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07/16/1998 Audit AUDIT REVIEW OF MONROE COUNTY GROUP HEALTH INSURANCE July 16, 1998 4GOUNTY '1. ✓ �..e /Q C47GMi J `�JM G '; �y Cr`y U nMe # ;1 + • ,4 ; •. 6il1lll Off • • FCOUNci• Prepared by: Internal Audit Department Clerk of the Circuit Court Danny L. Kolhage, Clerk Monroe County, Florida '.rr.b4 ' GOUN?j CO.44 `/ y;;M VB �i�G't G9a yd F• 6 • aP�; ��: of i 9 C•L IT .. pQ'w 11 OE COUNI.Y•. annp IL. 1aoujage BRANCH OFFICE CLERK OF THE CIRCUIT COURT BRANCH OFFICE 3117 OVERSEAS HIGHWAY MONROE COUNTY 88820 OVERSEAS HIGHWAY MARATHON,FLORIDA 33050 500 WHITEHEAD STREET PLANTATION KEY,FLORIDA 33070 TEL.(305)289-6027 KEY WEST,FLORIDA 33040 TEL.(305)852-7145 FAX(305)289-1745 TEL.(305)292-3550 FAX(305)852-7146 FAX(305)295-3660 July 16, 1998 The Honorable Danny L. Kolhage Clerk of the Circuit Court Re: Review of the Monroe County Health Insurance Plan Dear Mr. Kolhage: The Clerk's Internal Audit Department has completed the internal control review of the Monroe County Group Health Insurance Plan. The purpose of the review was to ascertain whether the internal control environment implemented with the direct submission of claims to Acordia National safeguards the financial assets of Monroe County and protects against the occurrence of fraud. We would like to thank the Employee Benefits Section of Monroe County for their cooperation and time while conducting the audit. Our audit revealed that there are internal control weaknesses in the Third Party Administrator's claim processing system. The County should address service issues such as the process for the addition of out-of-network physicians, random testing of claims, and employee incentives to review explanation of benefits. Strong internal control in the health benefits plan is considered mandatory in the high risk enviromnent of health care. The accompanying audit report is provided for your information. Additional copies of the report will be provided upon your request. Sincerely, Al".661- Sandra L. Mathena, CPA Director of Internal Audit cc: Board of County Commissioners (5) James Roberts, County Administrator Sheila Barker, Director of Human Resources John Carter, Senior Director of the Office of Management and Budget Leah Beard, Group Insurance Manager Kirk Zuelch, State Attorney Sandee Carlile, Clerk's Finance Director Marva Greene, External Auditor AUDIT REVIEW OF MONROE COUNTY GROUP HEALTH INSURANCE TABLE OF CONTENTS Page I. SCOPE AND OBJECTIVES 1 H. METHODOLOGY 1-2 III. BACKGROUND 3-6 IV. CONCLUSIONS 7 V. REVIEW FINDINGS: A. Inadequate Internal Control System for Processing Claims 1. Payments were made to fraudulent physicians by Acordia National 8-9 2. Random tests are not completed to determine if services billed are actually performed 10-12 B. Large Claims Are Not Reviewed In Aggregate 13 C. Employee Benefit Department does not use the Third Party Administrator's Claim System 14 D. Ramifications of using "the Medicode Database" versus the "Hospital Insurance Association of America's Database" to determine reasonable and customary charges. 15 AUDIT REVIEW OF MONROE COUNTY GROUP HEALTH INSURANCE TABLE OF CONTENTS Page VI. EXHIBITS: A. Adminstrative Service Agreement A B. Pre-Certification Letter B C. Cost Containment Procedures C D. Acordia National's Erroneously Paid Claims D E. Claim System Edits E F. Medicode Procedures compared to HIAA F VII. AUDITEE RESPONSES AUDIT REVIEW OF MONROE COUNTY GROUP HEALTH INSURANCE I. SCOPE AND OBJECTIVES: A. At the request of the Monroe County Clerk of the Circuit Court, the Internal Audit Department has completed an internal control review of the Monroe County Group Health Insurance Plan. The internal control systems were reviewed with Acordia National, Keys Physician Hospital Alliance, and the Employee Benefits Section of Monroe County. B. The internal control environment review was performed to ascertain whether the controls implemented with the direct submission of claims to Acordia National safeguard the financial assets of Monroe County and protect against the occurrence of fraud. H. METHODOLOGY: A. The following personnel were interviewed during the review to obtain information about the internal control environment of the Monroe County Health Insurance Plan: 1. The Vice President of Claims at Acordia National 2. The Assistant Vice President and Monroe County's Team Manager at Acordia National 3. The Account Representative at Acordia National 4. Chief Operating Officer of Acordia National 5. The Claims Supervisor at Acordia National 6. The Director of Operations Keys Physician-Hospital Alliance 7. The Risk Management Consultants at Interisk Corporation representing Monroe County 8. The County Administrator 9. The Director of Human Resources 10. Employee Benefit Supervisor B. The Internal Audit Department examined the following documents: 1. Florida Statutes related to Group Insurance Plans 2. The Proposal for the Provision of Health Plan Claims Administration and Utilization Review Services Presented by Accordia of South Florida, Inc. and Keys Physician- Hospital Alliance. 3. Administrative Service Agreement between the Board of County Commissioners of Monroe County and Accordia National. 4. Ernst & Young's Report on Controls Placed in Operation and Tests of Operating Effectiveness of the"Multiclaim" Medical/Dental Claims Processing/Benefit Payments, Plan Sponsor Contributions and Stop-Loss Insurance Applications 5. Monroe County Plan Documents 6. Explanation of Benefits C. A walk-through of existing Group Insurance Function procedures was conducted to document the current system used by Accordia for processing claims,in the Monroe County Group Insurance Function. D. Internal Audit staff interviewed Accordia National staff in Charleston, West Virginia 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. Filing and physical security features were also observed. E. Internal Audit staff interviewed Keys Physician-Hospital Alliance staff in Key West, Florida to understand the pre-certification, large case management, and physician credentialing controls. F. Analyzed suspect claims and related negotiated checks for appropriateness. F. Reviewed the procedures in place for claims processing and adding a new physician to the claims system. G. Reviewed the audit process to be performed by the County's insurance risk consultants on paid and pending claims 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. 2 III. BACKGROUND: A. Third Party Plan Administrator Agreement (Acordia National) of the Monroe County Medical and Dental Plan The Group Insurance Function was organized as part of the Employee Benefits Section of the Human Resource Department. Monroe County has established an employee welfare benefit plan for the purpose of providing medical, dental, vision, utilization review and COBRA benefits for its employees. The authority to provide health insurance and self-insure is provided by Florida Statute §112.08 (2)(a) which states that "Every local government 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 government unit and for health, accident, hospitalization, and legal expense insurance for the dependents of such officers and employees upon a group ti insurance plan and, to that end, to enter into contracts with insurance companies or professional administrators to provide such insurance. " Florida Statute §112.08 (2)(a) also states that "Each local government unit may self-insure any plan for health, accident, and hospitalization coverage or enter into a risk management consortium to provide such coverage, subject to approval based on actuarial soundness by the Department of Insurance; and each shall contract with an insurance company or professional administrator quaked and approved by the Department of Insurance to administer such a plan. " On July 1, 1996 the Board of County Commissioners and Acordia National entered into an initial Administrative Service Agreement (Agreement) to perform claim administration for the County's employee welfare benefit plan. See Exhibit A - Administrative Service Agreement. Acordia National, Inc. is located in Charleston, West Virginia. According to interviews with Acordia Management, claims examiners are trained to review the claims as they are processed to ensure that the claim is valid and that it is processed in accordance with established practices and applicable plan guidelines. Some examples of the areas that the Claims Examiners review are eligibility verification, provider maintenance, coordination of benefits, subrogation, plan coverage exceptions or considerations, CPT/Diagnosis Coding, and extraordinary charges or practices. In the event that the claim exceeds the Claims Examiner's assigned dollar. limit, the - system will automatically pend the claim and will not allow it to be released by the Claims Examiner. When this occurs, if the amount exceeds $1,500, the Claims Examiner completes an Over Limit Audit Report that contains a series of specific questions relating to the claim. If the claim amount is within the established dollar authority limit of the Senior Examiner and the answers to the questions are appropriate, 3 the Senior Examiner approves the report by signing it and releases the claim for payment. In the event that the claim exceeds the established dollar authority limit of the Senior Examiner, the Senior Examiner verifies the Claims Examiner's answers and submits the Over Limit Audit Report to the Team Leader or the Team Manager. The Team Leader or Team Manager also verifies the answers to the series of questions on the over Limit Audit Report. If the answers are deemed to be appropriate, the approval is documented by signing off on the Over Limit Audit Report. All UB92 claims exceeding $10,000 must be released by the Cost Containment Unit before the claim is released for payment. Any other claim exceeding $7,500 must be approved by the cost Containment Unit before it is released for payment. Claims are screened against the "Medicode Database" of reasonable and customary fee schedule by the computer system. The system automatically reduces claims according to the fee schedule. Medical records are requested for review of reductions of$100 or more for CPT Series 90000, or other reductions of$200 or more. B. Key's Physician-Hospital Alliance (KPHA) Employer-Provider Network and Utilization Review and Case Management Services Agreement for the Monroe County Health Plan On July 1, 1996 the Board of County Commissioners and Keys Physician-Hospital Alliance entered into the Employer-Provider Network and Utilization Review and Case Management Services Agreement. The Keys Physician-Hospital Alliance has established a network of participating health care providers. These providers, pursuant to the terms and conditions of provider agreements with KPHA, have agreed to deliver medical services in a cost effective manner to persons covered under the health benefit plans and policies of Monroe County. KPHA provides utilization review and case management services to personnel, dependents, Cobra beneficiaries and eligible retirees covered under the plan. The in-county network (KPHA network) providers are reimbursed at a usual and customary charge rate as established by "the Medicode database". Medicode is a health care information company that establishes standard charges for all procedures and services. The usual and customary charges used for reimbursement are geographic and zip code specific. All claims for covered services in the KPHA network, whether payable by the employer or a covered participant, will receive a 5% discount. This discount will be rescinded if an appropriately documented and non-contested claim is not paid to the KPHA provider within 30 days of being received by the claims administrator. 4 1 According to the Utilization Review and Case Management Section of the Agreement, KPHA shall provide the following services: "Review of inpatient admissions and of continued hospital stay Discharge planning Data collection and reporting Review of supportive or treatment services Review of office visits, ambulatory surgery and diagnostic or other outpatient services Review of billing practices and appropriateness of charges of network providers Large Case Management services" The Utilization Review program consists of pre-certification for elective or emergency hospital admissions and surgeries and concurrent stay reviews. There is also a list of outpatient procedures that require pre-certfication. See Exhibit A Pre-certification Letter. Once KPHA receives notification from the physician's office or the patient about an admission or an outpatient procedure that requires pre-certification, they call the physicians office and ask clinical questions to determine that the procedure or hospital stay meets medical necessity. After it is determined that it meets medical necessity, KPHA enters the information directly into Acordia National's computer system. The computer then produces a pre-certification number. KPHA notifies the physician's office of the pre-certification number. A letter is generated to the patient with the approval. If the patient does not pre-certify, the bill is still paid, but there is a penalty imposed. The county health plan will only pay the claim at a 60% rate. Employers participating in the plan may request a review of any specific case where utilization of services or charges are in question. The monthly capitation fee for utilization management is $1.25 per employee per month. According to the plan documents "Medical case management is a cost management program administered to provide a timely, coordinated referral to alternative care facilities for you or your covered dependent who suffers a chronic or catastrophic Sickness or Injury while covered under this Plan. When the case manager is notified of one of the above diagnoses (or any other diagnosis for which Medical Case Management might be appropriate) the case manager will consult with the attending physician to develop a written plan of treatment outlining all medical services and supplies to be utilized, as well as the most appropriate treatment setting. " See Exhibit B Cost Containment Procedures. Large Case Management services are pre-approved by the County on a case-by-case basis, and billings for such services are $50.00 per hour. Through Large Case Management, KPHA negotiates charges and discounts with the hospitals and other providers up front. KPHA verbally verifies that Acordia National, Inc. pays the discounted rate, but they do not review the final bill or the explanation of benefits. 5 C. Employee Benefits Function The Group Insurance Function is organized as part of the Employee Benefits Section of the Human Resources Department. The method used by the Monroe County Group Insurance Function for group insurance claims processing is direct submission. Participants and providers submit claims directly to Acordia National using the direct submission method. After Acordia National receives and processes the claim forms, a payment register is produced by the system. One copy of the register is sent to Employee Benefits. The Employee Benefits Department verifies the register to ensure that all claims being paid are for covered employees and their dependents Another copy of the payment register is faxed to the Clerk's Finance Department. The Clerk's Finance Department transfers the funds necessary to pay the claims to the bank account that the checks are drawn on. The bank account is owned by Monroe County but the checks are issued and mailed from Acordia. The authority for Acordia National to issue claims checks on the Monroe County bank account is provided by Florida Statute §136.091 which states that "A board of county commissioners is authorized to contract with an approved service organization to provide self-insurance services, including, but not limited to, the evaluation, settlement, and payment of self-insurance claims on behalf of the board. Pursuant to such contract, the board may advance money to the service organization to be deposited in a special checking account for paying claims against the board under its self-insurance program. The special checking account shall be maintained in a county depository pursuant to this chapter. The board may replenish such account as often as necessary upon the presentation by the service organization of documentation for claims paid equal to the amount of the requested reimbursement. Such reimbursement shall be made by a warrant signed by the chair of the board and attested by the clerk or secretary of the board. " 6 IV. CONCLUSIONS: A. The Third Party Administrator's (Acordia's) system of internal control for the addition of an out-of-network provider is not adequate to ensure the safeguarding of assets. Claims were paid to 8 fraudulent physicians totaling $23,820. The County should immediately make a demand of Acordia National for reimbursement of the amounts paid for fraudulent claims. Appropriate procedures should be established to properly control the addition of out-of-network physicians to the third party administrator's claim,processing system. B. Random tests to determine if services billed have actually been performed are not completed. Based on interviews with the County Insurance Consultant it is not an insurance industry standard to determine if services billed have actually been performed by the provider. Random audits of claims to document that services were provided should be established. C. As provided for by Florida Statute 112.153, County Management should consider the feasibility of setting up a cash incentive program for employees to review their explanation of benefits and report any overcharges or claims paid where services were not rendered. D. Large dollar claims are not reviewed in total for participants by Acordia National, KPHA, or the County. Acordia reviews individual inpatient claims over $10,000 and outpatient claims over $7,500. According to current procedures, the large dollar case associated with the fraudulent claims was never reviewed in total at any stage in the payment process. E. The Monroe County Employee Benefits Department does not use the Third Party Administrator's computer system for on-line eligibility and claims inquiry. The Employee Benefits Department should have remote access to Acordia's claim system along with all necessary passwords and training. A program of random audits and inquiries should be established on a periodic basis to ensure that the plan is functioning as intended, and to control any risk of fraud. F. County staff's review of ten common procedures comparing "the Medicode database" versus the "HIAA database" to determine reasonable and customary charges revealed that in total "Medicode" was 20% higher. County Management should be advised of the ramifications of using one method of reasonable and customary charges versus another on the total cost of the insurance plan. 7 V. REVIEW FINDINGS: A. Inadequate Internal Control System for Processing Claims 1. Payments were made to fraudulent physicians by Acordia National Finding(s): Information received from a Monroe County employee using the County health plan revealed that Acordia National processed 14 claims totaling $24,892 to 8 fraudulent physicians (See Exhibit C - Accordia Erroneously Paid Claims). Stop payments were placed on 3 checks in the amount of $1,072, resulting in a net total of $23,820 in fraudulent payments made by the third party administrator from County funds. Acordia's established system of internal controls for the addition of an out-of-network provider is not adequate or effective to ensure the safeguarding of assets. The fourteen claims were submitted by eight fraudulent physicians using the information from an actual Monroe County employee. After receiving explanation of benefits (EOB's) from Acordia National the employee notified Monroe County and Acordia National that he had never heard of any of the eight providers. The employee was a patient in Mount Sinai Medical Center for some of the dates the fraudulent providers indicate that services were rendered in their offices. According to the Team Manager at Acordia National, during processing of these medical claims, new out-of-network physicians had to be added to their claims system. The phone numbers of the physicians providing the service were not listed on the fraudulent claims as required. The claims processor's responsibility was to call directory information and obtain a phone number for the new physician. The claim form is then given to another department to add the physician to Accordia National's system. A review of the claim forms revealed that the phone numbers written on the claim forms could not possibly have been obtained from telephone directory information. There were not any physician offices at these locations and the area codes did not match the addresses listed. Proper internal control requires that Acordia National establish adequate procedures to add new out-of-network physicians. A significant risk of fraud exists in the system as it exists now and as displayed by the payment of the fraudulent claims. According to the Administrative Service Agreement, Acordia is responsible for its own negligence in administering the plan. The Agreement states that "to the extent permitted by law, Acordia National shall not incur any liability for any acts or for failure to act except for its own negligence or willful misconduct in administering the plan. " 8 Recommendation(s): 1.County Management should make a written demand to Acordia for reimbursement of the $23,820 paid to the fraudulent physicians. 2.County Management should require the Third Party Administrator to establish appropriate procedures to control the addition of out-of-network physicians to their system. County Administrator's Response: A conference call is set for July 16, 1998, to discuss the return of the $23,820 with Acordia's CEO, Rick Legg. Depending on the outcome of that phone conference, demand will then be made to Acordia for return of the $23,820. Acordia's new Instructions for Adding Providers to the System and Request for Provider Maintenance is attached. These instructions are 4/20/98 and it is anticipated that they will provide additional controls. However, the changes should be further modified to have all providers verified with the State Medical Licensing Board. 9 2. Random tests are not completed to determine if services billed are actually performed: Finding(s): During interviews with the third party administrator, it was determined that periodic random tests are not completed to determine if services billed are actually performed by the provider. Internal control weaknesses were noted in the current design of the Claims Processing procedures. According to Ernst & Young's Auditors Report of September 30, 1997, Acordia's data processing claims system is designed with the following internal controls: Eligibility data is maintained on-line. This includes dates of birth and effective dates of coverage by plan. Examiners are limited on the dollar amount of individual claims they can release without supervisory review, and access to the system is limited by security codes. Claim histories maintained on the system track various accumulators such as deductibles and coinsurance amounts by individual and family, as well as benefit plan limits that may have been reached. Reasonable and customary guidelines provided by Medicode limit the amounts that can be paid for individual procedures. The system prompts the examiner in the event a submitted claim may be a duplicate. A list of system edits was requested but Acordia was unable to produce one as of the date of this report. Another third party administrator, Health Plan Services, which submitted a proposal to Monroe County, included a list of system edits with their proposal. See Exhibit D - Claims System Edits. According to interviews with the Acordia team manager, it is not an industry standard to determine if services provided are actually received because of the large number of claims processed. Acordia will pay the submitted claim as long as they have the correct name of the employee or dependent, social security number, and date of birth. The examiner will send a letter requesting office notes or lab results if he questions something on the claim. Acordia does not pick random claims to request office notes or lab results or verify with the employee that the procedure was completed. A significant risk of fraud or misrepresentation exists in the system as it is currently designed. Provider fraud poses the greatest challenge as providers have access to computers, more sophisticated equipment, and greater knowledge of medical and dental procedures and terminology. In addition, there is a reluctance on the part of the individuals to accuse their physician of any wrongdoing. Interviews with County Management indicate that they would like to establish a cash incentive program for employees to review their explanation of benefits and report any overcharges or claims paid where services were not rendered. The authority to provide this employee incentive is provided by Florida Statute §112.153 which states "A participant in a group insurance plan offered by a county, municipality, school board, local governmental unit, and special taxing unit, who discovers that he or she was overcharged by a hospital, physician, clinical lab, and other health care 10 providers, shall receive a refund of 50 percent of any amount recovered as a result of such overcharge, up to a maximum of $1,000 per admission. All such instances of overcharge shall be reported to the Agency for Health Care Administration for action it deems appropriate. " The incentive program should require prompt actions from employees to be effective. The incentive program would add an external layer of internal control to the Group Health Insurance Plan. Recommendation(s): 1. County Management should establish procedures for completing random audits to confirm that services billed were actually performed by the provider for the employee or dependent. . 2. County Management should request from Acordia a list of all system edits in the claims processing system and a confirmation that system edits are being properly utilized. 3. County Management should report the fraudulent providers to the Agency for Health Care Administration per Florida Statute §112.153. 4. County Management should consider the feasibility of setting up a cash incentive program for employees to review their explanation of benefits and report any overcharges County Administrator's Response Random audits (without copies of the original submission) will only allow us to examine what has been input by Acordia. Checking the original claim is the only way to determine the accuracy of the on-line information. In the audit dated January 12, 1996, indirect submission was considered inefficient and uneconomical.' To do random audits we would need to secure copies of original claims and doctors or hospital notes for examination. Providers may be reluctant to send confidential medical information of this nature to the County. Monroe County will schedule training with Acordia on the on-line system and attempt to audit 50 claims per month. Interisk, our Benefit's Consultant provided the number of 50 as being sufficient to audit. Previously when the County handled indirect submissions of all claims, we found in the neighborhood of 1% errors. Random audits will probably not find dollar errors but should find and lead to correction of any procedure errors. Management will request a list of all edits performed on the system and a confirmation that adequate steps are taken in resolving the edit errors. On the audit performed by Interisk concurrently with the Clerk's audit, it states "While improvements can be made, the review of its operations and a sampling of the claims administered on behalf of the County, indicates that adequate procedures have been established by Acordia and administration services are generally being provided consistent with industry standards." The proposal from which Acordia was selected as our Plan Administrator lists the payment accuracy of being 96%. Management believes that monthly random audits will 1 Audit Report,Monroe County, Group Insurance Claims Processing,January 12, 1996,page 10 11 be a good way to verify that procedures are being followed but they will not find substantial cost savings. Management reported the fraudulent claims to the State Attorney's Office. Statute 112.153 references the necessity of reporting "Overcharges" and makes no reference to fraudulent activity. Management believes the Third Party Administrator should be responsible for reporting the information to the Agency for Health Care Administration, since they administer our claims. They should advise us of their findings and request our approval to report it on our behalf. The Statute 112.153 is already in place to reward participants for finding overcharges. Our excess insurance broker advised us that many entities have run into administrative problems with this program. The wording of the statute is rather vague. The intent was to have employees become the watchdogs of claim expenses and receive cash rewards for this work. They were to do all the leg work: spot the error, contact the provider, obtain a corrected billing and present the documentation to the insurance carrier. Participants are interpreting it to mean that they should receive rewards for any overcharged claim, even if the error was noticed by someone in the doctor's own billing office and submitted for correction. They are also not doing any of the leg work; they want to call the insurance office, report what they feel to be an error and have the staff do the research. Often they are unwilling to put anything in writing. The statute reads that all they have to do is "discover" the overcharge. Our excess broker also advises that many participants want reimbursement on the gross amount recovered, not the net. It will need to be clearly detailed so that there are no misinterpretations. Auditor's Comment(s): Interviews with personnel at the Agency for Health Care Administration revealed that fraudulent activity also needs to be reported to the Agency. County Management should report the fraudulent activity or advise the Third Party Administrator of the need to report it to the Agency for Health Care Administration. 12 B. Large Claims Are Not Reviewed In Aggregate Finding(s): A review of the internal control procedures at Acordia, KPHA and the County revealed that large claims are not reviewed in total. Acordia reviews individual inpatient claims over $10,000 and outpatient claims over $7,500. KPHA does pre-certification on inpatient stays and certain outpatient procedures. KPHA performs large case management for $50.00 per hour. They negotiate discounts on services and equipment with the providers in advance. KPHA does not review the final claim. They verbally verify with Acordia that the discount was applied. The County does not review any claims since the implementation of direct submission. The employee that the fraudulent physicians used to receive payment was a large dollar case. The case in total was not reviewed by Acordia, KPHA or the County. The potential for fraud exists in the large dollar claims. Large claims should be reviewed in aggregate for each participant. Recommendation(s): 1.County Management should establish procedures to review large dollar claims in total by participant. County Administrator's Response: The potential for fraud exists in all claims. Reviewing large dollar claims in aggregate would not have necessarily revealed the fraudulent providers. If this is to be done, copies of all the claims submitted for that participant must be reviewed in detail. Taking into consideration that Acordia's claims are batched in date order paid, research would be quite time consuming. 13 C. Employee Benefit Department does not use the Third Party Administrator's Claim System Firding(s): The Monroe County Employee Benefits Department does not use the Third Party Administrator's computer system for on-line eligibility and claims inquiry. The initial plan with direct submission of claims included the Employee Benefit Department doing random claims inquiry. The proposal for Health Plan Claims Administration and Utilization Review Services presented by Acordia of South Florida included in its pricing the connection of one of the employee benefits personal computers via modem to Acordia's HCPSystem. At the January 16, 1997 County Commission Meeting, the Board granted approval and authorized execution of a Lease Agreement between Monroe County and Acordia National, Inc., to provide the Employee Benefits Department with remote access to its claim software known as Lawton Multiclaim System Software. In the lease it states that "if requested by Lessee, Lessor shall provide assistance in installation of the terminal emulation software, together with training on the use of the Multiclaim System at either the Lessor's facilities or the Lessee's. Training fees shall be mutually agreed upon by Lessor and Lessee, prior to training initiation." Any additional training, equipment or access to the claims system necessary to review claims should be requested. _ The Employee Benefits Department should have access to Acordia's claim system as proposed. A program of random audits and inquiries should be established on a periodic basis to ensure that the plan is functioning as intended and to control any risk of fraud. Recommendation(s): 1.County Management should require Acordia National, Inc. to provide the Employee Benefits Department with remote access to its claim software and all necessary passwords and training. 2.County Management should establish a program of audits and inquiries on a periodic basis to ensure that the plan is functioning as intended. County Administrator's Response: Management will obtain on-site training for our benefits' office to become proficient with the Acordia computer system. The previous telephone training was not successful. Having access to the system will not provide us the opportunity to spot errors or fraud unless we are to receive actual copies of the claims submitted. Procedural instructions will need to be drafted to accomplish the goals and objectives of the auditing team. 14 D. Ramifications of using "the Medicode database" versus the Hospital Insurance Association of America's database to determine reasonable and customary charges. Finding(s): A review of ten common procedures comparing Medicode's database of reasonable and customary charges to Hospital Insurance Association of America's database revealed that Medicode was 20% higher. See Exhibit E Medicode as compared to HIAA. The Employer-Provider Network and Utilization Review and Case Management Services Agreement states that "KPHA guarantees that the Participating Provider's physician Usual Customary and Reasonable (UCR) and hospital charges will not change during the term of one year. Thereafter, KPHA agrees to provide a ninety (90) day notification in the event of a charge increase. UCR and hospital charges will be based upon "the I Medicode Database". The "Medicode Database" is provided to Acordia National by KPHA. All of Acordia's other clients use HIAA to determine reasonable and customary charges. After discussions with County Management about the increase in claims paid for fiscal year 1998, the insurance consultant was instructed to compare the top 80 procedure codes of both databases used by the participants in the plan. County Management should determine the impact of the use of the Medicode Database rather than the HIAA Database to determine reasonable and customary charges on the total cost of the health insurance plan. Recommendation(s): 1. County Management should determine if using the"Medicode Database" as compared to the HIAA database has any effect on claims paid. County Administrator's Response: Management knows that the use of Medicode has a significant impact on our claims. The Audit performed by Interisk found a $58,123 difference for the first quarter of 1998. KPHA has contracted with their providers to use Medicode. They are exploring the possibility of changing to HIAA. No conclusion to this issue has been reached yet. When we prepare Bid Specifications because this contract is scheduled to go out for bid in late 1998 or early 1999, these requirements will be part of the bid package. 15 VI. Exhibits Exhibit A Administrative Service Agreement ff/ : r . , ,„ , , ADMINISTRATIVE SERVICE AGREEMENT THIS AGREEMENT, made and entered into this 1st day of JULY 1996 by and between Board of County Commissioners of Monroe County Florida (hereinafter called "Employer") and ACORDIA NATIONAL of 602 Virginia Street, East, Charleston, WV 25326-1551, is hereinafter set forth: 1 WITNESSETH WHEREAS, Employer has established an employee welfare benefit plan (hereinafter called "Plan") for the purpose of providing medical, dental, vision, utilization review and COBRA benefits for its employees; 1 WHEREAS, Employer desires to engage the services of Acordia National as agent for the Employer for the purpose of effecting claim administration under its Plan; and ' NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter contained, the parties hereto agree as follows: 1) The effective date of this Agreement shall be June 1, 1996. 2) The Plan Year shall be from October 1 through September 30 of each year. 3) The Employer's Tax Identification Number is 596000749. 4) For each Plan Year, the Employer shall provide monies sufficient to pay benefits under the Employer's Plan on a timely basis. "Timely" shall be defined as within thirty (30) days of Acordia National's notification, oral or written, that benefit claims have been processed for payment. In the event Employer shall fail to provide sufficient monies to fund its claims in a timely manner, a ten percent(10%) surcharge shall be added to the monthly administrative fee due Acordia National, which surcharge shall become chargeable beginning on the thirty-first (31st) day after Acordia National's notification, as described herein. Employer acknowledges and agrees that Acordia National shall not have any duty or responsibility to release claim payments if Employer has not sufficiently funded the same. ZZ: iV d 9Z 9U U 96. J iO:i j(; 4!1? -i O=i-1IU 1 5) Employer acknowledges and agrees that Acordia National shall not have any financial duty or responsibility to see that the Employer deposit meets the Employer's Plan requirements; however, Acordia National's shall keep the Employer advised as to the amount of deposit needed to meet said requirements on a timely basis. Employer further acknowledges and agrees that Acordia National shall not be deemed a fiduciary for the Plan within the meaning of the Employee Retirement Income Security Act of 1974 ("ERISA"). Accordingly, the services to be performed by Acordia National hereunder shall be limited to the ministerial services set forth herein and the performance by Acordia National shall be subject in all respects to review by Employer within the framework of Plan provisions as well as policies, interpretations, rules, practices and procedures established by Employer. Acordia National shall not have any discretionary authority or control with regard to the management of Plan assets. To the extent permitted by law, Acordia National shall not incur any liability for any acts or for failure to act except for its own negligence or willful misconduct in administering the Plan. 6) The monthly capitation fee for administrative services will be charged per employee. Employee,for this purpose, shall be defined as an active employee, retiree, or COBRA participant who is eligible and enrolled in the Employer's Plan. Medical/DentalNision Claims Administration $10.35 Review of Evidence of Insurability For Late Applicants No Charge Payment of the fees established above is due from the Employer on or before the 10th day of each month, beginning on the 20th day of June, 1996. The fee shown above is guaranteed for a period of twelve(12)months. At the time of the first annual renewal, Acordia National agrees to not increase the above rate more than 3%. At the time of the second annual renewal, Acordia National agrees to not increase the above rate more than 5%. Any and all fee changes at the time of the first and second renewal of this contract will be preceded by at least ninety (90) days notice by Acordia National in writing to the Employer. The cost of any additional services rendered by Acordia National on behalf of the Employer necessitated by a change in federal or state law will also be negotiated with the Employer 2 prior to a change in the monthly fee. Acordia National will provide the Employer with at least ninety (90)days notice of any such rate increase. Acordia National shall provide generic enrollment forms, claim forms and other administrative and plan forms. In the event Employer desires customized administrative and plan forms, Acordia National will direct the printing of same, however, the cost of such printing shall be paid solely by the Employer. 7) Acordia National shall provide the following services in connection with the administration of Employer's Plan(s): a) Provide assistance to enroll all eligible Employees eligible COBRA beneficiaries and eligible retirees (as defined in the Employer's Plan) in Employer's Plan, as agreed with Employer; b) Design and obtain other coordinating or supplemental types of insurance coverage, where necessary, as requested by Employer in writing; c) Assist and advise Employer in revising Plan Document. Provide prototype Plan Documents and Identification Cards (ID Cards) for the Employer. Arrange for printing and preparation of such documents. The cost of the printing will be the responsibility of the Employer. , d) Acordia of South Florida will conduct informational programs for all eligible Enrollees to fully explain the benefits available under the Employer's Plan, as requested by Employer. e) Respond to telephone and mail inquiries from Plan participants regarding benefits available to them and their dependents; 0 Provide information concerning Plan benefits and participants, based upon information provided by Employer; g) Review and analyze all claims and determine whether the charges of health care providers submitted are within reasonable payment guidelines and/or are related to diagnostic related groups, preferred provider organization agreements or other industry standards; 3 I , h) Correspond with claimants, as necessary, to process claims and to ascertain whether other coverage exists which might pay the claim in whole or part; i) Receive, review, and administer all claims for benefits under the Employer's Plan, including the evaluation of claims made, standard evaluation of the eligibility status of all claimants, coordination of and at least annual auditing of the Utilization Review and Case Management function, provide the County with results of Utilization Review audit, appropriate Coordination of Benefits evaluation of all claims, supply data to Health Recoveries, Inc. necessary for subrogation, and other functions usual to the efficient and cost effective administration of claims; j) Acordia of South Florida will aid the employer in developing an efficient claims control program; including but not limited to the negotiation of and evaluation of managed care networks; k) Provide Employer with a monthly report of claims paid; ' I) Do all things necessary to properly effect the responsibilities of a claims administrator under the Employer's Plan, provided that all such actions/non- actions not otherwise required by this Agreement shall first be approved by -- Employer;and m) Accept all claims incurred but not paid prior to effective date of contract. Administer and process such claims. Acordia National will not charge Employer any additional fee for such claims incurred less than sixty (60) days prior to effective date of contract. The charge for processing such claims incurred more than sixty(60)days prior to effective date of contract will be 4% of the paid claims amount, not to exceed an amount equal to three (3) months administrative fees; n) Set up automated enrollment, eligibility and claims history information on Acordia National's computer system for the processing of claims; 4 o) Report all potential excess claims to the excess insurer, and provide Employer with monthly updates; p) Acordia National agrees to make documents available to the Employer and/or their Consultants for periodic audit of files for accuracy and efficiency of Acordia National's claims administration. And q) Acordia National agrees to process, authorize, and issue payment of all complete and eligible claims within twenty(20)days of receipt. 8) Acordia National shall provide COBRA administration services, if desired by Employer (check one blank below). It is agreed and understood that COBRA administration services are provided for medical, dental and vision plans only and are not provided for 125 Reimbursement Account Plans. Applicable -- Non-applicable ✓ It is acknowledged by Employer that future legislation related to continuation of benefit coverage, or other matters not currently required by COBRA legislation and COBRA regulations on the date of this Agreement may necessitate an adjustment in the fee for COBRA administration. 9) In the event Employer does not desire COBRA administration services by Acordia National, but instead the development of COBRA rates applicable to its Plan, Acordia National shall provide the same upon terms, to be agreed upon between Employer and Acordia National. 10) In the absence of a designation by the Employer and except for disposition of disputed claims, Acordia National shall determine the manner in which payment of benefits shall be made as it shall deem it to be necessary and appropriate, in accordance with the provisions of Employer's Plan, and shall not be responsible in the exercise of such judgment in the absence of negligence or willful misconduct on the part of Acordia National. 11) The Employer shall name Acordia National as an additional insured under its fiduciary bond which shall be conditioned upon faithful performance of its duties hereunder. 5 . _ - 12) Acordia agrees to defend, indemnify and hold harmless Employer against all claims, damages, liabilities and expenses actually and reasonably incurred or imposed on Employer in connection with any actual or threatened claim, action, suit, proceeding, settlement or compromise thereof which arises from Acordia's administration of claims under Employer Plan(s) other than in accordance with Plan provisions as well as the negligence or willful misconduct of Acordia, its employees, representatives or agents. The right to be defended, indemnified and held harmless shall extend to Employer's affiliates as well as the employees of Employer, their estates, executors, administrators, guardians, conservators and heirs and shall apply after the employee ceases employment with Employer with respect to acts or omissions of Acordia prior to such cessation. 13) The terms of this Agreement shall be from the effective date hereof and continue for a period of one year. This Agreement shall be renewed for two (2) successive one-year periods at the sole discretion of the Employer. In the case of proposed modification the party receiving the notification of the proposed modification shall itself notify the other party within ten (10) days after -- receipt of notice of its agreement to the proposed modification. Failure to do so shall terminate this Agreement as of the end of the Employer's Plan Year. 14) This Agreement,may be terminated by either the Employer or Acordia National at any time provided that Acordia National gives the Employer at least ninety(90)days prior written notice or that the Employer gives Acordia National at least thirty (30) days prior written notice. The prior written notice will state the prospective effective date of the termination. Termination of this Agreement will not terminate the rights or obligations of either party arising out of the period during which this Agreement was in effect. Upon the expiration of this Agreement, and if the same is not renewed, Acordia National shall return all files of closed or pending claims covered by this Agreement to the Employer or their designee. 15) Employer agrees that during the term of this Agreement and for a period of one year after its termination it will not induce any employee of Acordia National to leave Acordia National's employment or directly or indirectly assist any other person or entity in requesting or inducing any such employee of Acordia National to leave such employment. 6 • 16) All notices hereunder shall be in writing and mailed by certified mail, return receipt requested. Notices to the Employer shall be at the address first above written and to Acordia National at 602 Virginia Street, East, Charleston, WV 25326-1551, Attention: President, or at such other addresses as the parties may from time to time designate in writing. 17) The Employer and Acordia National agree that this Agreement shall be administered and construed according to the laws of the State of Florida. In the event that any matter of disagreement arises, it shall be promptly settled by arbitration in Miami, Florida in accordance with the rules then obtaining of the American Arbitration Association. 18) In the event this Agreement is terminated, the parties will have the option of agreeing to completion of claims administration services for claims existing at termination for a ninety (90) day period following termination of this Agreement upon terms negotiated between the parties for the fee j of no more than three (3) months usual administration fee at the time of termination. At the time of any such termination, Acordia National will provide, at no charge to the County, detail history of all claims and eligibility information on Electronic Data Processing Media. Acordia National will cooperate with the County and/or its new administrator with all reasonable requests regarding the method and formation of information to be provided to assure a smooth transition. 19) This Agreement, together with the Plan constitute the entire Agreement between the Employer and Acordia National. 20) Acordia National warrants that it has not employed, retained or otherwise had acted on its behalf any former County officer subject to the prohibition in Sec. 2 of Ordinance no. 10-1990 or any County officer or employee in violation of sec. 3 Ordinance 10-1990, and that no employee or officer of the County had any interest, financially or otherwise, in Acordia National except for such interest, permissible by law and fully disclosed by affidavit attached hereto. For breach or violation of this paragraph, the County may, in its discretion, terminate this agreement without liability and may also, in its discretion, deduct from the contract or purchase price, or otherwise recover, the full amount of any fee, commission, percentage, give or consideration paid to the former County officer or employee. 7 • 21) Acordia National assures the County that to the best of its knowledge information and belief, the signing of this agreement does not create conflict of interest. 22) All documents which are prepared in the performance of this agreement are to be, and shall remain, the property of the County and shall be delivered to the County at any time upon request and no later than thirty(30) days after termination of this agreement. 23) Acordia National is required to maintain the types of insurance identified in Attachment A. 24) Acordia National shall not assign or subcontract this agreement, except in writing and with the prior written approval of County. IN WITNESS WHEREOF, the Employer and Acordia National have caused this Agreement to be executed by their respective proper corporate officers, effective as of the Pi--day of_ �.:, , 19 9`p ai O' ,o$� EMPLOYER: BOARD OF COUNTY COMMISSIONERS OF 1 23 MONR E COUNTY FLORIDA •• AN sl: OLHAGE, CLERK By DEPUTY CL •K/0'1G•9(#ILS AlQ`/0 1� G h cis rm h ATTEST: ACORDIA NATIONAL By l /` 14/ Its „c ``,, eer.- ATTEST: j C'/ APPROVED AS TO FORM AN EGAL SUFFI N BY ROBERT N. DATE _ 8 Exhibit B KPHA Pre-Certification Letter Keys Physician - Hospital Alliance February 6, 1998 Dear Doctor, As you are aware the Keys Physician-Hospital Alliance provides many services for the employees of the Lower Florida Keys Health System and Monroe County. The Utilization Review program consists of pre-certification for elective or emergency hospital admissions and surgeries and concurrent continued stay reviews. According to the Plan Benefits,"Presurgical Review for specified elective,non-emergency surgical procedures"is required. Presurgical review services consist of screening of predetermined criteria and determination of necessity for a second opinion. The following is a list of Out Patient procedures that require pre-certification: Arthroscopy-Diagnostic Home Health Services Breast Biopsy Laparotomy-elective Bunionectomy Mastectomy-subcutaneous Carpal Tunnel Release Menisectomy Cataract Removal&Lens Implant(ECCE) MRl Head&/or Brain CT Head&/or Brain MRI-Lumbar Dilatation&Curettage Myringotomy or Tympanostomy Esophagogastroduodenoscopy(EGD) Nasal Septa!Surgery 1-Iemorroidectomy Thallium Scintigraphy Hernia Repairs Tonsillectomy&/or Adenoidectomy These procedures,as well as any elective hospital admissions, must be pre-certified at least five(5)days prior to the date of service. Authorization will approve these procedures for Out Patient Ambulatory Care stays only. Should the patient's condition warrant an extended stay after surgery, the hospital or doctor must call with clinical information to authorize an Observation Admission. We follow the"acute onset"of Severity of Illness criteria for Observation status.(InterQual, Inc) Certification does not guarantee payment of benefits. Benefits are subject to all terms and provisions as described in the Plan Document. Coverage eligibility remains a Claims Administrator decision. (Acordia National-800-624-8605) The Case Management Services serves the individual and the special needs of patients and their families due to injury or illness. We act as a liaison between the patient,physician,therapist,home health agency, the third party administrator and employer coordinating all services in order that each individual client return to their optimal potential. Please don't hesitate calling me with any questions or concerns. I can be reached at 1-800-400-0984 or 305-294-4599,Monday through Friday. Sincerely, . • / Winnie Radosti,RN I'.O. Box quo hcv West, Florida 33041-')1(17 (3(15)294 4544 1 I:ax(3(15) 1)4-4176 Exhibit C Cost Containment Procedures tilj..fiY;:y:'I�' ;„i P .lP{4,-l',ll Nrt:444z 4l•• 6, '• i• - •+�l'fpY}\!;"tif ,.';,�. ' :Y �� 'N• }k ,• t`}t�•�i`\v;•:,•:. . .. �..c, .S till ' 'i-:�..1;tr�� 2�,,` t�' �. �,�'�' �'. •�� .. . . �'� -.. i -r{. ‘e..1.6: (if at-11,7f'. : 1 .• ,Y '�`�'t 1''' Ir1;1 ►, - Cost Containment Procedures o 1 -- • ;•'.;.1," 'c••.r 111;:;114 • MI. ., Section 6 ;i ittp.i:' iii,' ;lli• i r:, r s:, a na ement. _ ; �i'� 1 �,: i•�� >'�' �;�;;; Medical Cage Ma g �; r • � _ � ,;.;:; •4. . .;0 .!)1; .-.1-0l k�.11A., • Medical Case Management is a cost management program administered `''r••`, ' ' 4 04,,�i„,�,,i'i,' .•11. to provide a timely, coordinated referral to alternative care facilities for :... „ ,r,., : ' � •� '•��`�y�•'• 4,,''' ��i�•, I'I you or your covered dependent who suffers a chronic or catastrophic 11`4`i,;ita ,�I,4I•' I Sickness or Injury while covered under this Plan. :i,•: li,''e� 1 •, ••,:f„ : ¢i;•i:.••, 1 t?,;`�;;;'4': • The following are examples of diagnoses which might constitute a chronic =.,Fs !+I`'I,•15Re� 4/ili, ';}; or catastrophic Sickness or Injury: • 1' f :,'•^iI1 '.Iiif ' �• >' ; I•P(f'lii• Neonatal High Risk Infant ; '' • i.1,:i..v,•1 • �,A.01. 'i Cerebral Vascular Accident(CVA) •`i a Y,''� r �'.h '�I Sclerosis ;id'ir ,'i1:0�.:�{!�J�. '�!•t, ,'}'I r Multiple . hic Lateral Sclerosis i� p ; •. ,I. ,':;;•',,.,c:,,;t .v• gmyotrop •c, visinr,•.,.I•';:.:�,,, .aii_• '.i `i Cancer Jk,• ``Iilj:'t;Y-''i{,::,,?.;,;•,.,i• 1 .'l Home Health Care I • ;q� 1;ti ti tv{, }.'•.•;.; •,-,,. ;,,0 i Seconda to Illness ;I ;;. ,•e.1 11..,1:1••r::,"1:, r.11'. 1•;'..n •, Major Head Trauma and Brain Injury ry - r a j 1 rl'''`;;'• '.:-i• :'I,. • Spinal Cord Injuries ! I gr:11 1;:! •f.{;C ,";. ; ,,;`.+.'' :', .:,:�1. Amputations • ,�� 'i`I"'.. P is • '1 •f4 10`•:ii•% 1* , 1 f'I. ''�.` G'-:'`' r:l''::v«:1.'- , !-l: (, • Multi le Fractures , ?11, 7:-.143 1? . ''el!''`':•111:1�,L' ;t Severe Bums •:)3..,1' • ;t.:• ••01:i11 I� AIDS .- .,,s' ' 1 .r..jt•: 'I1 ...I ;'•i' , '•,ta Transplants i I•l;lt,'ppt' _„ `I•'t', �.,i ,�'. • Any claim expected to exceed $25,000 :II f ,:,i :' .'':''•'' '.':', .!!..., '_.i,' :'r' When the case manager is notified of one of the above diagnoses (or ll TA!! 41;Ij;•11'i •• • •. , - :'I�'l �`�::':,i;;:�•'��r :,••�•:•�•••°• ,-•,.�*' k'•• other diagnosis for which Medical Case Management might be I '. }1 4j;1'; ::.,.. .. ::'.• 1.. .....::•-.'..:'- •'� g er will consult with the attending Physician to 1 •,•;1,,te,i, i:.::.:: • � appropriate) the case manag. •:•lt'1!:•4ilit:':::_. '' •• •' . ,• . ' , ' develop a written plan of treatment outlining all medical services and _ ,•,•'i:'':'•:•''.':.••:':•' ''•• • •• supplies to be utilized, as well as the most appropriate treatment setting. ,l�';�• }• li::•,,.;: .'.• • •''•,'�,�•;;. ;;;.:!:'.;'I The treatment plan may be modified intermittently as the patients • %,',i.114 l� I•'-•::: •:-I :'..... .: condition changes, with the mutual agreement of the case manager, the '',',11,r`�;4s':•',,: •. ' ,, patient and the attending Physician. • r I' ,t.:: - i' ',� i i;-: ; ' 'rr :1' on a case by case basis and 'I{ ��`' :+; ••.�1..1 -';-•: '� ;- All case management services are managed of the BO ";� • 4 1.10j. .%1 .`•l.r' are subject the approval of the Employee Benefit Section CC. ,;. �4• l if,i,11••,.;•, ,. s bject to l.. .yr1 i', (,,,..1.r....1,.,..,14:. ! •I„ri'f i ari,4..r�'. .' Wyk 14; .ti'� ....0:� I l I ii ,.; is'y fa+I: :;;,I' ;.1,1(, ` ''i },, 't";', 11:ram I: ' 1 %'�+1"�iA. IL tt .'L,C. Exhibit D Acordia National's Erroneously Paid Claims Monroe County Clerk of the Circuit Court Accordia Erroneously Paid Claims Patient: Monroe County Employee Fraudulent Claims Paid By Accordia National-the third party administrator(TPA): #Dr. Date Claim Rec Date of Amount Amount Check# Date Ck Location where check was Associated Patient Place of Referring By Accordia Service Billed Paid Cleared negotiated Account#'s Account# Service Physician 1 Victor Forzani,MD 8879 W Colonial Drive#276 Ocoee,Fl 34761 12/01/97 09/14/97* 3,550.00 2,560.00 33522 01/02/98 PonceBank Rio Pierras Deposit Acct# Harge000 11 Jerome Abrams,M.D. 24 1300297 *The patient was in Mt.Sinai hospital on 9/14/97. . Total Paid Victor Forzani,MD 2,560.00 #Dr. Date Claim Rec Date of Amount Amount Check# Date Ck Location where check was Associated Patient Pl;ace of Referring By Accordia Service Billed Paid Cleared negotiated Account#'s Account# Service Physician 2 Jorge Calderon M.D. - 4521 PGA Blvd.Suite 377 P.B.Gdns.,Fl.33418 12/22/97 09/29/97 1,620.00 1,620.00 34699 02/10/98 Armando's Check Cashing None Harge000 11 Bruce Boros Store-Hialeah Accordia made check out to George Info not on fax 09/18/97* 4,200.00 3,925.00 32381 12/24/97 Great Western 5308535946 Harge000 12 Bruce Boros Calderon MD-He signed it Jorge Calderon 11/10/97 09/12/97 3,415.00 3,390.00 32136 12/24/97 Great Western Lake Worth 5308535946 Harge000 11 Bruce Boros *The patient was in Mt.Sinai hospital from 9/14-9/19. Total Paid Jorge Calderon M.D. 8,935.00 #Dr. Date Claim Rec Date of Amount Amount Check# Date Ck Location where check was Associated Patient Pl;ace of Referring By Accordia Service Billed Paid Cleared negotiated Account#'s Account# Service Physician 3 Abraham E.Cira,MD 1128 Royal Palm Beach#472 Royal Palm Bch,Fl 33411 Info not on fax 10/01/97 1,400.00 1,400.00 33707 12/31/97 Great Western Lake Worth 6458333256 Harge000 11 Bruce Boros Total Paid Abraham E.Cira,MD 1,400.00 #Dr. Date Claim Rec Date of Amount Amount Check# Date Ck Location where check was Associated Patient Place of Referring By Accordia Service Billed Paid Cleared negotiated Account#'s Account# Service Physician 4 William Acosta,MD 18950 US Highway 441#301 Moun Dora,Fl 32757 12/08/97 09/24/97 2,150.00 1,900.00 33693 01/08/98 Conception Check Cashing,Inc. 780-41-4117 Harge000 11 Bruce Boros W321-417-904-41 Total Paid William Acosta,MD 1,900.00 • #Dr. Date Claim Rec Date of Amount Amount Check# Date Ck Location where check was Associated Patient Place of Referring By Accordia Service Billed Paid Cleared negotiated Account#'s Account# Service Physician 5 Mario Gonzalez,MD 1128 R.Palm Beach Blvd.472 Royal Palm Beach,Fl 33411 Info not on fax 09/14/97* 1,675.00 1,675.00 34079 01/13/98 Nations Bank 3434867023 Harge000 11 Bruce Boros 12/03/97 09/13/97* 1,700.00 1,500.00 33705 01/13/98 Conception Check Cashing,Inc. 780-46-6432 Harge000 11 Bruce Boros M171-26-4111 12/08/97 09/12/97 500.00 385.00 33706 02/12/98 Nations Bank 3434867023 Harge000 11 Bruce Boros *The patient was in Mt.Sinai hospital from 9/14-9/19. Total Paid Mario Gonzalez,MD 3,560.00 #Dr. Date Claim Rec Date of Amount Amount Check# Date Ck Location where check was Associated Patient Place of Referring By Accordia Service Billed on Check Cleared negotiated Account#'s Account# Service Physician 6 Juan E.Colmenares,MD 1730 South Federal Hwy#397 Delray Beach,Fl 33483 01/29/98 08/30/97 735.00 459.00 36369 N/A Stop payment placed 3/11/98 Harge000 22 Bruce Boros 12/19/97 08/11/97 450.00 228.00 34700 N/A Stop payment placed 3/03/98 Harge000 11 Bruce Boros 01/26/98 08/25/97 385.00 385.00 36368 N/A Stop payment placed 3/11/98 Lists Mt Sinai on claim form Harge000 22 Bruce Boros Total checks issued Colmenares 1,072.00 Total paid Colmenares 0.00 #Dr. Date Claim Rec Date of Amount Amount Check# Date Ck Location where check was Associated Patient Place of Referring By Accordia Service Billed on Check Cleared negotiated Account#'s Account# Service Physician 7 Gustavo Garcia MD 3876 SW 112 Ave Ste 302 Miami,Fl 33165 Claim form Claim form not received 09/10/97 2,865.00 2,865.00 32840 12/18/97 Total Bank G630-209-63-371-0 not received 1500125306 Total Paid Gustavo Garcia MD 2,865.00 #Dr. Date Claim Rec Date of Amount Amount Check# Date Ck Location where check was Associated Patient Place of Referring By Accordia Service Billed on Check Cleared negotiated Account#'s Account# Service . Physician 8 Roberto Rodriguez,MD 3876 SW 112 Ave#300 Miami,Fl 33165 Claim form not received 10/12/97 2,600.00 2,600.00 36129 02/10/98 Armando's Check Cashing Store Hialeah,Florida Total Paid Roberto Rodriguez MD 2,600.00 Total Checks Issued 24,892.00 Total Checks Paid 23,820.00 Exhibit E Claims System Edits , CLINICALOGIC EDITS AND FUNCTIONS DESCRIPTION CLINICAL-EDIT SYSTEM FUNCTION Deleted code Identifies CPT and HCPCS description Automatically replaces the deleted code if codes which are no longer used for billing only one replacement code exists. Presents because they have been removed from the a full range of possible replacement codes coding books. when more than one code is indicated for replacement. Claims processors must request correct code from provider when multiple codes are presented. Rebundling Procedure Rebundles procedure codes on a claim that Condensed related procedure codes into Codes should not be billed separately because single procedure code. Claim benefits are they are a part of a more comprehensive allowed for the single procedure code. code. Sex to Procedure Detects an inconsistency between the sex Automatically disallows services as of the patient and the procedure and/or inappropriate. Sex to Diagnosis diagnosis billed. Claims processor must request corrected information when edit presents. Claim processor should review claim input for accuracy. Normal Age to Detects an inconsistency between the age Displays a warning message to the claims Procedure Code of the patient and the normal and extreme processor. age ranges for the procedure and/or The processor should review claim and Normal Age to diagnosis billed. request additional information when Diagnosis Code inconsistency is an indicator of a billing error. Extreme Age to Procedure Code Extreme Age to Diagnosis Code Place of Service to Determines whether the procedure code Displays warning message to the claims Procedure Code was performed in the proper place of processor. services.(inpatient/outpatient) The claims processor should review claim • information and history to determine if the proper place of service is entered on claim. Assistant Surgeon Determines whether a charge for an Automatically denies services which do assistant surgeon is warranted for surgical not require an assistant surgeon. procedures. Case Management Detects procedure and diagnosis codes that Displays a warning message to the claims Edit for Procedure may indicate possible case management processor. situations. The claims processor should review for Case Management possible case management referral. Edit for Diagnosis HealthPlan Services 10 . DESCRIPTION CLINICAL EDIT SYSTEM FUNCTION Procedure Issue Edit Identifies procedures on a claim that may Displays a warning message to the claims have issues that require review prior to processor_ final benefit payment release. — The claims processor should determine if issues is relevant to the claim. Procedure Information Identifies procedures on a claim that may Displays a warning message to the claims Edit have issues which require a request for processor. additional information prior to final benefit The claims processor should determine if payment release. issue is relevant to the claim. When applicable, the information indicated should be requested. Procedure Review Edit Identifies procedures on a claim that may Displays warning message to claims require an additional review from a processor. designated third party. The claims processor should determine if issue is relevant to the claim. When applicable, claim should be forwarded to designated third party(supervisor,nurse, physician). Procedure to Detects inconsistencies between the Displays a warning message to the claims Diagnosis Edit procedure code and the diagnosis on a processor. claim. Claims processor should review procedure and diagnosis information to determine if they are related. When not related, additional information should be requested. Subset Procedure Edit Detects procedure codes on a claim that Automatically denies the subset procedure. should not be billed separately because The denial may be overridden for specific they are integral to the primary procedure. situations which are determined by procedure guidelines or medical review. • HealthPlanServices 11 • Exhibit F Medicode Procedures as Compared to HIAA Procedures Monroe County CPT Code Description HIAA R&C Medicode R&C r. 11100 Biopsy of skin $ 90.00 $ 132.73 r 17261 Destruction, Malignant Lesion $ 190.00 $ 238.14 29870 Diagnostic Arthroscopy $ 1,300.00 $ 1,860.00 42820 Adenoidectomy and/or Tonsillec $ 1,850.00 $ 1,480.10 43200 Esphaogastroudenscopy $ 950.00 $ 804.65 c. 58120 Dialiation and Curettage $ 1,250.00 $ 1,478.00 70450 CT and MRI of Head/Brain $ 900.00 $ 972.97 70460 Tomography,Head or Brain $ 1,000.00 $ 1,173.00 71020 Radiologic Exarn, Chest $ 110.00 $ 145.17 72146 Magnetic Resonance $ 1,475.00 $ 2,708.10 90782 Therapeutic/ DX Inj $ 40.00 $ 44.99 92004 OPHTH SERV;Exam; Compre New PT $ 105.00 $ 115.94 j 92014 OPHTH SERV;Exam; Compre Est PT $ 100.00 $ 102.77 92226 Ophthalmoscopy w/min Psychother $ 105.00 $ 91.06 y 99201 Office Visit/New PT $ 75.00 $ 78.63 99223 Subsequent Hsp Visit; Intermediate $ 275.00 $ 354.52 99283 ER Exam;New Pt; Intermediate $ 185.00 $ 193.00 , t Total $ 10,000.00 $ 11,993.77 VII. Auditee Responses 0 I BOARD OF COUNTY COMMISSIONERS ._1 .-r. ��; ".err--- MAYOR Jack London,District 2 OUNTY 0 MON ROE --� �1'�� `� Mayor Pro tern Wilhelmina Harvey,District 1 KEY WEST FLORIDA 33040 '�..." v�-�`•��" ti"; Keith Douglass,District 4 (305)294 4641 ( Shirley Freeman,District 3 lr•.. r�1;.,ty�j, Mary Kay Reich,District 5 Human Resources Department 5100 College Road `f Key West , FL 33040 X__,.,- L �}s a (305)292-4537 ,,--' - MEMORANDUM Date: July 6, 1998 _ To: Danny L. Kolhage Clerk of the Circuit Court _ - From: James L. Roberts _ County Administrator Subject: Preliminary Audit Review of Monroe County Group Health Insurance cc: Sheila A. Barker,Human Resources Director 1 In response to the Audit dated April 29, 1998, I submit the following responses: V. Review Findings: A. Inadequate Internal Control System for Processing Claims 1. Payments were made to fraudulent physicians by Acordia National Recommendations: 1. County Management should make a written demand to Acordia for reimbursement of the$23,820 paid to the fraudulent physicians. 2. County Management should require the Third-Party Administrator to establish appropriate procedure to control the addition of out-of-network physicians to their system. A conference call is set for July 16, 1998, to discuss the return of the $23,820 with Acordia's CEO, Rick Legg. Depending on the outcome of that phone conference, demand will then be made to Acordia for return of the$23,820. Acordia's new Instructions for Adding Providers to the System and Request for Provider Maintenance is attached. These instructions are 4/20/98 and it is anticipated that they will provide additional controls. However, the changes should be further modified to have all providers verified with the State Medical Licensing Board. 1 2. Random tests are not completed to determine if services billed are actually performed. Recommendations: 1. County Management should establish procedures for completing random audits to confirm that services billed were actually performed by the provider for the employee or dependent. 2. County Management should request from Acordia a list of all system edits in the claims processing system and a confirmation that system edits are being properly utilized. 3.. County Management should report the fraudulent providers to the Agency for Health Care Administration per Florida Statute Sec.112.153, 4. County Management should consider the feasibility of setting up a cash incentive program for employees to review their explanation of benefits and report any overcharges. Random audits (without copies of the original submission) will only allow us to r examine what has been input by Acordia. Checking the original claim is the only way to determine the accuracy of the on-line information. In the audit dated January 12, 1996, indirect submission was considered inefficient and uneconomical. I To do random audits we would need to secure copies of original claims and doctors or hospital notes for examination. Providers may be reluctant to send confidential medical information of this nature to the County. Monroe County will schedule training with Acordia on the on-line system and attempt to audit 50 claims per month. Interisk, our Benefit's Consultant, provided the number of 50 as being sufficient to audit. Previously when the County handled indirect submissions of all claims, we found in the neighborhood of 1% errors. Random audits will probably not find dollar errors but should find and lead to correction of any procedure errors. Management will request a list of all edits performed on the system and a confirmation that adequate steps are taken in resolving the edit errors. On the audit performed by Interisk concurrently with the Clerk's audit, it states "While improvements can be made, the review of its operations and a sampling of the claims administered on behalf of the County, indicates that adequate procedures have been established by Acordia and administration services are generally being provided consistent with industry standards." The proposal from which Acordia was selected as our Plan Administrator lists the payment accuracy of being 96%. Management believes the monthly random audits will be a good way to verify that procedures are being followed but they will not find substantial cost savings. Management reported the fraudulent claims to the State Attorney's Office. Statute 112.153 references the necessity of reporting "Overcharges" and makes no reference to fraudulent activity. Management believes the Third Party Administrator should be responsible for reporting the information to the Agency for Health Care Administration, since they I Audit Report,Monroe County,Group Insurance Claims Processing,January 12, 1996,page 10 2 • administer our claims. They should advise us of their findings and request our approval to report it on our behalf. The Statute 112.153 is already in place to reward participants for finding overcharges. Our excess insurance broker advised us that many entities have run into administration problems with this program. The wording of the statute is rather vague. The intent was to have employees become the watchdogs of claim expenses and receive cash rewards for this work. They were to do all the leg work: spot the error, contact the provider, obtain a corrected billing and present the documentation to the insurance carrier. Participants are interpreting it to mean that they should receive rewards for any overcharged claim, even if the error was noticed by someone in the doctor's own billing office and submitted for correction. They are also not doing any of the leg work; they want to call the insurance office, report what they feel to be an error and have the staff do the research. Often they are unwilling to put anything in writing. The statute reads that all they have to do is "discover" the overcharge. Our excess broker also advises that many participants want reimbursement on the gross amount recovered,not the net. It will need to be clearly detailed so that there are no misinterpretations. B. Large Claims are not Reviewed in Aggregate. Recommendation: 1. County Management should establish procedures to review large dollar claims in total by participant. The potential for fraud exists in all claims. Reviewing large dollar claims in aggregate would not have necessarily revealed the fraudulent providers. If this is to be done, copies of all the claims submitted for that participant must be reviewed in detail. Taking into consideration that Acordia's claims are batched in date order paid, research would be quite time consuming. C. Employee Benefit Department does not use the Third Party Administrator's Claim System. Recommendations: 1. County Management should require Acordia National, Inc. to provide the Employee Benefits Department with remote access to its claim software and all necessary passwords and training. 2. County Management should establish a program of audits and inquiries on a periodic basis to ensure that the plan is functioning as intended. Management will obtain on-site training for our benefits' office to become proficient with the Acordia computer system. The previous telephone training was not successful. Having access to the system will not provide us the opportunity to spot errors or fraud unless we are to receive actual copies of the claims submitted. Procedural instructions will need to drafted to accomplish the goals and objectives of the auditing team. 3 • D. Ramifications of using "the Medicode database" versus the Hospital Insurance Association of America's database to determine reasonable and customary charges. Recommendations: 1. County Management should determine if using the "medicode Database" as compared to the HIAA database has any effect on claims paid. ; Management knows that the use of Medicode has a significant impact on our claims. The Audit performed by Interisk found a $58,123 difference for the first quarter of 1998. KPHA has contracted with their providers to use Medicode. They are exploring the possibility of changing to HIAA. No conclusion to this issue has been reached yet. When we prepare Bid Specifications because this contract is scheduled to go out for bid in late 1998 or early 1999, these requirements will be part of the bid package. 4 SECTION: PROVIDERS NUMBER: 606 ORIGINAL DATE: 4/20/98 REVISED DATE: SUBECT: ADDING PROVIDERS TO THE SYSTEM EXAMINER INSTRUCTIONS: If a provider is not already in the system: 1)The appropriate form needs to be completed and sent to the Provider Maintenance Unit 2) The form,Request for Provider Maintenance, should be completed in full by the examiner at the time the claim is pended 3) While in a pond status, the FEIN number entered in MC30 should be "PENDNUMBR". • If the provider does not supply his telephone number on the claim, the examiner must: 1) Call directory assistance and add this phone number to the Request form 2) Do not write this directly on the claim itself • If a telephone number is obtained from directory assistance: 1) In addition to adding this phone number to the Request form,the examiner must call the provider -- 2) If contact is made within 1-2 business days, the examiner should document(on a telephone report sheet) the date of the call, the name of the individual they talked to and the provider's medical license number. If a telephone number is not provided from directory assistance OR if the examiner is unable to reach the provider's office within 1-2 business days: 1) The claim should remain pended changing the status to"W'from"T' 2) Office notes should be requested to verify that services were'actually rendered by a licensed medical provider 3) If office notes are not received,the claim should be referred to Provider Specialist for further investigation Pest-lt'Fax Note 7671 Dat C' Bt 3 T i h n• From I'A � n h 1Q- - Co. r ' Phone* Phone 8 • Tax1075 L9/ 937'o F CDA/ 3$3 $PIq • 05/28/98 16:34 TX/RX NO.4479 P.001 • PROVIDER SPECIALIST INSTRUCTIONS: If the provider is in the state of Florida OR if the examiner was unsuccessful in obtaining office notes, the Provider Specialist will follow the following steps; if the provider is outside the state of Florida, the same procedure is applied on a random basis(2 per day): 1) The specialist will attempt to verify the medical license number while notating on the Request form the date of the call, the individual we talked with and the actual license number 2) If the Provider Specialist is unsuccessful with the call to the provider's office, the Specialist will access the AMA website on the Internet to determine if the provider is listed there. . 3) If the Provider Specialist is unsuccessful with the features available through the Internet, the Specialist will call the appropriate State Medical Licensing Board to verify if the provider has a valid, active medical license. 4) The Specialist will document the date of the phone call, the Board's telephone number,the source at the Board, the license number, the provider specialty and if the license is valid. 5) If we cannot verify that an active medical license exists,the claim will be referred to the Team.Manager of the Provider Specialist Unit 6) If the provider is determined to be questionable with an invalid license after all sources are exhausted,the Team Manager of the Provider Specialist Unit will have the provider added with a status of"F"which results in automatic claim denials • 05/28/98 16:34 TX/RX NO.4479 P.002 REQUEST FOR PROVIDER MAINTENANCE Date From Team Leader Company Name Library • Co# Plan# Specialty Code ' Check the action needed: Add Provider as non PPO to MC07 (y/n) Add Provider as PPO to MC09 _ (y/n) suffix PPO I.D. Provider Name Provider 9 digit FEIN # Address Provider Telephone Number _ ** DO NOT WRITE THIS NUMBER ON THE CLAIM ITSELF IF NOT PROVIDED ON THE BILL** **************************************rnm**************************** Provider Specialist Use only: I - Identify Source of Phone#if not on the bill (operator assistance, directory,etc) - Verify that a call was made to this provider at this phone number _Y N • If verification call was not successful with the provider(no one answered, busy, etc), call the State Medical Licensing Board and indicate: (Board's telephone number) (Source at the Board) (License Number) _Y_N Is license valid? • If verification call was made,please specify: Date of the call r Who called the provider Name of individual that we talked to • Medical License Number - Date completed -FEIN #with suffix - Added by 05/28/98 16:34 TX/RX NO.4479 P.003