligibility Status of Participants 32 U. Unauthorized Execution of Plan Administrator Contract 33 - 34 V. Plan Administrator Contract Scope Deficiencies 34 35 W. Medical Plan Document Preexisting Condition Limitation Differs from Florida Statutes 35 36 X. Change in Dependent Coverage Provision Not Communicated top icip is 36-37 Y. The Plan Document Definition of Full-Time Employment Differs from Florida Statutes 38 39 VI. Auditee Responses: A. County Administrator CAI - CA6 M.. AUDIT REPORT MONROE COUNTY GROUP INSURANCE CLAIMS PROCESSING TABLE OF CONTENTS Im EWJ#�s VIL Exhibits: A4 Group Insurance Systems Flowchart Al A7 B. Analysis oft Number of Participants Enrolled B1 C Cost Analysis of Direct Submission with On-Site Terminal Cl. D. Salary / Cost Center Analysis D1 E. Annual Medical Claim Notice -- Used By Group Insurance El F. Subsequent Medical Claim Notice - Used By Group Insurance FI G. Subsequent Medical Claim Notice Used By Group Insurance GI H. Results of 51 Participants Surveyed HI I. Analysis of the 51 Claims Surveyed - Days to Process Claims 11 Im EXECUTIVE SUMMARY AUDIT OF MONROE COUNTY GROUP INSURANCE CLAIMS PROCESSING X. A. At the request of the Clerk of the Circuit Court and the County Administrator, the Internal Audit Department has completed an audit of Monroe County Group Insurance Claims Processing performed by the Group Insurance Function of the Employee Benefits Section of the Human Resources Department, The Internal Audit Department limited the scope of the audit to the period from October 1, 1993, through April 30, 1995. B. The Internal Audit Department reviewed State and Local laws and regulations relative to the Monroe County self-insurance, the Monroe County Medical and Dental Plan Documents, and Monroe County policies and procedures to gain an understanding of legal requirements and established internal controls. A walk-through of existing Group Insurance Function procedures was conducted to document the current system for processing claims in the Monroe County Group Insurance Function. Flowcharts (See Exhibit AI-A7) were developed to gain an understanding of the workflow of documents between the various Group Insurance positions. D. A statistical random sample of 51 claims was selected from Gallagher Bassett payment registers to test paid medical and denW claims for the audit period of October 1, 1993, through April 30, 1995. Gallagher Bassett supporting claim documents were reviewed for eligibility, accuracy, completeness, and timeliness of payment. MM E. Internal Audit interviewed Gallagher Bassett staff in Miami, Florida and observed the processing of a sample of actual Monroe County group insurance claims to verify the existence of automated system security, data input, and editing controls. Monitoring, and authorization controls were also reviewed. Adequate filing and physical security features were *'tsexied. F. A survey of participants for the 51 sample claims was performed to determine the level of participant satisfaction with the current system for processing medical and dental claims. G. Paid and pending Group Insurance Claims files related to the surveyed participants were reviewed to determine whether adequate documentation was maintained for paid and denied claims and whether claims were paid in accordance with the Monroe County Medical and Dental Plan Documents, H1. Background: A. Legal Authority to Provide Group Insurance and Self-Insure: B. Local Government Participation: participants, but also because of an increase in contributions to rebuild reserves. Self- insurance funding for the plan is obtained by billing the various departments and agencies for insurance contributions. 5NEW111TEW j 7f 1 1111 1 11 :11! Formal written goals and objectives were not available during the audit; however, our review of laws, regulations, policies and procedures indicates that County Management's primary concern is that valid claims of eligible participants and dependents are timely, and accurately processed and paid in accordance with Federal regulations, Florida Statutes, the Medical and Dental Plan Documents, and internal policies and procedures, F. Organizational Structure: During the audit period, the Group Insurance Function was organized as part of the Employee Benefits Section of the Human Resources Department. The Director of the EN An Employee Benefits Coordinator was responsible for the activities of Group Insurance Function during the audit test period. The Coordinator position has been vacant sinci. mid July and County Management has tentatively budgeted funds to fill the position for the last half of the 1995/1996 County Fiscal Year. During the audit period, the EM21oyee Benefits Coordinator gosition Morted to the Director of Human I-Lesources. G. Group Insurance Staff: During the audit period the Group Insurance Function staff consisted of one Employee Benefits Coordinator, one Group Insurance Specialist, two Insurance Technicians, and two Office Assistant II positions. H. Gallagher Bassett's Claim Processing System: 1. Comparison of Claims Processing Systems: A possible alternative to indirect submission is direct submission of claims by participants and providers to the Plan Administrator. In order to gain an understanding of the process of direct submission for claims processing, Internal Audit conducted intervievFE with personnel of Lee County, Florida and the Monroe County School Board. Key elements of the systems used by these government entities are presented within the audi) -report. J. Advanced Technologies: In a consultant report prepared in October 1990 by Interisk Corporation, a former Division Director of Management Services was informed that future growth of the Employee Benefits Section required a change to automation of the claims handling function. A. The Monroe County Employee Benefits Section's established system of internal controls is adequate and effective to ensure the reliability and integrity of financial information; however, weaknesses in internal controls were noted in collections of COBRA and retiree payments and refunds for overpayments, B. The Monroe County Employee Benefits Section's established system of internal controls may not be adequate or effective to ensure compliance with laws, regulations, policies, and procedures, because of apparent noncompliance with Florida Statutes and the Medical Plan Document provisions. C The Monroe County Employee Benefits Section's established system of internal controls is not adequate or effective to ensure the safeguarding of assets, because of the internal control weaknesses in cash receipts, inadequate segregation of duties, and failure to limit 11 D. The Monroe County Employee Benefits Section's established system of internal controls is not adequate or effective to ensure efficient and economical use of Monroe County resources, because of the lack of automation and because claims processing procedures duplicate procedures performed by Gallagher Bassett. E. The Mon County Employee Benefits Section's established system of internal controls is not adequate or effective to ensure that planned and actual activities conform to authorized goals and objectives, because the Group Insurance has not communicated to Participants the formal Claims Review and Appeal provisions of the Medical Plan Document and has not performed such formal procedures as a service to the Participants. Based on our review of system requirements, we have estimated that a conversion to direct submission of claims and on-line eligibility maintenance, using Gallagher Bassett's automated Claims Processing System, could result in annual savings to the County of $64,600 in salaries, not including employee benefits and other department expenses. Our analysis is presented in Exhibit C. B. Our review of salary allocations in comparison to actual job responsibilities indicated that the County Budget and actual expenditures for salaries of various Human Resources Department personnel do not accurately reflect actual job responsibilities. Budgeted amounts for employees' salaries should be allocated based on actual time spent on responsibilities of the various functions. 01 ton WW 1 1! 4 Im D . The manual receipt logs of all COBRA and retiree receipts for group insurance premiums do not contain inadequate information for a proper audit trail. The COBRA and retiree receipt logs are not reconciled to match logged receipts to recorded receipts in the Clerk's Official Records. G. A review of participant files related to our audit sample of 51 claims indicated that two payments were made payable to a medical provider instead of the participant and one check was payable to an improper medical provider. These errors have been or are in the process of being corrected. M H. Our review of the Participant files indicated that two of four claims for physician telephone consultations were incorrectly paid in the amount of $20 each. According to Group Insurance and Gallagher Bassett personnel, physician telephone consultations are not covered by the plan. 1. Our review of Participant files revealed that a photocopy of a prior Explanation of Benefits (listing cost and dates of service) was used by a medical provider to substitute as an voice". The photocopy of the EOB was not signed by the medical provider; however, the improper substitute "invoice" was processed by Group Insurance and Gallagher Bassett and benefits were paid to the participant. K. Our review of Participant files found that three participants submitted more than one claim for prescriptions at the same time and Gallagher Bassett inadvertently overlooked o *r *tore ebaims. L. In our review of Participant files, we found five documented claims for prescription medication reimbursement that were filed without the medical diagnosis and have never been paid. N. Our survey of Participants revealed two participants with unresolved questions concerning a claim. Review and appeal procedures established by the Plan document were not followed by Group Insurance personnel and the Participants. 0. Our review of Participant files revealed two invoices where the date of service was changed. One participant file did not contain documentation to explain why the date of an eye exam was changed. V No I= V- The contract scope of the Agreement for Services entered into by the Monroe County Board of County Commissioners and Gallagher Bassett Services, Inc. does not contain certaiE standard language to protect the County's interests and to establish controls over Gallagher Bassett's performance of the services in the Agreement. An agreement for services should include standard provisions to allow the right to audit, the right to monitor and review contract performance, the right to possession of backup records, assistance in case of conversion to an alternate plan administrator, penalties for failure to perform, and security measures for off-site storage of records. RE T° MONROE COUNTY GROUP INSURANCE CLAIMS PROCESSING A. At the request of the Clerk of the Circuit Court and the County Administrator, the Internal Audit Department has completed an audit of Monroe County Group Insurance Claims Processing performed by the Group Insurance Function of the Employee Benefits Section of the Human Resources Department. The Internal Audit Department limited the scope of the audit to the period from October 1, 1993, through April 30, 1995 H. Methodology: B. The following personnel were contacted during the audit to obtain information about the operations of the Monroe County's Group Insurance Function; 1. Director of IT Resources, 2. Employee Benefits Coordinator, 11 3. Group Insurance Function personnel, 4 The Clerk's Finance Director, 5. Gallagher Bassett Claims Representat] C. The Internal d: . . s, and Monroe County policies and procedures to gain an understanding of legal requirements and established internal controls, D. A walk-through of existing Group Insurance Function procedures was conducted to document the current system for processing claims in the Monroe County Group Insurance Function. Flowcharts (See Exhibit AI-A7) were developed to gain an understanding of the workflow of documents between the various Group Insurance posifions E. A statistical random sample of 51 claims was selected from Gallagher Bassett payment registers to test paid medical and dental claims for the audit period of October 1, 1993, through April 30, 1995. The supporting documentation maintained by Gallagher Bassett for these claims was reviewed for eligibility, accuracy, completeness, and timeliness of payment. F Internal Audit interviewed Gallagher Bassett staff in Miami, Florida and observed the processing of a sample of actual Monroe County group insurance claims to verify the existence of automated system security, data input, and editing controls. Monitoring and authorization controls were also reviewed. Adequate filing and physical security features were also observed. G. A survey of participants for the 51 sample claims was performed to determine me level of participant satisfaction with the current system for processing medical and dental claims. H. Paid and pending Group Insurance Claims files related to the surveyed participants were reviewed to determine whether adequate documentation was maintained for paid and denied claims and whether claims were paid in accordance with the Monroe County Medical and De*tal Plan Docilvieils. HL Background: A. Legal Authority to Provide Group Insurance and Self-Insure- The authority to provide Group Insurance is established by Florida Statute § 112.08 (2) (a) which states that "Every local governmental unit is authorized to provide and pay out of its available funds for all or part of the premium for life, health, accident, hospitalization, legal expense, or annuity insurance, or all or any kinds of such insurance, for the officers and employees of the local governmental unit and for health, N accident, hospitalization, and legal expense insurance for the dependents of such officers and effployees upon a group insurance plan and, to that end, to enter into contracts with insurance companies or professional administrators to provide such insurance. " ME 1111 W 1111 1 1 MMIIIMB �: I Section D3 of the Agreement states, "It is understood and agreed that GB performs purely ministerialfinctions for CLIENT within a framework of policies, interpretations, rules, practices and procedures made or approved by CLIENT, including the CLIENT's plan document, " 119FUTMUI.M. ALMMUMMMMS 11 During the period from October 1, 1993, through April 30, 1995, the Monroe County Group Insurance Function was organized as part of the Employee Benefits Section of the Human Resources Department. The Director of the Human Resources Department currently reports directly to the County Administrator. An Employee Benefits Coordinator was responsible for the activities of Group Insurance Function during the audit test period. The Coordinator position has been vacant since mid July and County Management has tentatively budgeted funds to fill the position for the last half of the 199511996 County Fiscal Year. During the audit period, the Employee Benefits Coordinator position reported to the Director of Human Resources, G. Group Insurance Staff and Responsibilities- During the audit period the Group Insurance Function staff consisted of one Employee Benefits Coordinator, one Group Insurance Specialist, two Insurance Technicians, and two Office Assistant U positions, Insurance Technician ffledical); The Medical Insurance Technician's responsibilities included, 1) providing assistance to participants and providers concerning group insurance claims, 2) verification of completeness of claim forms and provider bills, 3) determination of participant eligibility, and 4) maintenance of pending claim files, I Office Assistant 11 Positions: The Office Assistant H positions were responsible for opening and distributing incoming mail, filing pending and paid claims, typing Subsequent Medical Claim Notices, processing address corrections, distributing new employee packets, and sorting and mailing of claim payment checks. M illi 1111111ZI11 Physical security at the processing site 'includes a combination code door lock, locking filing cabinets, and user passwords. Security passwords for the claims processing system are changed every 30 days. Data entry terminals automatically log off after 10 to 15 minutes of inactivity. Claim files are segregated from work areas and claims are filed in order of the date paid by the claims examiner. M 1. Comparison of Claims Processing Systems: A possible alternative to indirect submission is direct submission of claims by participants and providers to the Plan Administrator. In order to gain an understanding of the process of direct submission for claims processing, Internal Audit conducted interviews with personnel of Lee County, Florida and the Monroe County School Board. Key elements of the systems used by these local government units are detailed below: 1 11 1 11 1 1 1 1 1 1 11 1 1 1 1 1 110 ORN111'all"111-g N Other staff involvement includes a Personnel Clerk IIA who is responsible for: 1) assisting in the processing and maintenance of records, 2) assisting employees in understanding COBRA benefits, and 3) assisting employees in forms completion and cleans processing. A Personnel Clerk H is responsible for: 1) processing incoming and 9 In a consultant report prepared in October 1990 by Interisk Corporation, a former Division Director of Management Services was informed that future growth of th-� Employee Benefits Section required a change to automation of the, claims handling .-tinctiov. IV. Conclusions: A. The Monroe County Employee Benefits Section's established system of internal controls is adequate and effective to ensure the reliability and integrity of financial information; I however, weaknesses in internal controls were no in collections of COBRA and retiree payments and refunds for overpayments. B. The Monroe County Employee Benefits Section's established system of internal controls my not be adequate or effective to ensure compliance with laws, regulations, policies, and procedures, because of apparent noncompliance with Florida Statutes and the Medical Plan Document provisions. C. The Monroe County Employee Benefits Section's established system of internal controls is not adequate or effective to ensure the safeguarding of assets, because of the internal control weaknesses in cash receipts, inadequate segregation of duties, and failure to limit access to and protect the confidentiality of records. D. The Monroe County Employee Benefits Sections established system of internal controls is not adequate or effective to ensure efficient and economical use of Monroe County resources, because of the lack of automation and because claims processing procedures duplicate procedures performed by Gallagher Bassett. E. The Monroe County Employee Benefits Section's established system of internal controls is not adequate or effective to ensure that planned and actual activities conform to authorized goals and objectives, because the Group Insurance has not communicated to Participants the formal Claims Review and Appeal provisions of the Medical Plan Document and has not performed such formal procedures as a service to the Participants. V. Audit Findings: A. The Group Insurance Claims Processing System is Inefficient and Uneconomical: An October 1990 Interisk Corporation study titled, "Report on Claim Processing of Workers' Compensation and Euplasee Benefit Plans, " states, "77is need for close scrutiny of the claims handling process provides for almost duplicate claim handling by the County and the Gallagher organization. " The report was discussed with the Board of County Commissioners on November 14, 1990; however, no further action was indicated. im County Administrator's Res Ronse(s The Administration concurs that with the growth of the system, the number of individuals covered, and the number of claims, there has developed an inefficiency in processing, This was not due to any particular problem except the inability of the administrative structure to be flexible in adapting to new situations. Rather than dwell on detail, suffice it to say at this point that the Administration is in the process of receiving responses to a Request for Proposals for Third Party Administration. 01.1 Part of the TPA's responsibilities - Kill include revising the Plan Document and assisting with revisions in processing including direct submission and electronic submission, R. Hunmn Resources Department Salary Allocations Do Not Match Actual Workload: provi ded in this chapter. " County-Administrator's Response s f I Salary allocations are being corrected and care will be taken to assure that budgetary transfers are made in accordance with Florida Statutes. C. Inadequate Segregation of Duties: MOTOR IN HEROINE m Counts Administrator's Response(s) Because of the manual orientation of the program, duties were not appropriately segregated as the program grew. There is presently an interim arrangement while the Administration is reviewing the responses to Request for Proposals. Once a new system is in place, such segregation will be standard. D. Inadequate Control of COBRA and Retiree Receipts: Ffiz The Dental Insurance Technician maintains manual receipt logs of all COBRA and retiree receipts for group insurance premiums. The logs contain inadequate information for a proper audit trail. The COBRA and retiree receipt logs are not reconciled to match logged receipts to recorded receipts in the Clerk's Official Records. A proper audit trail requires a detailed record of all COBRA, retiree, and other insurance premium receipts sufficient to provide information concerning the date of receipt, the payer's check number, the payer's name, the payor's address, the reason for the payment, the month E. of service, and the amount of the payment. Copies of checks should be made and retained as supporting documentation. The receipt logs only contain the pa is name, the required amount of payment, and the payer's check number. Currently, copies of receipts are not made and retained by Group Insurance. Proper internal control also requires that receipt logs be periodically and timely reconciled to match logged receipts to recorded receipts to ensure that all receipts are properly deposited and recorded in the proper accounts. Without a proper audit trail, group insurance premium receipts could be diverted to personal use without timely detection. Couno-Administrany s Response s� Since the audit, steps have been taken to be sure that the appropriate information is available. In addition, when the entire program is revised, procedures will be reviewed so that information is available and appropriately computerized. E. An Undeposited Check, Payable to Monroe County, Was Found in a Participant's File: When a duplicate payment is erroneously issued and subsequently cashed, established procedures provide that 1) Gallagher Bassett bills and collects the duplicate payment, 2) Gallagher Bassett sends the check to Group Insurance, 3) Group Insurance holds the check until the check is listed on the payment register, and 4) Group Insurance then sends R the check to county finance to be deposited. CCounq Adesinismator's Res onseft R --- I The check in question was inappropriately placed in a file and there was no follow up until the audit. Subsequent to the audit, the proper handling of the check was accomplished. In the future, all checks will be photocopied and handled promptly and there will be checks to be sure that payments are appropriatety accounted for. 1111111!11�� -.1 11 111111�1111ME�� I ' WH � R I OWMA I'll, C11111 I a g rf a claimant submits a duplicate claim, the claim is submitted by Group Insurance to Gallagher Bassett. When a Gallagher Bassett claims examiner enters the participant's claim data, the automated Claims Processing System determines whether any claim information matches a prior claim. The claims examiner uses professional judgment to allow or deny a claim if the system identifies a duplication, because some procedures are allowed more M than once a day for a given diagnosis. A duplicate claim could inadvertently be paid if the claims examiner accidentally overrides the system or enters incorrect information such as a different date, amount, procedure code, diagnosis code, or patient. Group Insurance cannot efficiently compare paid claims to the manual record keeping system to detect duplicate claims. Group Insurance claims records are filed manually in participant files in alphabetical order. No automated database is available in Group Insurance for tracking pending and paid insurance claims. Counpj Administrator's Regonse(s) Although the extent of the duplicate claim situation is unclear, there is some indication that it does exist. This will be a subjectfor revision and appropriate computer checking when the new system is in place in 1996. G. Payments Were Made to Improper Payees: Fin &nSft- A review of participant files related to our audit sample of 51 claims indicated that two payments were made payable to a medical provider instead of the participant and one check was payable to an improper medical provider, These errors have been or are in the process of be corrected. M H. Payment Was Made for Services Not Covered in the Plan: In CougALA4���r's ReWonse(s) The Administration and the Yhird Pang Administrator will revise the Plan Doc 1996 in an attempt to make the coverages and exclusions as clear as possible. 7'This also assist the Third Party Administrator in processing for eligibility of service7s, 1. An improper Invoice Submitted and Paid: U payments are not based on receipt of proper original provider invoices, improper payments zould be made for specific services not performed or invalid claims may be paid. = F I I I III IIII qvill Ip , �MMWMM Counfy Administrator's R There will be a system developed which will make it easier to identify the relationship of the patient to the emeloyee. Ae manner of this will be determined by the new procedures with the Third Party Administrator NN Group Insurance tapes original prescription receipts to sheets of paper and sends the sheets to Gallagher Bassett for processing, Sometimes, Gallagher Bassett inadvertently overlooks a claim for prescriptions. These errors may be discovered by either Group Insurance or the participant. The file did not document who discovered the errors. MNMM�*�� 1 A review of participant files related to the audit sample of 51 claims found 5 documented claims for prescription medication reimbursement that were filed without the medical diagnosis and have never been paid. Attachment B, page 3 of the supplement to the handbook states, "Prescriptions must have the patient's name, the date purchased; the amount of the charge; the doctor's name; the prescription number, the name of the medication; and in some instances, the diagnosis. " W M. Changes in Claims Review Procedures Were Not Adequately Communicated to Participants and Dependents- HAdiLng Us: On March 31, 1994, Plan Document claims review procedures were changed by Amendment #6 to provide for two separate review levels. The changes in claims review and appeal procedures were not communicated in Health Care Plan summary booklets and supplemental No information provided to participants. Participants have not received updated Health C Plan summary booklets since December 1, 1990, and supplemental documents have n explained changes in the claims review procedures and appeal process. Employees have been informed of the proper course of action necessary to perfect claims and appeal denia of payment. I IN w When a participant calls Group Insurance concerning a claim that cannot be resolved, Gro Insurance may send a letter to the participant explaining how to resolve the issue. Accordi to Group Insurance, it is the responsibility of the participant to follow-through on unpa I e claims. The Participants were not informed of the formal review and appeal proc provided by Amendment #6 of the Plan Document. RecommendalionLs L- 1. The Employee Benefits Coordinator or procedures to periodically follow up on participants in resolving insurance claims. other appropriate official should establi i unresolved issues and provide assistance 111UM, ZT. - The Employee lk — or other appropriate official should establisE procedures to document all claim problems and retain correspondence in participant files. 3, The Employee Benefits Coordinator or other appropriate official should train existin_.o-.- Group Insurance staff to establish familiarity with Claims Review and Appeal procedures. MMIMM N Recommen 1. An appropriate County official should consider acquiring an on-line terminal for use Group Insurance for quick review of eligibility and analysis of prior claims. 2. The Employee Benefits Coordinator or other appropriate County official should an that Participant files contain documentation explaining all exceptions and changes. I CLOUTA-Administrator's ftoonse s Yhis prinzarily is a Junction of the Yhird Paity Administrator and should have been handli under their contract. This will be part of the preparing for a new TPA relationship P. Review and Appeal Procedures for "Reasonable and Customary Charges" Are Not Adequately Explained to Participants- As described in Finding M, Amendment #6 of the Medical Plan Document contai provisions for a formal claims review and appeal process. According to the Plan Doe e Participants must request in writing, a review of denied claims. The notification of decisil M According to Group Insurance personnel, Participants are responsible for obtaini information from the medical provider to justify that the charges were necessary aand n excessive. Once the information is received by Gallagher Bassett, the excess fees can recoE sidered- Group Insurance personnel stated that some medical providers will write o excess fees. M based on timely information to ensure that such data is representative of the general level of charges. 5. The Employee Benefits Coordinator or other appropriate official should consider revising the Health are Plan summary booklets to include a current explanation of the Plan's Claims Review procedures, Once again, this whole relationstup wt e woike out under V� Docume with the Third Party Administrator, There will be educational sessions for employees; however, it must be understood that an employee who goes for a medical reason to a physician or hospital usually does not negotiate ®« This is one of the reasons that the County will be involved in utilization review and case management under the new system. Q. Claim Forms Are Not Completed and Filed in Accordance with the Medical Plan Document: W Section B.2. of the Agreement for Services states that "Gallagher Bassett shall provide Claim Services in accordance with F-xhibit A ', attached hereto. " 'Exhibit A' of the Agreement includes, in the administrative services to be provided by Gallagher Bassett, the provision io "Process claims in according to the provisions of the PLAIV. " N County Administrator's RgVanse The long list of recommendations is a clear reflection of the fact that this manual program grew beyond the ability to handle it as effectively as might otherwise be the case. Although the County does disagree with some of the points raised, there will be a complete review of the plan document and revisions to procedures so that these issues are minimized. Finding(s): According to the Employee Benefits Coordinator, file cabinets containing medical and dent claim records are not locked at night. We also noticed that discarded copies of medical a dental claim records are not promptly shredded and discarded. The discarded informati ©« in a box for more than a week before being shredded. 79-H party seeking such records. 77ds exemption is subject to the Open Government Sunset Review Act in accordance with s. 119.14. " Couny .. Administrator's RgVgnse The Employee Benefits staff has been instructed to maintain even stricter control of the records. The audit did not find any particular problem where confidentiality was violated, but rather choose to raise an issue that something might happen. Maximum security given the facilities available is being pursued. Recommendationf.0- 1® If the County does not convert to direct submission of claims, the Employee Benefits Coordinator or other appropriate County official should establish procedures to ensure M that all claims records are properly filed. appropriate County official should consider acquiring an on-line terminal for use Group Insurance for quick review of all prior claims filed by a participant. I CounN_A&RjMjEL-gtor �ReSponseLs) Ais situation should be reformed with the establishment of the new program and the direct submission andlor electronic submission and processing of claims. Canny A&Ministraffir's Res o s g nse ----U Once, again, this situation will be reformed with the institution of the new program. IN U. Unauthorized Execution of Plan Administrator Contract: A contract for services should be timely negotiated to allow a review for legal sufficiency, proper approval of the BO CC, and execution by the Chairman of the Board prior to the effective date of the contract, Recommendadonkk 1. The County Administrator should obtain immediate approval of the Board of County Commissioners and execution by the Chairman of the BOCC for this contract and all future contracts. IN 2. The County Administrator should ensure that contracts for services are timely negotiated to allow a review for legal sufficiency, proper approval of the BOCC, and execution by the Chairman of the Board prior to the effective date of the contract. Couno Administrator's Re.-mangets The County will endeavor to be sure that all contracts and amendments of this nature are appropriately presented to the Board of County Commissioners and executed. V. Plan Administrator Contract Scope Deficiencies: ,Hn The contract scope of the Agreement for Services entered into by the Monroe County Board of County Commissioners and Gallagher Bassett Services, Inc. does not contain certain standard language to protect the County's interests and to establish controls over Gallagher Bassett's performance of the services in the Agreement. RE f. Security measures for off-site storage of records. 2. The County Administrator should ensure that contracts for services are timely negotiated to allow a review for legal sufficiency, proper approval of the BOCC, and execution by the Chairman of the Board prior to the effective date of the contract. W. Medical Plan Document Preexisting Condition Limitation Differs from Florida Statutes: ,Hnd n L-g(s 1. Our review of the Monroe County Medical Plan Document found that the provision Ss Pre o existing conditions in §12.1 f the Plan Document it not agree with the provisio established by Florida Statute §627.6561 M Failure to comply with Florida Statutes concerning Preexisting Conditions may have be caused by inadequate legal review of the Plan Document and Health Care Plan summa booklet, incorrect interpretation of Florida Statutes by Group Insurance staff, and failure timely update the Health Care Plan summary booklets since December 1990. CounOLAgurinistrator's Response s fj Yhe auditor's comments will be taken into consideration in the development of the new plan document. Provisions in reference to pre-existing conditions will be made clear and in compliance with state statute. X. Change in Dependent Coverage Provision Not Communicated to Participants: B Fin Our review of the Monroe County Medical Plan Document found that the definition of a dependent in Amendment #5 to §2.2 of the Plan Document agrees with the provisions established by Florida Statute §627.6561 (2); however, the changes contained in Amendment #5 have not been communicated to participants and their dependents, E the policyholder or cerfificateholder at least until the end of the calendar year in which the child reaches the age of 25, if the child meets all of the following: (a) The child is dependent upon the policyholder or certifteateholder for support. (b) The child is living in the household of the policyholder or certificateholder, or the child is a full-time or part-time student. " As a result of the failure to communicate changes in the definition of a dependent to participants, improperly denied claims could exist based on incorrect interpretation of Florida Statutes and the County may be liable for an undetermined amount for improperly excluded Also, participants and their dependents may have relied on incorrect information concerning their dependents between the ages of 19 and 26 and fail to submit valid insurance claims, The failure to communicate Plan Document changes in age limitations for dependents to participants and their dependents may have been caused by inadequate legal review of th; Health Care Plan summary booklet, incorrect interpretation of Florida Statutes by Group Insurance staff, and failure to timely update the Health Care Plan summary booklets since December 1990. County Administrator's ReMonse(s) Once the new plan document has been adopted, it will be submitted to all participants in the program. New participants will receive a plan document and all participants will receive updates as appropriate. al Y. The Plan Document Definition of Full-Time Employment Differs from Florida Statutes: As a result of not complying with Florida Statutes, improperly excluded employees and dependents may exist and the County may be liable for unsubmitted valid claims of improperly excluded employees and their dependents. The failure to communicate Plan Document changes in age limitations for dependents to participants and their dependents may have been caused by inadequate legal review of the Medical Plan Document and Health Care flans ary booklet, incorrect interpretation of Florida Statutes by Group Insurance staff, and failure to timely update the Health Care Plan summary booklets since December 1990, M CauqU_Adqidg!ng��� The County will work with the Third Party Administrator for the provision in reference to full-time employment in the plan document. This will be reviewed during the work with the new Third Party Administrator and any changes in state statute or County policy within state statute will be appropriately communicated. 0 Auditee Responses Auditee Responsw REM TO: Danny Kolhap Clerk of Court FROM: James L, Roberts - County Administrator DATE: January 3, 1996 JLRAjs cc Paula Rodriguez MM Auditee Responses ir =. A. 7'h ( " Y "an insurance Cl Nflesssio9SYSICAN if inefficient and macconomical, The Administration concurs that with the growth of the system, the number of imlMduals covered. and the number of claims, there has developed an inefficiency in processing. This was not due to any particular problem except the inability of the administrative stru to be flexible in adapting to new situations. ' Rather than dwell on detail, suffice it to Say at this point that the Administration is in t1r: process of receiving responses to a Request for Propos4is for Third Party Admini r i Part of the TPA s responsibilities will includ t at • Human Rescurce-v DePHrIfflent Salary Aft " c oncias do not match actual monthisid. Sala rY allocations are being corrected and care will be taken to assure that budgetary transfers are made in accordance with Florida statutes, C ImadequourSCgre ration n , ,irdeflex: Because of the manual orientation of the rouram IN I I a jIdIIFFG*I�-g INIM qWALIMMMq-I ME EM 1. • An err re check payahk In Mossue Comply manfound for oparrycipmerImfli The check In question was inappro riateI4 Placed in a fili i WILU114111 a I & I i , K DaUcheam chnMW Ore sent to Gallugher hingeapf p enema i ng. , Although the extent oft duplicate claim situation is unclear, there is some indication that it does exist. This will be a subject for revision and appropriate computer checking when the new system is in place in 1991r, G. Pfficamnew weve made as hall),n MIMM�MIR The Administration and the Third Party Administrator will reviy. NWQ" O a & in processin for eligiili . I . b , Air 'mP inevisc SMANIftsedondpaid; It is o n difficult to obtain Proper document from some prcnd I der s, especially if Their Offices Are not automated, Frequently, this produces more paperwork a n d comm bark and forth. Even where provider Ofrlce& are automated it' is diffic unications ut to appropriate signatures on computerized bills issued &I the time of , � This i ss o ue will btain be taken up with the Third Party Administrator as the n ew pr Am is eloped. RM Aull Responses Deductible vast applied to cle wrordt dependese.- oati lo�e w Ic w MR C I ler to idanfiFy the relationship of the =1 to the employee. The manner or this will be determined by the new procedures with Ae Third Party Administrator, K Par all claims submitted as Gallagher Basseff we proceser4- identi ed in this audit. mmm""y ot ier tems L Unpaid chdass: M. ChfimFav In Cla Revien Procedures over ses asequattD, comeout I caused to Painucipame and dependents., Auditee Respoinim incumbent upon the County to be sure staff is appropriately itraineii find the County will continue to pursue that goal, 0. rule re doestincrunfian f ar c t e This primarily is a function of Elie Third Party Adminisfriour and should have been handled under their contract, This will be pa of the preparing for a new TPA relationship. Re4eiv aria'Appe j � a . I ev are R "Resturearlik end Cafoo q ssary C o f w1equarely emplained it) pordiciturni t. C OM net crolapter I ca asatifileaf in occurna m int sh MeetEcal Pfaff re t: e long list of recommendations is a clea reflection Y . Q - A - .1 "Lot BONO= . ....... R. Confidefectolity (f ClijarrIfifecaltsis is nor adequarely Prvefecited: The Employee Benefits staff has been instructed to maintain even stricter control of the records, The audit did not find any particular problem where confidentiality was violated, but rather choose to raise an issue that something might happen, Maximum security given the facilities available is being pursued, in V. Ran Adantaristraparr c e ss i le as s aeo ( irnaluc man AM y VMMMI provisions Mentifted! h The auditor's corn will be taken into consideration in thedevelopment or the new plan document. Provisions in reference to pre-existing conditions will be made clear and in compliance with state statute. X. tIsInge ist dependent coreng hid consolsinicated it) pariticipflay: Once the now plan document has been adopted, it will besubmitted to all participants in the program, New participants will receive a plan document and all participants will receive updates as appropriate. Y rhe plan doestriarep Ileflaiiiiinsts e iff mi l - sterm e#PIPI lli t nis FLori duSeasions. The County will work with the Third Party Administrator for the provision in reference t full employment in the plan document. This will be reviewed during the work with the new Third Party Administrator and any changes in state sta IIIIIIIIIIr"U. ME Exhibits i Im EXIUBff A - 2 Group Insurance System flicirchaft ......... .. ........ . .. M EXMBIT A - 3 Group Insurance Syst Fl M i EXIHBff A - 4 Group Insurance Systtm )%WCMft 0 �36I S;� 'F j I zz l f EXM3lT A - 5 Group Insurance System Flowuhart I'l Is cc all I6 tiF P�� a�'t 'is Group Insurance Sysum Fbmduut y, Group C EXHIBIT B i Analysis of the Number of participants Enrolled Number of Participants Monroe County - Group Insuranco I km� Im 1 1500 CL 1250 E :3 lose z ME Im For years 1988, 1989, 1991, 1992, information obtained from G I nsurance. For 1990 no information is available, theref average 1989 and 1991. For years 1993, 1994, 1995, information per Gallagher Bassett invoice, Im ME EXIHBIT C Cost Analysis or Direct Submission with On-Site Terminal Estimate Actual Salary Budget Per Audit ii jL3± (1) Cost of On-Site Terminal and Employees: Salary of Employee Benefit Coordinator (75%) 26,704.86 (2) Salary of an Additional Employee 22,000.00 (3) GH Help Desk Support 1,200M (4) Dial-up Charge 9,152.00 (5) Local Phone Charge 300.00(6) Direct Submission ,d in. Fee 3,983.00 (7) First Year Training Cost 1 _ 810.00 (8) Total Cost 66.149.86 Savings t_,694_49 (9) w Source: Clark of the Urt PAYVOIJ 0frWO employe fil Is * Irwaaft On review of job descriptions and employees. Annual Medical Claim _ g UNWAL MW NOTICE SER VICES, INC. �� KA MOMIX COUNTY 110AR0 1W C11, � G SESSEES � 11 a "O K ale KFY - . EM CIry IA- t'pC. Y$, SEE E Cat �R 0 "AV FOR R IV CLA ®W_.« AMEN VA PET I I9- EXMBIT F i Subsequent Medical Claim Notice GIMCN) - Used Ay Group Insurance 6ALAGHER BASSET NTY joplONROE L T SERVICES, INC. Q2�v WE$T FLOAAQk Mo 00MM.'4"I MONROE COUNTY BOARD OF COUNTY COMMISSIONERS 3 E 0 U E N T MORI CAL CLAIM N 0 T I C E DEPENDENT NAME EFFECTIVE DATE ACTIVE TEP14 I I RETIRED ( I ­` CCBRA DEPENDENT INFORMATION M181111M EMEEM EM w EXIHBIT G Subsequent Medical Clahn Feted (SMCN) - Used By Other Gallagher Bassett Clients GALLAGHER BASSETT SERVICES, INC. SUBSEQUENT MEDICAL CLAIM NOTICE Plan III LocaXn wmh # -- D___ lclorecdocclocrocaroCalroacedrac smoboam asch OL be mmZ2mmm= ; Om TO OIL 10 ACCH)ENT 4 F ACCIDENT - TE E 0 F A r. CIN rnWIF AUTHORIZATION TO PAY EENEF'TS TO THE PROVIDER, I hereby oullexure Dayment directly to the Provider Of lot 81010C411 Water M&MC&I Gonolits, it ard O*Wwl" Payable to me for the servicalle A rcocr ib od below of on the Ntachad bft NA Foote exceed the M 10 * 01141 3 4 6 end Culloiftimiry Charge lot pede jHhV i Coo' ARTM O R MATION TO RELEASE INFORMATION j he Fut h ow , ye Ith WAHCS Ph VdAdw 10 Fill"" OnY Wagmation SCAu-ted in fhe obohM of Pe r smorota6m of thryl~l A Form G834-In-DiMen is m C-OWA EFFECTIVE DATE I DATE EMPLOYEE BECAME RETIRED PATIENT'S DATE OF MATH LLyD&3!A%?EN TAE uLT FROM EMPLOYMENT 0 LOCATION OF ACCOENT SIGNED cEMPLOvEEI SIGNED mmptoym Im EXIHBIT H Results of 51 Participants Surveyed Analysis of the Number of Surveys: Returned 23 Not Returned Total Surveys Do you feel you received the Senorita you were entitled to is question relates to a specific claim) yes 15 no 3 don't know 5 not returned 28 Total 8 All Surveys Returned Surveys 29.42% 65.22% 5.88% 13.04% 9.80% 21.74% 54,90% - � --IM () - 100,00% Over the past two years have you experienced any problems concerning claims? Over the Past two years have you contacted the claim office concerning any claims? yes 13 Ali Surveys Returned Surveys yes 13 25.49% 56.52% no 8 15.69% 34.78% don know 2 3.92% 8.70% not returned 28 540 9075 Total 5 1.05 05 C Over the Past two years have you contacted the claim office concerning any claims? yes 13 no 9 don't know I not returned 28 Total Returned Surveys W EXHIBIT I Analysis of the 51 Chdrus Surveyed - Da to P rocess cl a i na; Days For Group Insurance In 1 makes took Ion dom 10 days to prawn • 13 claims took It m 20 days to prongs I claim took 21- 30 days to process show; 11111 2 1 sets to process Ashes took more than 40 days to process Days for Galla her B assett To Process Claims 47 37 $ 24 claims 1 days to I am t claims 21 days to process =1 5 claims saw: 1 days to pr 1 claw took 41 - 50 days t p rocess in 2 claims took more thag 50 days to proce 9 clause MR 25 took days to ps 1 1- 46 days w =) 4 dalow took d1- a t p awma EN 241shastmAJI-stsepm BE 6 OWNS Statutes & Constitution Ni ew Statutes Online Sunshine Page I of I Select Year: The 2016 Florida Statutes Title V1 Chi ter 55 View Entire Chanter CIVIL PRACTICE AND PROCEDURE JUDGMENTS 55.03 Judgments; rate of interest, generally. 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