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11/15/2018 Audit MONROE COUNTY DEPENDENT ELIGIBILITY VERIFICATION AUDIT AND OTHER ADMINISTRATIVE MATTERS November 15, 2018 GOUR), o, frca 0- le ' O OVV ROE COU .e Prepared by: Internal Audit Department, Clerk of the Circuit Court Kevin Madok, Clerk of the Circuit Court and Comptroller Monroe County, Florida Dependent Eligibility Verification Audit Table of Contents Summary 2 Background 2-3 Objectives 3 -4 Methodology 4-5 Audit Conclusions 6 Audit Observations and Recommendations A. Documented Responsibilities, Processes and Procedures Need to be Updated 7-8 B. Dependent Eligibility Verification Audit Results 8- 11 C. Understanding of Prescription Benefit Manager (PBM) and Medical Plan Internal Controls 12 D. American Health Insurance Portability and Accountability Act of 1996 (HIPAA) Compliance 13 E. Administrative Billing and Claims Detail not Submitted in Detail 14 F. Required Coverage of Adult Children Age 26-30 by Florida Statute 627.6562 15- 16 Exhibits A. Services to be Provided Detailed Claims Audit Scope B. Dependent Eligibility Audit Letter C. Affidavit of Dependent Status for the Group Health Plan D. Service Organization's Control Report E. Sarasota County Employee Benefit Costs 2018 F. Auditee Responses Sandra Mathena CPA,CFE, CIA Wesley George Director of Internal Audit Senior Internal Auditor 1 I Dependent Eligibility Audit November 2018 Summary The verification that participating dependents were eligible for plan benefits was completed and ineligible dependents were very low. Industry standards estimate most companies will find 3%- 10%of plan members to be ineligible. Although, there were some areas that indicate opportunities for improvement, we must commend the Employee Benefits Department on the accuracy of dependents covered. We must also commend the Monroe County employees for their response rate on this document based audit. There were only 5 employees/retirees that did not respond, which is well below average. It is important to note that the Employee Benefits Department was severely hindered by the hurricane during open enrollment. Background The Monroe County Board of County Commissioners (BOCC) requested that the Monroe County Clerk of the Court and Comptroller (Clerk) complete a Group Health Insurance and Pharmacy Audit during 2017. As part of the request, the Clerk's Internal Audit Department completed a dependent eligibility verification audit (DEVA). There was no additional cost to Monroe County for the DEVA. The second part of the request is a claims audit of Blue Cross Blue Shield of Florida, Inc. (BCBSF) and Envision Pharmaceutical Services, LLC (Envision). The BCBS claims will be completed by Healthcare Horizons Consulting Group, Inc. Refer to Exhibit A - Services to Be Provided Detailed Claims Audit Scope. Envision prescription claims will be audited by HealthLinX, LLC. Both companies will be auditing 100% of paid claims for 2017 and 2018. Audits are becoming a common practice in employer based benefit administration. Monroe County Board of County Commissioners administers a single-employer defined benefits healthcare plan (the "Plan"). Florida Statute 1.12.081 requires the County to provide retirees and their eligible dependents with the option to participate in the Plan if the County provides health insurance to its active employees and their eligible dependents. The Plan provides medical coverage and prescription drug benefits to both active and eligible retired employees. The Plan includes participants from the County and each Constitutional Officer. 21 Dependent Eligibility Audit November 2018 Blue Cross Blue Shield of Florida, Inc. has acted as Monroe County's third party administrator (TPA) for medical claims since November 1, 2011 when they took over from Wells Fargo. Envision Pharmaceutical Services, LLC has acted as the County's pharmacy benefit manager since October 1, 2011. The County spent approximately$17.4 million in FY 2017 to provide Health and Prescription Benefits to employees, retirees and qualified dependents. The Board of County Commissioners has updated the plan with various successful measures to lower these costs. Given the high cost of providing these benefits to employees, it is essential that the County seek additional opportunities to minimize the cost of providing benefits. Ensuring that only eligible employees and dependents are enrolled in these benefits will help reduce overall healthcare costs. According to industry estimates the average dependent can cost an employer a minimum of$3,000 annually. An employee without a participating spouse/domestic partner or dependent was not included in the audit. Currently, the County does not require employees to submit enrollment documents (birth certificates, marriage licenses, etc.) to support eligibility of the dependents that they chose to enroll for these benefits during their enrollment. They do require a certification for spousal/domestic partner coverage at open enrollment. Annual enrollment is the only chance employees have each year to enroll dependents, except for qualifying events or when a court order is adjudicated. Qualifying events include (but are not all inclusive) birth, adoption, marriage or the addition of a certified dependent. The County has never conducted a Dependent Eligibility Verification Audit. In the absence of controls to verify eligibility, it is possible that ineligible dependents may be receiving benefits which could increase the healthcare costs to the County. As part of the audit the Clerk's Internal Audit Department verified that dependents enrolled in the Monroe County Group Health Insurance Plan meet eligibility guidelines to participate in the program. Audit letters requesting the required documentation for dependents were mailed during April 2018. Refer to Exhibit B — Dependent Eligibility Audit Letter. The documents required during the audit to verify eligibility are typical of that required by other employers conducting a document model audit. The same documents used to verify dependent eligibility for the State of Florida were used by the Clerk's Internal Audit Department for their audit. Objectives The objectives of this audit were to determine if internal controls related to the Monroe County Group Health Plan are operating effectively and in compliance with applicable laws, rules, regulations, policies and procedures, and contracts. More specifically, the audit objectives were to: 31 Dependent Eligibility Audit November 2018 • Obtain assurance that there are controls in place to ensure that only eligible employees and their dependents receive benefits under the Plan. • Determine whether the County's health benefit and pharmacy plan's administrative fees are processed and paid in compliance with the Plan provisions and applicable agreements, Methodology To accomplish the objectives of the audit, the procedures performed included, but were not limited to the following: • Performed inquiries of County and Third Party Administrator (TPA) • Communication Plan: During the planning phase of the audit, Audit staff developed a communication plan and identified the types of documentation that would be accepted as verification of eligibility for each type of dependent. The documentation required was basically the same as required by the State of Florida for their dependent verification audit. The Employee Benefits Department coordinated with the Internal Audit Department to inform employees about the audit. Internal Audit's telephone number was included to answer any questions from plan members. • Obtain a signed form letter from each covered employee and retiree to validate current dependent status for all dependents covered and ask the member to sign off/verify the information they provided is true. • Method of Delivery: Letters were sent to all employees and retirees with dependents. The initial letters were mailed first class through the United States Postal Service. The addresses used were the same as the official address records maintained by the Employee Benefits Department. 449 letters were sent out to employees/retirees that cover dependents. 307 employees/retirees with dependents responded with the first mailing. Total number of employees with dependents on database 455 Total duplicated on database 6 Total letters sent to employees with dependents 449 Total employees that responded with first mailing 307 Total employees with bad address 9 Total emails sent to non-responders 56 Total employees that responded to emails 12 Total certified letters sent 114 Total employees that stated they would not respond 1 Total employees that received telephone calls numerous 41 Dependent Eligibility Audit November 2018 Total number of dependents 706 Total number of spouses 213 Total number of domestic partners 15 Total number of children 447 Total children 26—30 21 Total children turning 27 next year 10 • Verification of Documents: Employees and retirees could send by mail, email, fax or bring copies of the documents to the Internal Audit Department in the Clerk's Office. Documents were reviewed to ensure eligibility was met. • Extension of the deadline, Emails with a receipt request were sent to those employees that did not respond. 56 emails were sent and 12 employees/retirees responded. Internal Audit did not have the emails for all the non-responders. • Certified letters with return receipts were sent out to 70 employees without email addresses and 44 employees that did not respond to the email requests. • Telephone calls were made to numerous employees that did not respond to any of the above requests. New requests were emailed to participants that did not respond. • Reviewed Plan Documents, TPA service agreements, enrollment information provided to employees, and information on the County's intranet site related to Plan eligibility and benefits. • Obtained and reviewed the TPA's Service Organization's Control (SOC) Reports issued by independent CPA firms, describing and evaluating the TPA's internal controls related to TPA services and claim processing. Analyzed items to be completed by client to ensure that the County is completing all required steps. • Design a request for proposal and contract for a claims audit on both the Medical and Pharmaceutical plans. • Reviewed monthly administrative billing from Blue Cross Blue Shield of Florida, Inc. and Envision Pharmaceutical Services, LLC. 51 Dependent Eligibility Audit November 2018 Audit Conclusions A. Documented responsibilities, processes and procedures need to be updated for all tasks to ensure the County meets its Plan responsibilities. B. While ineligible dependents on the Health Plan were very low, dependent eligibility verification controls need to be strengthened C. The Service Organization's Control (SOC) Report on Internal Control for Blue Cross and Blue Shield of Florida and Envision Pharmaceutical Services, LLC is not requested by Employee Benefits from the Health Care Provider or reviewed. D. The American Health Insurance Portability and Accountability Act of 1966 (HIPAA) compliance needs to be reviewed. E. Administrative billing detail not sent to the Clerk's Finance Department for review and audit. F. Imputed income is not reported for employees with certain adult children age 26 (the calendar year after they turn 26) through age 30. Coverage for this age group is required by Florida Statute. 61 Dependent Eligibility Audit November 2018 Observations and Recommendations A. Documented Responsibilities, Processes and Procedures Need to be U2dated Written processes and procedures for all tasks are needed to ensure the County meets its Plan responsibilities. Observation The County contracts with Blue Cross and Blue Shield of Florida, Inc. and Envision Pharmaceutical Services, LLC to process Plan claims and perform various functions for the Plan. The County's responsibilities include verifying that employees and dependents are eligible to participate in the Plan, approving the administrative fees paid to the TPA, monitoring claims administration, and reviewing any denied/appealed claims. Currently, limited guidance is provided to responsible employees on how to fulfill these County duties. The County new hire enrollment documents provide some guidance; however, these documents do not include specifics on the procedures that should be performed. Personnel perform some procedures that have been verbally passed down from previous employees. Recommendation 1. Document responsibilities for monitoring the Plans and the processes and procedures used to ensure that those responsibilities are being met. Written procedures provide a tool for existing and future employees to perform their functions effectively and can be used to communicate responsibilities and expectations to staff. At a minimum, written procedures should address the monitoring of medical claims, the treatment of denied claims, the determination of administrative fees, the processes for verifying employee and dependent eligibility, and document retention and destruction. 2. We recommend that Employee Benefits contract for a claims audit annually. Monroe County ManagementW Resnonse We agree that when responsibilities, processes, and procedures are clearly documented and regularly followed, that accuracy can be improved. The department can always focus on continuous improvement in these areas. Employee Benefits has checklists for regular/daily procedures that are printed and used for transactions. The department has an operating manual. These checklists are 71 Dependent Eligibility Audit November 2018 used to ensure continuity of processes. Even with these tools it is possible to experience a clerical error, so we are always open to considering new and improved processes. Extensive new hire forms, including summaries and cover page instructions are provided. The HR departments/representatives that provide the packets to new hires are familiar with the forms. Annually, prior to open enrollment, benefits conducts a voluntary workshop to review coverage and any form or process changes. Medical claims are reviewed per invoice (weekly) and every claim over$ 1,000.00 is specifically reviewed for eligibility. Prescription claims are reviewed per invoice (weekly) and every claim over$ 500.00 is specifically reviewed for eligibility. Medical and prescription invoices are reviewed by: 1)Administrative Assistant 2) Coordinator 3) Administrator 4) Director and 5)final approval by County Administrator. Administration fees are determined by Florida Blue and Envision and reviewed by The County and Gallagher each year. In most cases, the administrative fees are guaranteed for a specific period of time. Claims grievance procedures have already been established in writing under the Affordable Care Act (ACA). The Employee Benefits department will review and update its procedures. The County's benefits consultant, Gallagher, states that: 100%of the paid claims to be audited may not be necessary. There should be a representative sample number of claims audited annually that is actuarially creditable. Further comprehensive auditing may be necessary if the representative sample is outside the norm. Depending on what the claims audit reveals, Gallagher does not believe a full claims audit needs to be conducted annually. They recommend once every 3 years. The Employee Benefits department will review the results of the claims audit, being conducted separately, and consider options for ongoing or periodic auditing of claims. B. Dependent Eligibility Verification Controls Strengthen process to verify all enrolled dependents are eligible to participate in the plan Observation 81 Dependent Eligibility Audit November 2018 The verification that participating dependents were eligible for plan benefits was completed and ineligible dependents removed from the plan was very low. The audit indicated that a number of dependents in the Plan did not sufficiently support their eligibility to participate in the Plan. There was 100% employee compliance with the completed form but 2 employees did not provide all documentation. There were 2 retirees that did not respond and 1 retiree did not provide all documentation. The Employee Benefits internal database was not up to date at the time of the audit which caused some employees and dependents to be still covered by the Health Plans in error. Envision provides Monroe County with access to a web-based report generator through which the Employee Benefits Department may create and download a variety of standard and customized reports. The report generator has not been used by the Department. • 1 former employee with 1 dependent was removed during the audit. The termination in December 2017 was missed by Employee Benefits. The employee and dependent was still on the Health and Prescription Plan until August 201.8. The administrative bill for BCBSFL dated August 1, 2018 to September 1, 2018 still included an administrative fee charge of $48.25. A credit for part of the Administrative fee was received in the amount of$141.53. 0 1 employee had sent in forms to remove a spouse but since the internal database was not current the spouse was not removed until noted by the Internal Auditors during the audit. There was a refund of $1,416 given to the employee for paydays 4/13, 4/27, 5/11, 5/25, 6/8, 6/22, 7/6 and 7/20. This represents spouse premium of$177 for each payday. • 1 employee with 2 dependents was removed during the audit. His termination date was 1/21/2018 and the termination form was received in Employee Benefits on 1/24/2018. However, Employee Benefits was behind in their paperwork so they did not remove the employee and dependents until the audit. • 1 employee removed a dependent that she had previously tried to remove when her dependent received their own insurance. She was told she did not need to remove this dependent. • 3 domestic partners were listed as spouses which affects imputed income. • 9 employees had bad addresses. • 6 duplicates were on the database. We were able to receive credit back on part of the administrative fee for BCBSFL. However, if claims had been processed in error we might not have been able to recover the payments. In the Envision Agreement provision 4.2 Eligibility Date it states "Plan Sponsor shall provide timely eligibility updates (for example, additions, terminations, change of address or personal information, etc.) to ensure accurate determination of the eligibility status of covered individuals." It further states in (ii) "Envision will continue to rely on the information provided by Plan Sponsor until Envision receives notice that such information has changed; and (iii) Envision shall not be liable to Plan Sponsor for any Claims or 91 Dependent Eligibility Audit November 2018 expenses resulting from the provision by Plan Sponsor (or its designee) of inaccurate, erroneous, or untimely information." In addition, discussions with County personnel indicated that the County does not routinely maintain documentation supporting dependent eligibility verifications. The Employee Benefits Department does require signed affidavits that dependents are eligible but in some cases these were missing. Refer to Exhibit C— Affidavit of Dependent Status for the Group Health Plan. The Internal Audit Department will provide Employee Benefits the birth certificate copies and marriage license copies gathered during the audit for their records. If ineligible dependents have participated in the Plan,the County may have incurred costs for ineligible benefits. Maintaining an accurate and up-to-date list of eligible members of the Health Plan is essential to ensure that benefits are allowed only for eligible individuals. Recommendation 1. Establish clear procedures to verify that all newly enrolled dependents are eligible to participate in the Plan. Documentation such as marriage certificates, dependent birth certificates, and documentation that supports the relationship is still intact should be requested from new employees and employees with a qualifying event. 2. We recommend that the Employee Benefits database errors are corrected and operating procedures be put in place to maintain the database. 3. We recommend that Monroe County Board of County Commissioners consider requiring that those employees/retirees that did not respond to provide the documents during open enrollment or lose their coverage. 4. We recommend that Employee Benefits provide a monthly listing of covered employees to all payroll departments for verification of employee status. Monroe County Manalzement Response Employee Benefits internal database was not up to date at the time of the audit due to open enrollment data entry and some staff members on leaves of absences. Upon return to full staffing, priority was given to reviewing, updating and making corrections to the database. The benefits department utilizes the FTP site offered by Envision Rx, for weekly invoices/reports and for the weekly and monthly administrative fee/reports. It is worthy to note that of 855 dependents; only 4 substantive issues were identified during the audit. This represents an error rate of.047%; and an accuraci rate of 99.953%. 101 Dependent Eligibility Audit November 2018 1. 12/30/2017—employee termination. A termination notification for 12/30/2017 was submitted by employer and within the many transactions this item was overlooked. Upon notification, transaction was immediately processed. No claims were processed or paid as the result of this oversight. No payroll deduction correction was required and County was reimbursed administrative fee per plan. Note that administrative fees are billed 30 days in advance. Under normal review process, this would have been detected in the weekly payroll register review and administrative fee review. 2. Submitted forms to remove dependent. Zero claims were processed or paid. Under normal working conditions, this would have been detected in the weekly and monthly reviews. The payroll deductions continued without report/questions from the employee, which would have also been indicator to benefit team that an oversight had occurred. Employee was reimbursed the overage in deductions and County was reimbursed for administrative fee per plan. Note that administrative fees are billed 30 days in advance. 3. 1/21/19 termed employee. Zero claims processed or paid as the result. 4. Employee removed dependent that she had previously tried to remove when dependent received their own insurance. 5. Domestic partners listed as spouses, which affects imputed income. Until July 2017, the benefits database system did not have notation of the difference between domestic partners and spouses. The option was for a note to be entered at multipurpose location. Therefore, some long standing domestic partners may have been indicated as spouses. However, in the premium calculation it is and was clearly visible that imputed was being processed. 6. Bad addresses: Employees must self-report updates to address, phone and email. A complete HRIS system would be helpful in avoiding such issues. We are now verifying address through the open enrollment process. 7. Duplicate in database: When converting to sequel (security) new tables provided to benefits by IT create multiple listing for each employee. Correcting the multiple listings is a manual process by the benefit team. Director, administrator and staff have discussed with IT. This continues and will continue to be any issue as long as current database is in use. County does routinely maintain supporting dependent eligibility documentation. Based on current file and processing requirements we have the appropriate documentation. To our knowledge, for each request made by the auditor with one exception, we produced what is currently required for dependent eligibility. This is evidenced by the 0.047% ineligibility rate from this audit. Weekly reviews of claims and monthly reviews of administrative fees (previously noted) offer assurance that enrollment is complete and accurate. Affidavits: legal spouse, legal child, different last names, etc. are in place as well when eligibility could be in question. The County will continue to review dependent eligibility documents such as birth certificates, marriage licenses, etc. in order to verify eligibility for coverage. The County will determine whether copies of those documents should be retained. 111 Dependent Eligibility Audit November 2018 C. Understanding of Pr_escri tion Benefit Manaer [PBM and Medical Plan Internal Controls The Service Organization's Control(SOC)Report for Florida Blue and Envision are not maintained or reviewed. Observation Envision is the PBM contracted by the County to process prescription plan claims and perform various functions for the Plan. Florida Blue is the third party administrator contracted to process health plan claims and performs various functions for the plan. Florida Blue's and Envision's internal controls are evaluated periodically by an independent CPA firm that issues SOC reports that describe and reviews internal controls related to the PBM's prescription claims processing functions, including any internal control weaknesses identified. The SOC report also includes a description of internal controls that are recommended for user entities like the County. The County does not obtain or review the PBM's SOC report to, 1) identify any PBM internal control weaknesses that could impact the administration of the County's medical and pharmaceutical plans, or 2) evaluate whether or not the County has addressed the recommended controls for "user" entities that are included in the report. The audit found that the most recent SOC report covering the period included a clean opinion on the design and operating effectiveness of the PBM's internal controls. The report also includes suggested "user controls" and notes that the PBM's internal controls are designed with the assumption that internal controls are implemented at the user entities. While the SOC report is extensive, the County would benefit from an in depth review of it in its entirety. Page 29 of the report lists various complimentary controls. Refer to Exhibit D — Service Organization's Control Report. Recommendation Obtain and review the PBM's SOC Report which describes and evaluates internal controls related to the PBM's claims processing functions. Identify and address internal control. Monroe County Management Res onse Gallagher, our benefit consulting team, receives this report for review with Administrator. As an identified shortfall within the audit, going forward, SOC will be ordered regularly and reviewed within the department and well as with benefit consulting team. Current providers have exhibited excellent track record. 121 Dependent Eligibility Audit November 2018 D. American Health Insurance Portability and Accountability Act of 1996 f HIPAA) Compliance Observation HIPAA compliance for an organization revolves around protecting the privacy and security of Protected Health Information (PHI) that the organization has or will have access to. PHI is any information that can be connected to an individual's health condition. HIPAA Privacy are safeguards for keeping protected health information safe from a people, administrative, and contractual standpoint. HIPAA Security are safeguards for keeping protected health information specifically in electronic form (computers, networks, email, software, electronic transmissions, etc.) safe from disasters, hackers, and electronic theft. For self-insured plan (medical health plan, dental, vision, and flexible spending) or fully insured plans with access to detailed health information of their employees, an organization must put in place safeguards and controls for both HIPAA Privacy and Security to protect PHI that the organization has or will be given access to. This includes HIPAA Awareness training for those who have access to PHI, implementing formal policies and procedures and documents required by HIPAA, and validating your IT infrastructure against the HIPAA security information technology standards. The Office of Civil Rights for HHS enforces HIPAA and is responsible for investigating complaints. Fines for HIPAA violations range from $100 to $50,000 per violation, up to $1.5 million for violations of a single provision, according to TrueVault. Monroe County's information technology standards need to be compared against the federal IT standards in HIPAA Security. Identify and fix any deficiencies. A formal review of Monroe County policy and procedures related to HIPAA is needed to ensure compliance in all areas. Recommendation We recommend contracting with a HIPAA security firm to complete a HIPAA security audit and risk analysis that will aid the County in completing training, writing policies and procedures, and identifying and fixing any infrastructure deficiencies. Monroe County Management Resoonse We are working closely with compliance opportunities and certifications as part of a departmental reorganization. Privacy officer and team will have regular training; at minimum attend annual professional training. In additional, we utilize education offered by consultants and varying state, regional and local organizations. The Benefits team takes privacy seriously and strives to ensure that protected information is safe. 131 Dependent Eligibility Audit November 2018 E. Administrative Billing and Claims Information Not Maintained in Sufficient Detail Benefits Department does not send data in sufficient detail to the Clerk's Finance Department Observation The Employee Benefits Department is 100% responsible for the accuracy of administrative bills from BCBS which shows administrative fees due from the County. The Employee Benefits Department approves the funding for BCBS but only sends a copy of th e i n vo i c e totals to the Clerk's Finance Department for payment. While the County is required to protect certain information that could identify the patient and health issues, not sending employee names and corresponding administrative fee charges of $48.25 per month per employee makes it difficult to later verify that administrative fees were accurate and supported. If an employee is only covered for part of a month the fee is prorated. The employee listing contains no protected health information. The listing including member names should be sent to the Clerk's Office. During the audit review period payments were made for some employees that were no longer employed by the County or Constitutional Officers. During the audit this information was not supplied in a timely manner by the Employee Benefits Department to the Internal Auditor because of severe time constraints in the Department. Recommendation 1. We recommend that Employee Benefits Department include administrative fee details including employee name and charges supplied by BCBS to the Clerk's Finance Department. 2. We recommend that Employee Benefits Department work with the Clerk's Finance Department when they select anew financial software system to ensure there will bean integrated Human Resource/Benefits Module. Monroe Countv Manayement Res�)onse The County understands the Clerk's Finance Department may wish to additionally verify the BCBSFL administrative fee or claims invoices for accuracy. We will work with the Clerk's Finance Department to develop a process that makes available data to sufficiently verify administrative fees and/or claims without potentially compromising Protected Health Information (PHI) or other sensitive member data. Per our discussion with the lead auditor, Sandy Mathena, this will be discussed in conjunction with the claims audit, being conducted separately and concurrently. The County would like to work with the Clerk's Finance Department when they select a new financial software package to ensure the integrated Human Resource/Benefits module meets the needs of the County. 141 Dependent Eligibility Audit November 2018 F. Required Coverage of Adult Children 26 to 30 by Florida Statute 627 6562 Observation The Affordable Care Act requires plans and issuers that offer dependent child coverage to make the coverage available until the adult child reaches the age of 26. The State of Florida Statute 627.6562 requires coverage from age 26-30, the eligible dependent must be the insured child by blood or law and must meet the following additional criteria: 1) Less than 30 years of age 2) Unmarried 3) Has no dependents 4) Is a resident of Florida, or if not a resident of Florida, is enrolled as a full-time or part- time student 5) Is not covered as a named subscriber, insured, enrollee, or covered person under any other group, student, or franchise health plan or individual health benefits plan, or is entitled to benefits under Medicare. This law does not require an employer to pay all or part of the cost of coverage provided for a dependent under this section. Monroe County's Plan has 21 dependents covered over age 26 and 10 that will turn 26 in 2018. The employee is required by the Benefits Department to sign an affidavit for the 26 - 30 year old dependents. Refer to Exhibit C — Affidavit of Dependent Status for the Group Health Plan. Not all affidavits were current when requested during the audit. When the annual affidavit is signed documentation to support their residency should be requested such as proof of Florida residency or proof of school residency. Employees covering adult children under the employee's medical, dental and vision insurance plans may continue to have the related coverage premiums payroll deducted on a pre-tax basis through the end of the calendar year in which child reaches age 26. Beginning January 1 of the calendar year in which child reaches age 27 through the end of the calendar year in which child reaches age 30, imputed income for the value of the applicable adult child's coverage for the coverage period must be reported on the employee's W-2. Imputed income is the dollar value of insurance coverage attributable to covering an adult child. There is no imputed income if adult child is eligible to be claimed as a dependent for federal income tax purposes on employee's tax return. Sarasota County has recently enacted the following to their plan. "Employees who elect to cover dependents aged 26-30 will pay the full employer and employee share of a single tier premium for the coverage for each 26-30 year old dependent. The cost will be $319.44 per pay period for the POS II plan and $231.31 per pay period for the Aetna Health Fund (AHF) plan. This cost is in addition to the medical premiums for coverage for the remainder of the family. In addition, the deductions for the 26- 30 year old dependent coverage will be made with after-tax dollars." Refer to Exhibit E — Sarasota County Employee Benefit Costs 2018. Imputed income must be calculated for some adult children and included in the income of the employee that covers this dependent. 15 1 Dependent Eligibility Audit November 2018 Recommendation 1. The Employee Benefits Department should contact their Health Benefit Consultant to clarify this issue and calculate imputed income to the affected employees. 2. The BOCC may want to consider a separate charge for adult children age 27 through 30. Monroe County Management Resr)onse MCBOCC does not currently have separate rates for dependent children between ages 26- 30. A review of the rate structure and guidelines for imputed income are needed. Gallagher Benefits Consultants have not yet made any recommendations on this group or imputed income rate/guidelines. A small number of dependents in this age group remain on the plan. Rates and guidelines can be reconciled with 1/1/2019 and the current open enrollment period. 16 1 Dependent Eligibility Audit November 2018 EXHIBITS EXHIBIT A Services To Be Provided Detailed Claiois Audit Scope HEALTHCARE HORIZONS ATTACHMENT B CONSULTING GROUP, INC MONROE COUNTY FLORIDA HEALTHCARE CLAIMS AUDITS SERVICES TO BE PROVIDED Comprehensive Medical Claims Audit Healthcare Horizons will audit all claims paid for the audit period for a wide range of potential claim errors. Our 100%claims audit utilizes our proprietaN set of algorithms (both standard and custom)applied to an electronic file of all paid medical claims. We conduct the audit on all claims, rather than a random sample. This approach yields much better results,because we identify both isolated and systemic errors,and assign actual dollar impact to those errors, making a much stronger case to the payer. As a result, employers can recover significantly more in overpayments. Testing includes, but is not limited to: Duplicate claims: Healthcare Horizons identifies duplicate claims at both the claim level and individual procedure level. While most clients would expect duplicate claims to be rare,they are quite common in healthcare claims payments and usually result in recoveries on every project conducted by Healthcare Horizons. Eligibility: Compare a file of historical eligibility with claims to flag payments outside of valid eligibility dates. Every administrator should have a process for identifying and recovering claims affected by a retroactive termination as they are common in the claims industry. In addition to claims paid after the termination date, Healthcare Horizons identifies claims paid during a gap in coverage and claims paid without an eligibility record on file. Fraud and abuse: Question certain patterns of billing that appear abusive such as upcoding. Potentially perform hospital bill audits. Coding compliance: Use edits published by industry resources to flag code combinations that may be unbundled or mutually exclusive. Assure correct transition to ICD-10 coding. Provider discounts: Healthcare Horizons normally requests a review of the signed provider contracts for the top 30 utilized hospitals for each group. While on site at the administrator, Healthcare Horizons uses the claims data to test pricing and other contractual terms present in the contract for all claims paid to that provider in the claims data set. Other terms in the contract may include readmissions,outpatient services on the day of admission, pre-admission testing,timely filing,and transfers. Modifier pricing: Industry standard testing of modifiers for multiple procedures, assistant surgeons, co-surgeons, nurse anesthetists, and other special situations. Benefits: Healthcare Horizons creates customized queries to model the benefits present in the summary plan documents (SPDs) provided by the employer group. Likely areas of testing for benefits are application of copayments and coinsurance,annual dollar or visit maximums, non-covered benefits,coordination of benefit rules, and other specific items flagged by our auditors as potential errors. A Healthcare Horizons auditor reviews the SPDs in full for each claims audit and selects the benefit areas where testing is possible. Some benefits do not lend themselves to systematic testing in the data and can only be reviewed on selected sample claims. If medical attachment b services.dou Page 1 of 5 HEALTHCAREHORIZONS ATTACHMENT B GROUP, INC MONROE COUNTY FLORIDA HEALTHCARE CLAIMS AUDITS and pharmacy benefits are comingled for deductible and out-of-pocket maximums, Healthcare Horizons will utilize medical and pharmacy data to verify correct administration. Coordination of Benefits: The presence of other primary insurance usually reduces the payment due by the employer group if they are secondary. In some cases, a secondary policy will pay as primary,such as when primary benefits are exhausted, or the primary policy does not cover a particular service. Healthcare Horizons utilizes the claims data to identify claims paid as primary that may have missed other insurance based on other claims in the data set being paid as secondary, ESRD status, COBRA members over 65, and retirees. Healthcare Horizons also scrutinizes claims that are paid as secondary with a paid amount higher than that of the primary carrier. Normally,the secondary payment is lower than the primary plan payment,as it likely only covers remaining member responsibility after the primary payment. Healthcare Horizons evaluates any timing restrictions due to COB errors. Timely Filing: Review if timely filing limits were used and claims were properly denied outside of the limits. Review if TPA is paying in timely manner to avoid late claim contract penalties. Subrogation: Healthcare Horizons queries the claims data for possible subrogation opportunities where third-party liability(TPL) may exist. A common example is medical services related to an auto accident where the auto insurer is liable for a portion of the medical claims. These claims are identified via accident-related diagnosis codes. Hospital Mistakes: Many payers across the country have adopted policies to investigate and subsequently deny payment for hospital mistakes and avoidable conditions,such as objects left in patient during surgery,fractures incurred in the hospital, blood incompatibility,and certain types of infections. Healthcare Horizons examines the claims data for these types of hospital errors and expects recovery opportunities for these errors as more administrators adopt such policies. Reinsurance: If the employer group has stop loss or reinsurance coverage, Healthcare Horizons utilizes the claims data to identify members that should have resulted in a credit due back to the group. Healthcare Horizons verifies with the administrator that the credits have been issued to the group. As part of our comprehensive analysis, Healthcare Horizons may determine that certain high-dollar claims are worthy of on an on-site hospital chart audit due to questionable billing. This type of review is especially important if it is determined that the hospital has been reimbursed via a percent of billed charges. At the conclusion of the on-site visit at BCBS, Healthcare Horizons will make a recommendation to the County on whether an additional review of hospital charts is warranted. attachment b-services.docx Page 2 of 5 HEALTHCARE,IORIZONS ATTACHMENT B CONSUOING GROW, 1Nr. MONROE COUNTY FLORIDA HEALTHCARE CLAIMS AUDITS Operational Assessment Healthcare Horizons will perform an operational assessment of BCBS through the use of a questionnaire that is focused on cost-containment measures. The questionnaire will address areas such as duplicate claim edits, medical management, application of provider contract rates and terms,application of benefits, assignment of provider networks, use of rental networks or fee negotiation, UCR reductions for out-of-network providers, eligibility management and processes for retroactive termination recoveries,controls for potential fraud and abuse, medical edits such as bundling, coordination of benefits and subrogation recoveries, audit processes on Monroe County claims, and general cost containment programs such as hospital bill audits.The information received from the questionnaire and potential interviews will allow Healthcare Horizons to properly assess the operations of BCBS. The best benchmarks use data-driven metrics; Healthcare Horizons analyzes carrier data by applying it to standard industry metrics and identifies trends that lead to proactive management. Some examples of data- driven benchmarks are: • Claim Time-to-Process—Measures time between claim receipt and payment. • Average Claim Cost—Determination of the average cost of medical benefits per employee for comparison to "best in class" large employers. Monroe County may compare to revenue generated per employee. • Closing Ratio—The number of claims closed divided by the number of claims received during a specified time period. • Stick Rate—Percentage of claims adjusted due to error in original processing. • Discounts—Evaluate any discount guarantees in place by the carrier. In addition, Healthcare Horizons will review the following self-reported categories via BCBS information requests: • Average Speed to Answer—Total time elapsed from queued call to response. • Call Abandonment Rate—Call termination prior to response. • First Call Resolution—No repeat calls for the same matter within designated period. • Inquiry Mix and Resolution—Quantify the mix of member inquires based on phone,email,and paper. Evaluate inquiry resolution time period. • Inquiry Composition—Evaluate the types of inquiries received—process improvement opportunity. • Member Satisfaction—Review of member surveys completed by the carrier. • Processor Overrides—If possible,evaluate volume of processor overrides. • Audit Rights—Ensure ASA allows"best in class"audit rights in terms of scope and timing. attachment b-services.docx Page 3 of 5 HEALTHCAREHORRONS ATTACHMENT B c.oNsu ING CROUP, INC MONROE COUNTY FLORIDA HEALTHCARE CLAIMS AUDITS Prescription Drug,Audit Healthcare Horizons partners with HealthLinX, L.L.C. (HLX)as a subcontractor in the performance of the pharmacy plan audit. Financial True-up Services True-ups compare the contract rates with the data to determine if the PBM administered the program according to the pricing guarantees. This requires the receipt and loading of all claims data electronically from the PBM. HLX then loads 100%of the claim data into their proprietary claims system and reprices the claims to determine outliers. The claims not matching the contract guarantees are then submitted to the PBM with a detailed request for explanation. In some cases,the guarantees are on an aggregate basis which necessitates using a "bucket"system to identify compliance with the contract. HLX is familiar with all types of claim guarantees and can provide guidance to the group as to the advantages and disadvantages of each type of system. Rebate True-up Rebate true-up services compare the guaranteed rebates per brand claim with the actual data from the PBM to determine if the program is administering the rebate guarantees accurately. A true-up requires the receipt and loading of all claims plus a statement of performance from the PBM. HLX then loads 100%of the claim data into their proprietary claims system and reprices the claims to determine accuracy of the statement. Any difference is calculations will be thoroughly verified with the PBM. A complete report of the accuracy of rebate administration will be provided to the Plan. Claims Audit Timeline Our audits follow a five-phase approach to effectively manage the activities and maintain a disciplined timeline. On average,the audit takes between 5-6 months to complete depending on the availability and responsiveness of the administrator. The chart below provides an overview of each phase required to perform the audit. Healthcare Horizons handles nearly every aspect of the audit process and will keep you up-to-date throughout the entire project. PECOVERY .�Esl=tlla1'��RiV tl�!H� ' which wRi®1 r�R•telr- claims ntcJ d►4e7eR.%[efi�e[aP- �' Horizons matt. Sn•1u•mr1=19e ancifyzes rota TPA secover- 1 . sate'1R " •UteYI'as n- ... attachment b-services.docx Page 4 of 5 HEALTHCARE iORIZONS ATTACHMENT B t,>ryst�G���m GROUP, INC MONROE COUNTY FLORIDA HEALTHCARE CLAIMS AUDITS Healthcare Horizons will perform a one-week site visit at the TPA to audit claims and determine which claims are paid in error. Using the results of the site visit, Healthcare Horizons will determine if any issues warrant follow- up beyond the site visit claims. Upon completion of our testing, we compile and deliver a detailed audit report that documents our findings, including a full list of erroneous claims based on the results of the audit. We will also identify root-cause issues and make recommendations for correcting these problems. attachment b-services.docx Page 5 of 5 EXHIBIT B Dependent Eligibility Audit Letter Monroe County Clerk of the Circuit Court Dependent Verification Internal Audit Department PO Box 1980 Key West, FL 33040 March 29, 2018 Jane Doe POB X)= Key West,FL XXXXX Dear Jane Doe, g FAX: 1-305-295-3681 REFERENCE NUMBER:EID XXX RESPOND BY: May 12, 2018 The Monroe County Commission has directed the Monroe County Clerk's Office Internal Audit Department, to verify that dependents enrolled in the Monroe County Group Insurance Program meet the Program's eligibility requirements. In order for your dependent(s) to continue to receive benefits under the Monroe County Group Insurance Program,your action is required.You must submit proof of their eligibility to the Monroe County aeries Office Internal Audit Department so that it is received by May 12, 2018. A detailed list of documents required to prove eligibility of your dependent(s) is enclosed with this letter. Copies of the documents and the enclosed Verification Form must be received by the Clerk's Internal Audit Department by May 12, 2018. Please feel free to call the Internal Audit Department at (305)292-3591 from 8:30 am to 5:00 pm Eastern Time, Monday through Friday. Thank you for your cooperation with this important effort to control health care plan costs. According to our records,the following dependents) require verification at this time: Does this person meet the definition Enrolled Dependent Name Relationship of an eligible dependent? If not eligible,please indicate YES NO the date of ineligibility. _ John Doe ❑ ❑ ❑ ❑ I ❑ ❑ ❑ 0 To complete the verification process for eligible dependents,simply follow these steps: • Collect copies of all required documents(listed on page3)for each enrolled dependent. • Sign and date the signature box below. • Submit this form together with copies of all required documents to the Clerk's Internal Audit D e p a r t m e n t so they are received by May 12, 2018. Please ensure a copy of this form is included with all documents submitted. • For faster processing, please submit required documents by faxing them to 1-305- 295-3681 or emailing to wQeorge@monroe-clr m . Documents may be mailed to Monroe County Clerk of the Circuit Court, Internal Audit Department, P.O. Box 1980, K e y W e s t, F I o r i d a 3 3 0 4 0. Please do not mail original documents. By my signature on this form, I certify to Monroe Countythat (1) all information on this form is true, correct,and current as of the date signed and(2)all "REQUIRED DOCUMENTS"that are submitted are authentic. I understand any attempt to maintain coverage for an ineligible dependent will be subject to appropriate disciplinary action. Signature of Enrollee: Date: What documentation is needed to verify my dependent's eligibility? Dependent Required Document(s) 1. Legal spouse Ia. If married for less than 12 months and the enrollee and his or her spouse have not filed a joint federal income tax return, a government-issued marriage certificate or b. If married for 12 or more months, a transcript of the most recently filed (2016 or 2017) federal tax return showing that showing you filed as married,either jointly or separately. Visit www.irs.gov/individuals/get-transcript to obtain tax documents, if needed. See below: ***"What type of tax transcript do I need to supply?" 2. Domestic Partner (2)two of the following documents must be presented: a lease,deed or mortgage indicating that both parties are jointly responsible; driver's licenses for both partners showing the same address; passports for both partners showing the same address; verification of a joint bank account (savings or checking); credit cards with the same account numbers in both names; joint wills; powers of attorney;or joint title indicating that both partners own a vehicle. 3. Biological child (Government-issued birth certificate. 4.Adopted child a. An adoption certificate,or b. An adoption placement agreement and a petition for adoption. S. Stepchild a. A government-issued birth certificate for the stepchild, and b. The transcript of the enrollee's most recently filed federal income tax return to verify the marriage of the enrollee and legal guardian. 6. Ward Record showing the enrollee or the enrollee's spouse has legal guardianship or court- ordered custody of the dependent. 7. Newborn grandchild iA government-issued birth certificate listing your covered dependent as the child's parent. 8. Foster child Record showing the enrollee or the enrollee's spouse is the dependent's foster parent. 9.Child with disability a. For age 26 or older, proof of eligibility—see boxes 2-4,as applicable,and b.A transcript of the most recently filed (2016 or 2017)federal tax return 10.Child age 26 to 30 a. Proof of eligibility—see boxes 2-4, as applicable,and (end of calendar year of I b. Certification that enrollee's over-age dependent is unmarried, has no dependents, lives in the 301h birthday) Florida or attends school in another state and has no other health insurance. • To obtain copies of U.S. birth certificates: o In Florida, see the county of birth's clerk of court's website, or www.vita icheck.corn. o Out of state,visit www.vi or call the county of birth's clerk of court. • All documents must be in English or certified English translation. ***What type of tax transcript do I need to supply? You can request a tax transcript online at htt�-,,s:/,iwww.irs.gov/individuals/get-transcrir,,t or you may call their automated phone transcript service at 800-908-9946 to order a tax return transcript be sent by mail. Select the "return transcript" for the most recent year filed (2016 or 2017). Yes. If you file as married,whether separate or joint,the tax return transcript should show both you and your spouse. If the transcript does not list your spouse's name but shows their Social Security Number, leave their SSN unredacted for the spouse. EXHIBIT C Affidavit Of Dependent Status For The Group Health elan Monroe County Board of County Commissioners (MCBOCC) AFFIDAVIT OF DEPENDENT STATUS FOR THE GROUP HEALTH PLAN Employee Information Employee Name: _ Social Security Number: Dependent Information Dependent Name: _ Birth Date: Dependent's Address: Certification By checking below, I hereby certify that the dependent identified above: is my legal spouse under Federal Law; OR is my child (defined in Section 9 -Eligibility For Coverage. If this Affidavit pertains to my child who is 26 to 30 years of age,I further certify that the dependent identified above: is my natural, adopted,Foster, or step child; and is unmarried and does not have a dependent; and is a Florida resident or a full-time or part-time student; and is not enrolled in any other health coverage policy or group health plan; and is not entitled to benefits under the Title XVIR of the Social Security Act unless the child is a handicapped dependent child. I recognize that this affidavit is a legally binding document and accept full responsibility for notifying the Benefits Office immediately if there are any changes pertaining to my spouse or this child's status as my dependent. I agree to provide supporting documentation, such as,but not limited to, court records,birth certificates,proof of school registration,proof of residency, or any other documents, when requested by the Benefits Office or its insurers at any time as long as the individual is enrolled as my dependent. I understand that I may be responsible for any expenses paid by the MCBOCC Group Health Plan or its insurers for dependents that I enroll that are not eligible to participate in the MCBOCC Group Health Plan benefit programs and that my providing false or misleading information about the dependent status of such individuals to the Benefits Office or its insurers may be grounds for disciplinary action, including termination of employment. I hereby certify, under penalty of perjury,that the information provided by me is true and correct to the best of my knowledge. Employee Signature Date VERIFICATION BY NOTARY: STATE OF County of Sworn to and subscribed before me this day of ,20 by (person's name) Notary Public(signature) (seal) Personally Known or Produced Identification Type of Identification Produced: EXHIBIT D Service Organization's Control Report User Entity Control Considerations Envision's Pharmacy Benefit Management and Related Administrative Services System was designed with the assumption that specific internal controls would be implemented by client organizations. In certain situations, the application of specified internal controls at client organizations is necessary to achieve specific control objectives included in this report. The client's organizational internal controls should be in operation to complement Envision's Pharmacy Benefit Management and Related Administrative Services System controls. Skoda Minotti's examination was limited to the activities and procedures for Envision's Pharmacy Benefit Management and Related Administrative Services System as they relate to its clients. Accordingly, Skoda Minotti's examination did not extend to any activities or procedures in place at the clients of Envision. It is each interested party's responsibility to evaluate the client organization control considerations information presented in this section in relation to the internal controls that are in place at client organizations to obtain a complete understanding of the total internal control structure and to assess control risk. If effective client internal controls are not in place, Envision's Pharmacy Benefit Management and Related Administrative Services System controls may not compensate for such weaknesses. This section describes other internal controls that should be in operation at client organizations to complement the controls at Envision's Pharmacy Benefit Management and Related Administrative Services System. The auditors of Envision's Pharmacy Benefit Management and Related Administrative Services System clients should consider whether the following controls have been placed in operation at client organizations. ➢ Client Data Integrity— User access rights — User access rights are granted for clients to enable them to log into Envision's SFTP site and update their member information. Any client of Envision must guard the system access information, logins and password(s) as zealously for their own employees as Envision does for its own employees. ➢ Client Data Integrity—Adjudicator program functionality requirements—Any adjudication program functionality requirements beyond minimum required elements described under Eligibility on page 18 with regard to defining how a pharmacy claim is to be adjudicated are defined by the user organization. ➢ Computer Operations(System Availability)—Contingency procedures—If Envision's services were unavailable or inoperative due to system or communication failure, the user could expect some delay. Each user organization should establish procedures to ensure continued operations during such a disruption. ➢ Data Communications — Network security issues — User organizations are responsible for maintaining the integrity of any Internet Protocol based connection to Envision as well as monitoring network connections they maintain between Envision and their own sites to ensure connections are maintained and available 21) Section 3 Proprietary and Confidential EXHIBIT E Sarasota County Employee Benefit Costs 2018 2018 EMPLOYEE BENEFITS DEPENDENT COVERAGE WHO IS ELIGIBLE FOR MEDICAL PLAN COVERAGE? Sarasota County offers benefits to you and your eligible family members. Extended family memb ers,such as grandchildren,are not eligible for coverage unless you are their legal ' guardian or have adopted them,or you are covering their eligible parent(your eligible Y 9 dependent)and they are under 18 months of age. . - of Dependent • Yourspouse Must be your legal spouse.Ex-spouses are not eligible, even if court-ordered. Up to age 26 Age 26-30 medical only;the eligible dependent Your children: must be the insured child by blood or law and must • Biological meet the following additional criteria: 1) Less than 30 • Adopted years of age 2)Unmarried 3)Has no dependents 4) Is a resident of Florida,or if not a resident of Florida,is • Stepchildren enrolled as a full-time or part-time student 5) Is not • Children you are required to support under the covered as a named subscriber,insured,enrollee,or terms of a Qualified Medical Child Support Order covered person under any other group,student,or ��- franchise health plan or individual health benefits plan,or is entitled to benefits under Medicare. Benefits Tip:Be sure to review your dependents' eligibility and data to ensure birth dates and REQUIRL-D D0CIjMErjTATl0l^f Social Security numbers are up-to-date.Contact All employees who have enrolled new askbenefits@scgov.net if you see any errors or dependents on either of the county's health need to remove a dependent. plans must supply documentation sup porting DEPENDENTS AGED 26-30 their dependents.For a dependent spouse,you will need a marriage certificate.For dependent Employees who elect to cover dependents aged children,you will need a birth certificate. 26-30 will pay the full employer and employee share Sarasota County performs random dependent of a single tier premium for the coverage for each eligibility audits.Employees are responsible 26-30 year old dependent.The cost will be$319.44 for arty claims incurred while a dependent per pay period for the POS II plan and $231.31 per pay is not€[fcrMe. period for the Aetna Health Fund(AHF) plan.This cost is in addition to the medical premiums for coverage for the remainder of the family. In addition,the deductions for the 26-30 year old dependent coverage will be made with after-tax dollars.(Dependents aged 26-30 with a qualifying disability may continue to be covered under the employee's pof icy without paying the additional premium.) scgov.net(keyword benefits) Q, m C m $ CFO (m m rt C L CL CD — 3 (D oni H p W W W y3j d y 7 r'o °1 6 c A A A C S C m C epi ,dr O v c 0 � fp �+ � � m m In CD o s n A ,OnID fnD i a O G' C C $ m m o' -o a ° 3 0 0 3 3 7 C 9 m w in 4n N in Vl S/I vt M 3 3 3 3 3 m O 'a Ov a Ov _ O p O 'D Oa p p p 3 3 ° 7 ° Ql ~` N 00 V < r<o d W < !<0 O N < K < < W A 0 O 01 0) m A V m 3 A O O m r' 3'ad T y „ S 3 D S 3 3 3 .. a, of �, -• v C -• a m r r 3 to 3 0 = m r o y r N a o O al p V F+ < A < 0 7 (D p0 7 N F+ A 7 N w + 00 A A 00 "" + n Oo t 07 01 lli a + a W O m to to m �' m N va m O u t. m m MIA �, 3 n o ° a O 8 D LA a 0 3 v v v a O w o ro �_ o d NID r<mn n A N < < w to Co r^ N ' O ONi N K O N, + N l0 m Dl m 00 + 7 00 m m N m m M W 81 O z 00 to + O N t F in in N N in in Q Sn d 3 Q 67 41 y fD r 3 N N 7 3 N N w fl9 ID v < to'r 6 COof (n N 001 00 N co K < N � K �_ O N O cn an . 3 v o I a a o c (D - Go m w w wo m — eD m O O too yr H mw K A #+ ON1 O rF M vn m ,,,-, Nr..:�33f O IA I-P Vlv, m m ''in M+ a 00 m O v*3 o ° , a o V1 (� (D to N 3 N V + tD V 4A + m � cn 3 a 0 c O D Ln to < Y < N O N m -n OD m v N + W 3 N in T N oro w 3 (n N - l0 ? < Q1 Ul O ° a LY N O m m 7 O �+ r m Auditee Responses County of Monroe BOARD OF COUNTY COMMISSIONERS Mayor David Rice,District 4 The Florida Keys �. G Mayor Pro Tem Sylvia J.Murphy,District S t Dann) L.Kolhage.District I George Neugent,District 2 Heather Carruthers,District 3 October 30,2018 Sandra L. Mathena,CIA,CFE, CPA Director of Internal Audit Clerk of the Circuit Court 500 Whitehead Street,Suite 101 Key West, FL 33040 Dear Ms. Mathena: Please accept the following Employee Services Management Response to the Dependent Eligibility Verification Audit your office recently conducted. Finding 1:Documented Responsibilities, Processes and Procedures Need to be Updated We agree that when responsibilities, processes, and procedures are clearly documented and regularly followed,that accuracy can be improved. The department can always focus on continuous improvement in these areas. Employee benefits has checklists for regular/daily procedures that are printed and used for transactions. The department has an operating manual. These checklists are used to ensure continuity of processes. Even with these tools it is possible to experience a clerical error, so we are always open to considering new and improved processes. Extensive new hire forms, including summaries and cover page instructions are provided. The HR departments/representatives that provide the packets to new hires are familiar with the forms. Annually,prior to open enrollment,benefits conducts a voluntary workshop to review coverage and any form or process changes. Medical claims are reviewed per invoice(weekly)and every claim over$ 1,000.00 is specifically reviewed for eligibility. Prescription claims are reviewed per invoice(weekly)and every claim over$ 500.00 is specifically reviewed for eligibility. Medical and prescription invoices are reviewed by: 1)Administrative Assistant 2) Coordinator 3) Administrator 4) Director and 5)final approval by County Administrator. Administration fees are determined by Florida Blue and Envision and reviewed by The County and Gallagher each year. In most cases,the administrative fees are guaranteed for a specific period of time. 1 Claims grievance procedures have already been established in writing under the Affordable Care Act (ACA). The Employee Benefits department will review and update its procedures. The County's benefits consultant, Gallagher, states that: 100%of the paid claims to be audited may not be necessary. There should be a representative sample number of claims audited annually that is actuarially creditable. Further comprehensive auditing may be necessary if the representative sample is outside the norm.Depending on what the claims audit reveals, Gallagher does not believe a full claims audit needs to be conducted annually. They recommend once every 3 years. The Employee Benefits department will review the results of the claims audit, being conducted separately, and consider options for ongoing or periodic auditing of claims. Finding 2: Dependent Eligibility Verification Audit Results Employee Benefits internal database was not up to date at the time of the audit due to open enrollment data entry and some staff members on leaves of absences. Upon return to full staffing, priority was given to reviewing, updating and making corrections to the database. The benefits department utilizes the FTP site offered by Envision Rx, for weekly invoices/reports and for the weekly and monthly administrative fee/reports. It is worthy to note that of 855 dependents,only 4 substantive issues were identified during the audit. This represents an error rate of.047%;and an accuracy rate of 99.953%. 1. 12/30/2017—employee termination. A termination notification for 12/30/2017 was submitted by employer and within the many transactions this item was overlooked. Upon notification, transaction was immediately processed. No claims were processed or paid as the result of this oversight. No payroll deduction correction was required and County was reimbursed administrative fee per plan. Note that administrative fees are billed 30 days in advance. Under normal review process,this would have been detected in the weekly payroll register review and administrative fee review. 2. Submitted forms to remove dependent. Zero claims were processed or paid. Under normal working conditions,this would have been detected in the weekly and monthly reviews. The payroll deductions continued without a report/questions from the employee,which would have also been indicator to benefit team that an oversight had occurred. Employee was reimbursed the overage in deductions and County was reimbursed for administrative fee per plan. Note that administrative fees are billed 30 days in advance. 3. 1/21/19 termed employee. Zero claims processed or paid as the result. 4. Employee removed dependent that she had previously tried to remove when dependent received their own insurance. S. Domestic partners listed as spouses, which affects imputed income. Until July 2017,the benefits database system did not have notation of the difference between domestic partners and spouses. The option was for a note to be entered at multipurpose location.Therefore, 2 some long standing domestic partners may have been indicated as spouses. However,in the premium calculation it is and was clearly visible that imputed was being processed. 6. Bad addresses: Employees must self-report updates to address, phone and email. A complete HRIS system would be helpful in avoiding such issues. We are now verifying address through the open enrollment process. 7. Duplicate in database: When converting to sequel (security) new tables provided to benefits by IT create multiple listing for each employee. Correcting the multiple listings is a manual process by the benefit team. Director, administrator and staff have discussed with IT. This continues and will continue to be any issue as long as current database is in use. County does routinely maintain supporting dependent eligibility documentation. Based on current file and processing requirements we have the appropriate documentation. To our knowledge, for each request made by the auditor with one exception,we produced what is currently required for dependent eligibility. This is evidenced by the 0.047% ineligibility rate from this audit. Weekly reviews of claims and monthly reviews of administrative fees (previously noted) offer assurance that enrollment is complete and accurate. Affidavits: legal spouse, legal child, different last names, etc.are in place as well when eligibility could be in question. The County will continue to review dependent eligibility documents such as birth certificates, marriage licenses, etc. in order to verify eligibility for coverage. The County will determine whether copies of those documents should be retained. Finding 3: Understanding of Prescription Benefit Manager(PBM)and Medical Plan Internal Controls Gallagher,our benefit consulting team, receives this report for review with Administrator. As an identified shortfall within the audit,going forward, SOC will be ordered regularly and reviewed within the department and well as with benefit consulting team. Current providers have exhibited excellent track record. Finding 4:American Health Insurance Portability and Accountability Act of 1996(HIPAA)Compliance We are working closely with compliance opportunities and certifications as part of a departmental reorganization. Privacy officer and team will have regular training, at minimum attend annual professional training. In additional,we utilize education offered by consultants and varying state, regional and local organizations. The Benefits team takes privacy seriously and strives to ensure that protected information is safe. Finding 5: Administrative Billing and Claims Detail not Submitted in Detail The County understands the Clerk's Finance Department may wish to additionally verify the BCBSFL 3 administrative fee or claims invoices for accuracy. We will work with the Clerk's Finance Department to develop a process that makes available data to sufficiently verify administrative fees and/or claims without potentially compromising Protected Health Information (PHI)or other sensitive member data. Per our discussion with the lead auditor,Sandy Mathena,this will be discussed in conjunction with the claims audit, being conducted separately and concurrently. The County would like to work with the Clerk's Finance Department when they select a new financial software package to ensure the integrated Human Resource/Benefits module meets the needs of the County. Finding 6:Required Coverage of Adult Children Age 26-30 by Florida Statute 627.6562 MCBOCC does not currently have separate rates for dependent children between ages 26-30. A review of the rate structure and guidelines for imputed income are needed. Gallagher Benefits Consultants have not yet made any recommendations on this group or imputed income rate/guidelines. A small number of dependents in this age group remain on the plan. Rates and guidelines can be reconciled with 1/1/2019 and the current open enrollment period. Closing Statement: We appreciate the opportunity to review and improve our work processes through this audit. Your cooperation, professionalism,and patience during a very busy transformational time for our department have been sincerely appreciated. Please let me know if you have any questions about our responses. Bryan Cook Director, Employee Services Monroe County(Florida Keys) cook-brvanAmonroecounrv-fl.eov 305-292-4458(office) 305-587-8311 (cell) Historic Gato Cigar Factory 1100 Simonton Street, Suite 2-268 Key West,Florida 33040 4