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04/21/2004 Audit Supplemental SUPPLEMENTAL AUDIT REPORT OF MONROE COUNTY HEALTH BENEFIT PROGRAM April21, 2004 ,,. GOUNT �'1. Y J�� J�j�'e.. oc, 4is , f u . c - . -% COUNTY, Prepared by: 1 Internal Audit Department Clerk of the Circuit Court Danny L. Kolhage, Clerk Monroe County,Florida coUNTy 9�Y Q tJ �- 4 1 ioI - i Ski f;:k• .i.�J���. T C' CLERK OF THE CIRCUIT COURT MONROE COUNTY BRANCH OFFICE BRANCH OFFICE PLANTATION KEY MARATHON SUB COURTHOUSE MONROE COUNTY COURTHOUSE GOVERNMENT CENTER 3117 OVERSEAS HIGHWAY 500 WHITEHEAD STREET,SUITE 101 88820 OVERSEAS HIGHWAY MARATHON,FLORIDA 33050 KEY WEST,FLORIDA 33040 PLANTATION KEY,FLORIDA 33070 TEL.(305)289-6027 TEL.(305)292-3550 TEL.(305)852-7145 FAX(305)289-1745 FAX(305)295-3663 FAX(305)852-7146 April 21, 2004 The Honorable Danny L. Kolhage Clerk of the Circuit Court RE: Supplemental Audit Report of Monroe County Health Benefit Program Dear Mr. Kolhage: The Clerk's Internal Audit Department has completed the supplemental audit of the Monroe County Health Benefit Program. The purpose of the audit was to determine if additional areas were of concern regarding the efficiency and effectiveness of Acordia National and the Keys Physician Hospital-Alliance (KPHA) in coordinating the plan and to further evaluate County Management's systems employed to monitor the Contractor's performance. We would like to thank the Division Director of Administrative Services and her staff for their cooperation while conducting the audit. By its nature, this report focuses on exceptions, weaknesses, and problems. This should not be understood to mean there are not also various strengths and accomplishments. Due the complexity of our Health Benefit Plan and the substantial expenditures involved, the contracts with KPHA, Acordia and providers need to be continuously monitored and improved for clarity. The audit was conducted with the assistance of Patricia Sutton, Internal Auditor. The accompanying audit report is provided for your information. Additional copies of the report will be provided upon your request. Sincerely, & l '/aWw'U-- Sandra L. Mathena, CPA, CFE, CIA Director of Internal Audit Cc: Board of County Commissioners (5) James Roberts, County Administrator Richard R. Collins, County Attorney Sheila Barker, Division Director of Administrative Services Sandee Carlile, Clerk's Finance Director SUPPLEMENTAL AUDIT REPORT OF MONROE COUNTY HEALTH BENEFIT PROGRAM TABLE OF CONTENTS Page • I. SCOPE AND OBJECTIVES 1 II. METHODOLOGY 1-2 III. BACKGROUND 3 IV. CONCLUSIONS 4-5 V. AUDIT FINDINGS: A. Network Providers Paid Incorrectly 1. Dimension provider claims paid as referrals 6-7 2. KPHA provider claims paid as referrals 8 3. KPHA dental providers added to Acordia's system incorrectly 9 B. Payment Method Employed For Surgical Procedures 10-11 C. Discounts Rescinded by Providers 12 D. Overpayments Identified in May 2003 Health Benefit Program Audit 1. KPHA provider claims paid as referrals 13 2. Incorrect discounts for durable medical equipment 14 3. 90th Percentile Medicode overpayment 15 E. Network Providers Billing With Multiple Tax Identification Numbers 16 F. Group Insurance Management Should Perform Regular Audits of Acordia Claims and Reports 17-18 G. Group Insurance Management Should Provide Employee Education Regarding Health Care Claims 19-20 VI. EXHIBITS A. Letter to Acordia, June 18, 2001 B. E-Mail from Acordia,August 26, 2003 C. Sample Letter from Fisherman's Hospital D. E-mail from KPHA E. Letter to Acordia, August 5, 2003 VII. AUDITEE RESPONSES i 1 SUPPLEMENTAL AUDIT REPORT OF MONROE COUNTY HEALTH BENEFIT PROGRAM I. OBJECTIVES AND SCOPE In response to the prior audit of the Health Benefit Program issued May 2003, the Monroe County Clerk of the Circuit Court and the Monroe County Board of Commissioners requested the Internal Audit Department to complete a supplemental audit of the Health Benefit Program. The audit objectives were to determine if additional areas were of concern regarding the efficiency and effectiveness of Acordia National and the Keys Physician Hospital-Alliance (KPHA) in coordinating the plan and to further evaluate the effectiveness of County Management's systems employed to monitor the Contractor's performance. II. METHODOLOGY A. We interviewed the following personnel to obtain information about the Monroe County Health Insurance Plan: 1. County Administrator 2. Director of Administrative Services 3. Group Insurance Administrator 4. The Clerk's Finance Department personnel 5. Assistant Administrator, Lower Keys Medical Center& Director of Operations Keys Physician-Hospital Alliance 6. Vice President of Claims at Acordia National 7. Assistant Vice President and Monroe County's Team Manager at Acordia National 8. Dimension Health Network personnel B. Internal Audit Department examined the following documents: 1. Monroe County Employer Liaison Committee Agenda's 2003 2. Acordia Refunds &Reversals Audit Report, 2000 to 2003 3. Clerk's Finance Department deposit records 4. KPHA/Dimension provider listings 5. Acordia Referrals by Authorizing Providers, 2000 to 2003 6. Acordia Single Provider Payment Listings 7. Acordia listing of KPHA Providers 8. Acordia Non-PPO Network Savings Report, 2000 to 2003 9. Specific claim detail and invoice detail for large hospital billings 10. Explanation of Benefits (EOB's) from Acordia for specific claims 1 C. The Internal Audit Department reviewed Single Provider Payment Listing reports for physicians and hospitals. D. Internal Audit reviewed Referral Analysis By Authorizing Providers reports. E. Reviewed spreadsheets provided by Acordia calculating claim overpayments. F. Reviewed Acordia Out of Network reports. G. Compared Acordia Refund and Reversal reports to Finance Department deposits. H. Reviewed a sample of claims to determine if appropriate network discounts were applied. I. Requested Acordia to reprocess claims that were determined to be inaccurate. 2 III. BACKGROUND INFORMATION Medical, dental and vision claims of $9,426,645.09 were paid for retirees, employees, and dependents of Monroe County for the fiscal year ending September 2002. This was an increase of 12.1% over claims paid for fiscal year ending September 2001. For the fiscal year September 2003 the paid claims totalled $10,905,253.43. This is an increase of 15.7% over fiscal year 2002 and a 29.7% increase over fiscal year 2001. The County modified several factors of the health benefit program to reduce health care costs for calendar year 2004. The County increased the overall proportion of health care cost paid by the employees and retirees, with anticipation of an approximate 20% decrease in costs. In the May 2003 report, Audit Report of Monroe County Health Benefit Program, twenty findings were identified. Of the twenty findings, the following overpayments were identified and are not included in the supplemental report: Acordia Claims Examiner Error $82,362.44 Employee Portion of Examiner Error $14,686.26 90th Percentile Medicode Not Updated $52,877.70 Employee Portion Of Medicode Not Updated $6,607.63 Ineligible Providers $1,382.23 Incorrect Billing $234.00 25% Discount Override $66.05 KPHA Providers Added With Incorrect Discounts $47,529.39 Total Overpayments May 2003 Audit $205,745.70 Further testing was implemented in the supplemental audit to specifically identify the amount of overpayments discovered as a result of the initial audit sample and to determine additional areas lacking controls to prevent overpayments in health care benefits. An additional $110,458.30 was discovered as a result of network providers being paid as referrals in the supplement audit. In addition, it was discovered that the initial audit included $35,781.04 that was identified incorrectly as overpayments. The net overpayment discovered in the initial and supplemental audit is reported as follows: Overpayments May 2003 Audit $205,745.70 Overpayments February 2004 Supplemental Audit $110,458.30 Incorrectly Calculated Overpayments May 2003 ($35,781.04) Total County Overpayments $280,422.96 3 IV. Audit Conclusions: Al. Numerous Dimension provider claims were paid as referrals and resulted in an overpayment of$83,997.72 for the period January 1, 1999 to August 18, 2003 and is due the County. The providers have been notified and$7,058.19 has been received. A2. Numerous KPHA provider claims were paid as referrals and resulted in an overpayment of$3,774.68 for the period January 1, 2000 to August 18, 2003 and is due the County. A3. KPHA dental providers were added to Acordia's system incorrectly. Acordia calculated the claims resulting in an overpayment of$22,685.90. The dentists have been notified and$5,715.18 has been received. B. Group Insurance Management stated that payment for surgical procedures should be calculated according to Medicare's Multiple Surgery Guidelines. These guidelines would provide the County additional savings in health benefits. Correspondence between the County and Acordia has not clarified the guidelines to be implemented. C. Review of the Single Provider Payment Listing reports for the network hospitals identified claims that did not have the appropriate discounts applied. The hospital rescinded the discounts, if the claim was not paid in 30 days and Acordia refunded the discounts. D1. The initial audit dated May 27, 2003 identified an overpayment of claims based on an outdated fee schedule. Acordia recalculated the claims and determined the overpayment to be $134,729.77. The physicians have been notified and $36,666.22 has been received. D2. The initial audit included incorrect discounts for durable medical equipment in the amount of $10,424.01. It has been determined that KPHA Case Management negotiates the charges and the standard discount is not applied to these claims. D3. The initial audit included a physician administering cancer drugs that are not subject to the comparison per an agreement between the County and KPHA. The provider was incorrectly reported by Acordia as having an overpayment of$25,357.03. E. Numerous providers are billing with more than one federal tax identification number. The claims were paid as out of network claims. A provider can only be matched to a specific network if they bill their claims with the tax identification number provided to Acordia by the network. Numerous providers also have multiple suffixes added to their tax identification number. This can be a result of a change of address, data entry error, or multiple locations or as a result of being in a Group-Base as well as providing individual services and the provider may not be updated to the appropriate network. 4 F. Group Insurance Management should perform regular audits of Acordia claims and reports. G. Group Insurance Management has changed health care benefits passing substantial cost to the employee. With proper information and education employees will have the ability to scrutinize claims and potentially assist in the reduction of health care cost. kI 5 A. Network Providers Paid Incorrectly The auditors reviewed Referral Analysis reports, Single Provider Payment Listings and Acordia's schedule of overpayments from the May 27, 2003 audit and found additional claim processing errors. The breakdown of the claims in the supplemental audit are as follows: Dimension Providers (938 Claims) $83,997.72 KPHA Providers (223 Claims) $3,774.68 Dentists (2,144 Claims) $22,685.90 Total $110,458.30 1. Dimension provider claims paid as referrals Finding: Numerous Dimension provider claims were paid as referrals, but the providers are actually participants in the Dimension Network. This was determined by review of the Referral Analysis Report. Providers paid as referrals were paid at the in network rate of 80% or 100%. A laboratory that joined the Dimension Network on January 1, 1999 had claims paid as referrals and the claims should have been paid based on the Dimension Fee Schedule. For example, one procedure code (82784) had a charge of $359.42 and Acordia paid $288.00. The Dimension Fee Schedule amount was $27.60. Therefore, Acordia should have only paid $22.08 (80% of $27.60). The overpayment for Monroe County's 80% portion on this one CPT code was $208.32. A claim should only be processed as a referral if it is not a network provider. Acordia's management produced computer reports to determine the extent of the overpayment. For the period January 1, 1999 through August 18, 2003, five Dimension providers were overpaid a total of $83,997.72. Acordia is in the process of recouping the overpayments. Acordia has received payment from one Dimension provider in the amount of$7,058.19. Recommendation(s): 1. Group Insurance Management should establish a program of audits and inquiries on a periodic basis to ensure that the plan is functioning as intended. 2. Group Insurance Management should monitor the collection process of the overpayment due the County. County Administrator's Response: 1. Management believes claims should always be processed as network provider and if no network shows up, the system should check for referral before decision to assess penalty. The referrals are generally lab tests and the quantity of them should not be prohibitive for checking. The processing of lab tests on a referral basis was implemented because management believed it was unfair to the 6 participants to have them responsible for finding a network lab. Group Insurance Management is reviewing the Referral Analysis Report to prevent this from occurring again. 2. Group Insurance Management is aware that the collection process is taking a significant amount of time. Providers are very upset that we can go back for a longer period of time than they have been allowed to bill claims. They believe the process has been unfair to them. KPHA has received numerous complaints; and as of March 1, 2004, we have had eight providers opt out of the network. 3. As identified above by the auditors, Acordia is already in the process of recouping the overpayments. Management will be sure that this continues. In the future, management will establish a periodic review of claims by the County's insurance consultant for the purpose of identifying and resolving problems. 7 2. KPHA provider claims paid as referrals Finding: Numerous KPHA provider claims were paid as referrals, but the providers are actually participants in the KPHA Network. This was determined by review of the Referral Analysis Report. Providers paid as referrals were paid at the in network rate of 80% or 100%. A claim should only be processed as a referral if it is not a network provider. Acordia's management produced computer reports to determine the extent of the overpayment. For the period January 1, 1999 through August 18, 2003, the KPHA providers were overpaid a total of $3,774.68. Recommendation(s): 1. Group Insurance Management should establish a program of audits and inquiries on a periodic basis to ensure that the plan is functioning as intended. 2. Group Insurance Management should monitor the collection process of the overpayment due the County. County Administrator's Response: 1. Management believes claims should always be processed as network provider and if no network shows up, the system should check for referral before decision to assess penalty. The referrals are generally lab tests and the quantity of them should not be prohibitive for checking. The processing of lab tests on a referral basis was implemented because management believed it was unfair to the participants to have them responsible for finding a network lab. Group Insurance Management is reviewing the Referral Analysis Report to prevent this from occurring again. 2. Group Insurance Management is aware that the collection process is taking a significant amount of time. Providers are very upset that we can go back for a longer period of time than they have been allowed to bill claims. They believe the process has been unfair to them. KPHA has received numerous complaints; and as of March 1, 2004,we have had eight providers opt out of the network. 3. This is a similar situation to the previous finding. Management will be sure that this continues. In the future, management will establish a periodic review of claims by the County's insurance consultant for the purpose of identifying and resolving problems 8 3. KPHA dental providers added to Acordia's system incorrectly Finding: Five dental providers in KPHA were added to Acordia's system incorrectly or not properly updated. Acordia provided the auditors a report correctly calculating the discounts and an overpayment of $22,685.90 was made to the providers. Acordia corrected the discounts and notified the providers of the overpayments and $5,715.18 has been received. Incorrect payments would have continued indefinitely since the set-up did not contain accurate information. Acordia should furnish KPHA a provider listing with tax identification numbers and discount percentages allowed to review and correct on a periodic basis. Recommendation(s):. 1. Group Insurance Management should monitor the collection process of the overpayment due the County. 2. Group Insurance Management should establish guidelines to ensure Acordia's listing of network providers is accurate. County Administrator's Response: 2. Group Insurance Management will continue the collection process. 3. Effective January 1, 2004, Monroe County has ceased being a self-insured provider of Dental Services. Employees are paying for their own insurance through American General. 4. Group Insurance Management will utilize the services of the insurance consultant for the purpose of monitoring Acordia's listing of all KPHA Network Providers to be sure that it is accurate. 9 B. Payment Method Employed for Surgical Procedures Finding: Group Insurance stated that payment for surgical procedures should be calculated according to Medicare's Multiple Surgery Guidelines and was under the assumption that Acordia was using this method. This assumption was based on a letter sent to Acordia from Group Insurance requesting Medicare guidelines be used for unbundling. See Exhibit A-Letter to Acordia, June 18, 2001. Acordia states unbundling of charges and multiple surgeries guidelines are two different issues. See Exhibit B - E-mail from Acordia, August 26, 2003. Their system, Code Review, already bundles and unbundles procedure codes including surgeries. The multiple surgery guidelines are applied after the procedure codes have been bundled or unbundled. The following claim is an example of unbundling: CPT Code 43750 and 43246 were combined into one code 43246. There was also another procedure code 36533 for $1,200. Acordia stated, our Nurses have indicated that this procedure was not performed through the same incision as the primary procedure, therefore, we did not reduce to 50% of the Medicode Fee. However, based on Medicare's Multiple Surgery, which differs from ours, this would have been reduced to 50% regardless and should have been limited to 50% of$1,200 or$600. The auditors requested Acordia to reprice all surgery claims from October 1, 2001 through June 30, 2003 and Acordia informed the auditors this was unrealistic and not feasible. See Exhibit B - E-mail from Acordia, August 26, 2003. The auditors were unable to determine the extent of overpayment resulting from the miscommunication between Acordia, KPHA and Group Insurance Management. Acordia is able to amend the plan with written instructions based on the e-mail of August 26, 2003 from Acordia. See Exhibit B -E-mail from Acordia, August 26, 2003. There has been no correspondence between the County and Acordia clarifying the guidelines to be implemented. Recommendation(s): 1. Group Insurance Management should discuss the consequences of using Medicare's Multiple Surgery Guidelines with KPHA. 2. Group Insurance Management should also consider including an acknowledgment form to be signed by Acordia Management that states the change has been made and the date it was implemented. County Administrator's Response: 1. Group Insurance Management has discussed both Multiple Surgery Guidelines and Unbundling with KPHA. We are satisfied with the procedure being used by Acordia on unbundling. After much discussion and research, we have agreed to r 10 the following Multiple Surgical Procedures that will be included in the next plan revision: Surgery includes the medically necessary preoperative and post operative care, when performed by a Physician. If two (2) or more operations or procedures are performed on the same day, on the same patient, by the same Physician, benefits are described in the Schedule of Benefits and subject to the usual, customary, and reasonable charges (or network fee schedule) for the first procedure, and 50% of usual, customary, and reasonable charges (or network fee schedule) for any additional procedures performed. 2. Group Insurance Management will develop an acknowledgment form to be signed by Acordia stating the appropriate changes have been made and the date of the implementation. 11 C. Discounts Rescinded by Providers Finding: The auditors reviewed Single Provider Payment Listing reports for the network hospitals and requested a sample of claims that did not have the appropriate discount applied. The review identified Fisherman's Hospital rescinding discounts on claims that were not paid within 30 days by Acordia. Acordia informed the auditors if additional information is requested the 30 days begins after receipt of all documentation necessary to analyze the claim and process appropriately. Acordia paid the original billed charges less the provider discount and if the claim was paid past the 30 day period the hospital would request the discount be paid. See Exhibit C - Sample Letter from Fisherman's Hospital. The sample of 6 claims revealed a total of$33,716.48 paid to Fisherman's Hospital based on discounts rescinded. The KPHA contract provides the following definition for provider compensation: Participating Provider Compensation: All claims for covered services, whether payable by the Employer or a Covered Person will receive a discount off of provider billed charges as specified in Attachment A. This discount will be rescinded if an appropriately documented and non-contested claim is not paid to the Participating Provider within thirty (30) days of being received by the claims administrator(Acordia National). Group Insurance Management is working with KPHA to revise the contract language to define clean claims and disputed claims. See Exhibit D - Email from KPHA. Recommendation(s): 1. Group Insurance Management should ensure that Acordia calculates prompt pay discounts according to the terms of the KPHA Proposal and Agreement. 2. Group Insurance Management should review Refund and Reversal reports provided by Acordia to monitor provider discounts that have been refunded. County Administrator's Response: 1. The language in the KPHA contract was confusing as to what constituted a `non-contested claim'. In the new contract with KPHA, effective March 1, 2004, we have defined a "Clean Claim, " Notification of Claim Status" and " Disputed Claims". This should prevent the discrepancy caused with the handling of discounts such as those documented with Fisherman Hospital. 2. Group Insurance agrees with the recommendation to monitor the Refund and Reversal Report. 3. Group Insurance Management will officially inform KPHA that the practice identified for Fisherman's Hospital is not within the scope of the Contract between the County and KPHA. KPHA will be asked to inform Fisherman's Hospital that practice must be discontinued. 12 D. Overpayments Identified in May 2003 Health Benefit Program Audit 1. KPHA provider claims paid as referrals Finding: The initial audit dated May 27, 2003 identified physician claims for the KPHA network using an outdated Medicode Fee Schedule for the usual and customary comparison, which resulted in multiple claims being overpaid. The County requested the claims be reprocessed on August 5, 2003. See Exhibit E - Letter to Acordia, August 5, 2003. The total County adjustments calculated by Acordia resulted in an overpayment amount of $134,729.77. The providers have been notified and repayment of $36,666.22 has been received. As of February 12, 2004, the outstanding balance is $98,063.55. Recommendation(s): 1. Group Insurance Management should monitor the collection process of the overpayment due the County. 2. Group Insurance Management needs to ensure procedures are in place to verify the Medicode Fee Schedule is updated annually. County Administrator's Response: 1. Group Insurance Management is aware that the collection process is taking a significant amount of time. Providers are very upset that we can go back for a longer period of time (15 months) than they have been allowed to bill claims. They believe the process has been unfair to them. KPHA has received numerous complaints; and as of March 1, 2004, eight providers have left the network. As of March 31, 2004 we have increased the repayment amount of $36,666.22 to $70,379.81. 2. We were the only client of Acordia that was using Medicode. It created a very cumbersome system for processing and updating. Effective March 1, 2004, our contract with KPHA has started using P.H.C.S. (formerly HIAA) Fee Schedule. All other Acordia Clients use P.H.C.S. This should make the processing and updating easier and more efficient. Acordia will update their system and it will be effective for all their providers. KPHA providers have agreed to this new system in their contract with KPHA 3. Group Insurance Management will semi-annually confirm that the P.H.C.S. Fee Schedule is being utilized appropriately. 13 2. Incorrect discounts for durable medical equipment Finding: The initial audit dated May 27, 2003 identified claims with incorrect discounts totalling $47,529.39. Included in the amount was $10,424.01 for durable medical equipment claims that did not have the standard KPHA discount of 15%. During the supplemental audit it was discovered the rates for medical equipment are negotiated by KPHA Case Management. The standard discount of 15% does not apply to durable medical equipment claims, but a case management fee is billed to the County. Subsequently, the auditors determined the overpayment identified as "incorrect discounts for durable medical equipment" should not have been included as an overpayment in the initial audit. Group Insurance Management and KPHA agree the discount should not be applied to durable medical equipment. However, the contract does not indicate durable medical equipment is processed differently from other KPHA claims. Recommendation(s): 1. Group Insurance Management should document and include all processing conditions in the contract. County Administrator's Response: 1. Group Insurance Management will document the processing for Durable Medical Equipment in the next plan document. As much as Group Insurance Management would like to be able to document all processing in our plan document, we continue to find unique medical situations that have to handled administratively based on what serves the patient as well as what keeps the cost as low as possible for the plan. 14 -r 3. 90th Percentile Medicode overpayment Finding• The initial audit dated May 27, 2003 identified claims being processed with the 1997 90th Percentile Medicode. Acordia ran preliminary reports identifying $52,877.70 as the overpayment due to the outdated Medicode. Included in the amount was $25,357.03 which was for one physician administrating prescription drugs. It had been determined by the County and KPHA that the service the physician provided would not be subject to the medicode comparison. However, the physician had discrepancies in his billing procedures and gave the appearance of an overpayment in the initial audit. For example, one claim was billed for 40 units at$30.09 with a total charge of$904.00 and a total of$858.80 was paid. The payment was correct even after being compared to the 90th Percentile of Medicode. The next claim billed 1 unit at $30.09 with a total charge of$904.00 and a total of$858.80 was paid, but the spreadsheet calculation gave the appearance of the claim being overpaid $830.21. The preliminary overpayment calculated by Acordia was prepared in a formula based spreadsheet and did not take into account examiner overrides. The physician will not be billed the calculated overpayment of$25,357.03 by Acordia. Recommendation(s): 1. Group Insurance Management should review all documentation provided by Acordia to ensure calculations and procedures are accurate. County Administrator's Response: 1. Group Insurance Management along with KPHA and Acordia are monitoring processing to maintain the accuracy of the system. Medicode will no longer be our basis; as of March 1, 2004,we will be using P.H.C.S. (formerly HIAA). 15 E. Network Providers Billing with Multiple Tax Identification Numbers. Finding: Numerous providers are billing with more than one federal tax identification number. The claims were paid as out of network claims (70% coinsurance percentage and no discount) because the tax identification number did not match the one provided to Acordia by KPHA or Dimension. According to Acordia Management, this is a common issue for all networks. Providers don't always notify the networks when their tax identification numbers change and it ultimately results in claims being paid out of network. A provider can only be matched to a specific network if they bill their claims with the tax identification number provided to Acordia by the network. KPHA plans to provide both social security numbers and tax identification numbers to Acordia to update their claim system for all KPHA providers. The auditors also discovered many network providers have multiple suffixes added to their tax identification number. This can be a result of a change of address, data entry error or multiple locations and the provider may not be updated to the appropriate network. In addition, providers may be Group-Based and also provide services on an individual basis, therefore creating new suffixes and the potential of inaccurate processing. Recommendation(s): 1. Group Insurance Management should establish a program of audits and inquiries on a periodic basis to ensure that the plan is functioning as intended. 2. Group Insurance Management should establish guidelines to ensure Acordia's listing of network providers is accurate. 3. Group Insurance Management should check the referral report on a monthly basis. County Administrator's Response: 1. Group Insurance Management is aware that some providers bill under more than one federal tax identification number. This is done for a variety of reasons including their affiliation with other providers and location for providing the service. Some physicians are affiliated with a network in one location and not while practicing in another. When the provider supplies different federal tax identification numbers for these reasons, they can actually not be part of a network. Participants who believe they used a network doctor and were penalized for using a non-network provider should contact Acordia or the Group Insurance Office for assistance. Networks change on a frequent basis and it is the responsibility of the participant to verify network status before seeking treatment. 2. Group Insurance Management will establish guidelines to insure Acordia's listing of network providers is accurate and will utilize the services of the County's insurance consultant on a periodic basis to check the system. 16 F. Group Insurance Management Should Perform Regular Audits of Acordia Claims and Reports Finding: Group Insurance Management has been provided the ability to access Acordia's Host On Demand online claim system to allow audit and inquiries of claims. Numerous monthly reports from Acordia were provided to the auditors. The auditors reviewed the reports and found they had substantial benefits in identifying potential claim miscalculations. The following reports can provide Group Insurance Management information to monitor claims processed by Acordia: 1. Referral Report By Authorizing Provider - Monthly analysis of the report can quickly discover network providers paid as referrals and claims can be adjusted to properly reflect provider discounts. 2. Refund and Reversal Analysis - Monthly analysis of the report may help identify discounts rescinded and refunded to the provider. Timely review could provide the County the ability to document and correct discounts rescinded. 3. Single Payment Provider Listings - Monthly review may identify billed charges paid with an incorrect discount and can also provide claims to be selected for audit and inquiries. 4. Monroe County Employer Liaison Committee Agenda's - KPHA informs Group Insurance Management of provider additions and deletions. The changes need to be verified with Acordia to determine updates were completed accurately. Recommendation(s): 1. Group Insurance Management should establish a program of audits and inquiries on a periodic basis to ensure that the plan is functioning as intended. 2. Group Insurance Management should establish guidelines to ensure Acordia's listing of network providers is accurate. County Administrator's Response: 1. The above findings basically reflect a finding found throughout the audit. Management will be sure to develop ongoing monitoring and auditing ability so that these issues can be appropriately controlled. 2. Group Insurance Management is working with the consultant to establish a suitable method of audits and inquiries. 3. Group Insurance Management is concerned about proper listing of providers in the appropriate networks. However, the participant is the best source for insuring the proper accounting for network providers. The penalty for using an out-of-network provider is greater than many of our discounts. When an employee seeks medical treatment they should confirm that they are using a network provider. When 17 precertifications are done, KPHA informs the participant when they have selected an out-of-network provider and will offer in-network alternatives to the participant. Group Insurance Management will continue to work on the accuracy of the network providers with Acordia. 18 G. Group Insurance Management Should Provide Employee Education Regarding Health Care Claims Finding: Monroe County has established an employee benefit plan for the purpose of providing medical, prescription, dental, vision, utilization review and Cobra benefits for its employees. Increasing health care cost has forced the County to implement changes that will financially impact the employees, dependents and retirees with the intent of decreasing the cost of health care for the County. As of January 1, 2004, the benefit plan was modified and resulted in an increased cost of dependent coverage, increased coinsurance payments, increased prescription copayments and provided the employee the option of paying a premium for elective dental and vision coverage. Employee participation is an integral part of controlling health care cost. With proper information and education employees will have the ability to assist in reducing the overall cost of benefits. The direct impact of increasing health care cost and decreasing employee benefits has provided employees an increasing awareness in monitoring their own claims. For example, an employee brought to the attention of the auditors they had received a check from Acordia for services that had not been rendered. The provider was requesting preauthorization, but submitted the request on a claim form and a check was issued to the employee. The check was subsequently returned. In another instance, the employee had surgery and scrutinized the billing upon receipt. The employee discovered a charge of an additional hour of surgery time that was not performed. The employee has pursued the issue and the billing is being adjusted. Recommendation(s): 1. Group Insurance Management should establish a regular program to educate employees on health care benefits and provide the information necessary to scrutinize claims to protect the employee and the County from overpayments. County Administrator's Response: 1. Group Insurance Training is done at all New Employee Orientation with BOCC employees. All items that could cause discussion of the Group Insurance Program at a BOCC meeting are noticed to all active and retired participants in the insurance program. Changes to the Plan as adopted by the BOCC are noticed to all active and retired participants. In January 2002, Worker's Comp and Group began a county-wide program of training on those two programs. They were done in Plantation Key, Marathon, & Key West in January, February, March, April, June, and September, 2002 and January 2003. These training sessions were conducted with the various constitutional officers. Our Resource Link (newsletter for Board employees) notified employees that changes were to be voted on at the September 17, 2003 meeting of the BOCC and advising them that if they had not received the memo (that went to all employees and retirees) of the proposed 19 changes, to contact the Group Insurance Office for a copy. Open enrollment was held in November outlining all changes to the program. American General did presentations on November 20, 2003 in Key Largo and Marathon and on November 21, 2003 in Key West on the Dental and Vision Programs. Group Insurance Management works diligently to keep all employees informed of the program requirements. Group Insurance will establish a new set of orientation sessions for employees throughout the Keys. • 20 ,--; • Exhibits . 1 iL II • Exhibit A Letter to Acordia June 18, 2001 .W t TF y I' ._ $ � 4 vv7' ��4 a-. :•!!: " } •ti ,:+rT.14,, , •.item .A...' !7E; r r. ;i- ,��y1P 18 i` % o i1 1�Y�M� $Td EF a ;Y_ 4 i'•-,�r4.•F:�rt !t.1z �}.i,p, .• t'V~C. C C D . r: �,�. - .�;• ,d.. , .Y3• o�. __ r f t�. °i X��• :.1�• ug u�t u�titci�z. . :9 `�p1v. • • . el E.,,,,::"� Y. .eFLgk i 1;14 1, 1 _-I,:• •jCt., ,41,3 tu•:C inocc I. • i i. • �F',� ".,Y :. , ,.• y.'.'�[' ::- A : + 7M . by � ' '''l n 41sf it ! 3 4'. r 1_ 1.S *�;~,- , ,;.;�• . :" :,1 %1:i'° :-3 a ot;P T _f. .„. ,� ,D4t,15t 4 J -' ir°F�� ,. ;. .•, :�... .•�1•.'+ g �e •. 'Mutray. a d, . is'(r�cl� • T .^.i . • 4/),,..cr. .. • may •• d1.ry ..l !r lr "y : .. •. ��� J:. Administratiye'Services D' 4nt, , 5100 College Road try i , � • Key West,FL 33040 To01 P - . ' • (345) 292-4537 ritou 1.44 -`- -er�iN t".. '•)•'' No Pit-t. 4gL/Y *k rt.*A • Monday,June 18,2001 '•.., . .' • Acordia National. • 602 Virginia Street, East,,.. ` `--' - . P. 0. Box 3043 •-e` Charleston,WV 25331-3043 - . i ' Attention: Richard H. Legg • Dear Mr. Legg: . On March 13, 2001, the Monroe County Board of County Commissioners passed some changes to the our health plan. The changes affecting processing our claims are: Proposal Number 2—Implementation of Emergency Room Visit deductible of$75 per visit. Implementation date is October 1,2001, . Proposal Number 7—Increase out of Network disincentive from 10% to 30%. This will be implemented when proposal Number 6 (securing network) is implemented. Proposal Number 8—Limit Chiropractic visits per calendar year from 60 to 30. Implement January'1, 2002. Proposal Number 9—Limit Massage Therapy visits per calendar year to 15. Implement January 1, 2002. - Proposal Number 10 — Limit Acupuncture Treatments per calendar year to 15. Implement January 1, 2002. - • Proposal 11 —Vision Benefits-return to "no more than one complete visual examination, including refraction, during any two calendar years. Implement January 1;2002. Aug 07 03 03: 24p ft roe County Group Ins 3052924452 p. 2 MEMORANDUM TO: Rick Legg Lora Denny FROM: Connie Raines RE: County of Monroe plan changes DATE: July 16, 2001 I_J Questions on plan changes: 1) Proposal# 7 - increase out of Network disincentive from 10%to 30% -this will be implemented when proposal#6(securing network- ???) is implemented. a) What is proposal 6?. I have no info on proposals 3 thru 6. b) When is proposal#7 effective? DISREGARD PROPOSAL#7 Questions on the 10/Q /2001 plan changes• r 1) Proposal#2: ER deductible of$75. -does the$75. apply to the out of pocket?- YES a) Does the$75. deductible still apply once the out of pocket is met?—YES, DEDUCTIBLE PER VISIT. b) Once the$75. is taken, how are the balance of charges to be paid? 80% IN- NETWORK; 70% OUT OF NETWORK. c) Does the $75. deductible apply to both PPO&Non-PPO charges? - YES d) Does the$75. deductible apply to both medical emergencies &non-emergency treatment in the ER?—YES, ONLY TIME DEDUCTIBLE IS WAIVE IS IF ER VISIT BECOME AN INPATIENT STAY. 2) Proposal#14: What are the Medicare guidelines regarding unbundling of costs? Will these be manual for the examiner? Does anybody have this info?—THIS RECOMMENDATION WAS MADE TO US BY KPHA AS A COST SAVINGS. THEY ARE CURRENTLY OBTAINING THIS INFORMATION. WE WILL FORWARD CRITERIA. Aug 07 03 03: 25p M' roe County Group Ins 3052924452 p. 3 Rick Legg Lora Denny Page 2 July 16, 2001 Questions on the O1/O1/2Q02,p]an change 1) Proposal#9: What types of providers are covered to render massage therapy? a) Any guidelines for massage therapy(when or why it would be covered?)? PLEASE CHECK WITH LORA DENNY REGARDING HOW OUR PLAN CURRENTLY PROCESSES MASSAGE THERAPY CLAIMS. ONLY CHANGE TO PLAN IS LIMITATION OF VISITS TO 15 PER CALENDAR YEAR. 2) Proposal #11: Is there a dollar maximum for the eye exam?—YES, $50.00 HAS ALWAYS BEEN THE DOLLAR MAXIMUM PAID UNDER OUR VISION PLAN FOR CORRECTION OF VISION. 3) Proposal #13: Verify please: Individual out of pocket will be$2,200.plus deductible ($2,500. individual maximum- out of pocket plus deductible).— CORRECT. Exhibit B E-Mail from Acordia August 26, 2003 Page 1 of 2 Sandra Mathena __ From: <Beverly_Burdette@AcordiaNational.com> To: <smathena@monroe-clerk.com> Cc: <Melanie_Slater@AcordiaNational.com> Sent: Tuesday,August 26, 2003 3:57 PM Subject: Monroe County Surgeries rIey, I'm back and digging through my piles that accumulated while I was Gone. ,Ve need to discuss one of the requests you made while I was out. You asked me to "reprice" all surgery claims paid from Oct 1, 2001 through June 30, 003. As you know, we have spent a tremendous amount of time reviewing -11 claim history for the past 3 years to assist you with your audit, and we e are committed to doing everything possible to assist you and to fix any ;sues identified . However, you have asked me to tell you when your YD,quests are unrealistic or not feasible . . . this request is not possible within any reasonable period of time. I'm not sure you understand what could be involved,but it is not something that can be done electronically _r programmatically. Every claim over this period would have to be pulled and recalculated manually---we are talking hundreds of hours of review. My ffer to set you up with a PC and system access here in WV is still open if ou want to review all of these claims. Further, I am concerned that the County is asking for surgery claims to be Dviewed for this period when we have never received any written instructions to change our processing procedures. You and I have talked bout this for at least 3-4 months, yet we have never received any written istructions to change our processing procedures, nor have we recieved any instructions to amend the plan. As of today, we are still not using Iedicare's multiple surgery guidelines for processing surgery claims. If ie County wants these changes made to the plan, they really need to notify us of this in writing. ,gain, "unbundling" and "multiple surgeries" are two different issues. lease review the fax you sent to me on August 8th. This memo is a list of uestions we asked of Monroe County regarding their 10/1/2001 plan changes. In question number 2 we asked for clarification of what was meant by Medicare guidelines of unbundling of costs" . The answer provided on us memo was, " THIS RECOMMENDATION WAS MADE TO US BY KPHA AS A COST SAVINGS. THEY ARE CURRENTLY OBTAINING THIS INFORMATION. WE WILL FORWARD "RITERIA." We have no record of receiving anything further from the County r KPHA. Deverly Burdette 'ice President, Operations Acordia National Telephone: (304) 353-8781 ax: (304) 353-8759 4/21/2004 I Exhibit C Sample Letter from Fisherman's Hospital p al . ub7;t a RGEDNieman 3 05 Nie anati•Ili• ••" •c m"015t5537' '..p � gl ••• • P_02 4. H O f S P E T A L. June 19,2002 • Lois Wears • Acordie lnsnce -ura — VIA FAX: (304)353-8773 • T RE: • Dear Lois:The KPHA contract allows for a twenty-five percent(25%idiscount•from the total charges on our claims. The contract states that the discount"will be rescinded if a pproptiately documented and non-contested claim is not paid to the Participating Provider within thirty0)days of being received by the claims • administrator". The above referenced claim was electronically transmitted Ey NEIC to•you on 4/3/02. Partial payment on this claim was received on 5/21/02.We appealed the discotffit taken on•tbat claim. The remainder of this payment was not received until b/WIl/02•—seventy-seven(7 days after claim receipt. This discount hi not valid either. Please reprocess the ineligible discount taken of$8,642.25= You can reach me at(305)289.6425,should you have any g estiooa. Thank you for your time. r • Sine y, • — • . L.irB en M ad Care Cnordinator . '� ,•• • • 4 330] Overseas Hwy. Marathon,FL 33050 -= (305)743-5533 Fox(305)743-3962 • www flshermenshospitaLcom • Exhibit D E-mail from KPHA Page 1 of Barker-Sheila From: LoweWatler, Meylan [Meylan.LoweWatler©lkmc.hma-corp.com] Sent: Monday,January 12, 2004 4:21 PM To: Barker-Shelia®Monro8County-FL.Gov; Femandez-Mariat MonnaeCounty-FL.Gov Subject: Clean Claim, Notification of Claim Status, and Disputed Claims Le nguage • rI '- Sheila: I am providing some language that may be helpftil in decreasing the conitision in claims processing with respect to the application of the discounts as follows: --Clean,Claim A "Clean Claim" means a claim submitted by the Provider/Hospital that has been properly and accurately completed on the appropriate paper or electronic claim form,HCFA 1500 and/or UUB 92 together with any information that was requested in writing by Acordia National within 15 days of Acordia National's receipt of a claim. Notification of Claim St to ii Payor/Plan shall notify Provider/Hospital within 15 days of receipt of a claim that said claim is not considered "Clean" and reasons therefore. Failure to do so shall deem the claim being considered "Clean" and set for timely payment. -- Disputed Claims Tf the Payor/Plan does not object in writing to a claim within 15 days of receipt by the Payor/Plan,the claim will he considered clean and complete. If the Payor/Plan disputes any portion of the billing for services rendered, Payor/Plan will promptly seek to resolve tho dispute and return the claim to the regular processing status. Should the , claim remain in dispute for more than 30 days,Payor/Plan will pay the Provider/Hospital 90%of the fees as outlined in the "Provider Agrooment Amendment/Reimbursement Addendum" within 7 days with payment for the remaining 10%subject to the outcome of the dispute. Those items requiring further resolution prior to the remaining payment shall he reconciled by the Payor/Plan and the Provider/Hospital and the appropriate payments or adjustments made within 60 days. Please lot me know:if T can add this language to our KPHA/MC Contract and I will also need to add the language as an addendum to the individual provider contracts. As soon as you let me know l can get the addendums which include the amended reimbursement amounts out to the providers, - Meylan Lowe-Waller Assistant Administrator Lower Keys Medical Center 5900 College Road Key West, Florida 33040 306-294-5531,extension 3382 The information contained in this c-mail is confidential and/or privileged. This c-mail is intended to be reviewed by anly the individual(s)named above, or the employee or agent responsible to deliver it to the individual(s)named ibove, If you are not the intended recipient, you arc hereby notified that any dissemination, distribution or copying >f this information is strictly prohibited. Tf you have received this e-mail in error, please notfy rue immediately and lestroy the email. Thanks, ?8/04 Exhibit E Letter to Acordia August 5, 2003 a. f' at, _O OF COUNTY COMMISSIONERS Mayor Dixie M.Spehar,District 1 ...� I•,� Mayor Pro Tern Murray E,Nelson,District 5 OUNTY O MON ROE George Neugent,District 2 • KEY WEST FLORIOA 33040 1,,: :� •• :411+^yi ,` '" Charles"Sonny'McCoy,District 3 (305)N4-4641 :a• 1.Syr l ' David P.Rice,District 4 aLi" Ayry, •#:1�, rj,,. County Administrator 1100 Simonton Street Key West,FL 33040 A • yi • August 5,2003 Richard H.Legg Managing Senior Vice President&Chief Operating Officer Acordia National 602 Virginia Street,East P.O.Box 3043 Charleston,WV 25331-3043 Dear Mr.Legg: It has been several months since we met on the Issue of dairrts being processed Incorrectly as to usual and customary and with out-of-date Medicode rates. It was determined very early in the audit that the errors began occurring In late 2000. To estimate the extent of the error, claims have been rerun by your staff using the correct code and applying the usual and customary guidelines. Based on the Information of this rerun,there has been an overpayment of$156,534.03. This overpayment Is broken down In to the following: Examiner Error $82,362.44 Employee Portion 14,686,26 90th Percentile Medlcode not updated 52,877.70 Employee Portion 6.607.63 Total $156,534.03 These claims should be reprocessed immediately, Please advise when this has occurred. ,.• • •• - Mother issue(hat has been brought to our attention Is our direction to you of June 18,2001(copy attached). On Proposal 14,we directed you to process daims under Medicare guidelines regarding unbundling of costs. It is our understanding the you are not using these guidelines,but another guide for unbundling costs. Could you please Clarify what you are using and how It differs from Medicare. . Attached you will find a copy of the audit produced by the Clerk of the Court. Some areas of the audit are still being reviewed by the Internal auditor and a report will have to be made to the board on the process of correcting eiiars discovered In the audit Your prompt reply to this letter will be appreciated. Sincerely James L Roberts County Administrator CC Danny Kolhage,Clerk of the Court 2 'd bbSi'-Z6Z-SOE utwPU oO sluagoa sower ezn :Rn an TV gnu VII. Auditee Responses BOARD OF COUNTY COMNIISSIONERS COUNTY,.orMONROE —"- '' Mayor Murray E.Nelson,District 5 KEY WESTLORIDA 33040 �^:' �,R.�f'" Mayor Pro Tern David Rice,District 4 (305)294-4641 : i•' � Dixie Spehar,District 1 George Neu en County Administrator ,j, �j� �����"'� g g t,District 2 �1,91 @!f q" `�i Charles"Sonny'McCoy,District 3 1100 Simonton , �,�:r t - -; Key West, FL 33040 MEMORANDUM • Date: Tuesday, April 13, 2004 To: Danny Kolhage Clerk of the Court From James L. Roberts 74. County Administrator Subject: Supplement Audit Report of Monroe County Health Benefit Program The Administrator has reviewed the comments by the Internal Audit Department regarding the • Monroe County Health Benefit Program. The following are our comments in reference to the report: A. Network Providers Paid Incorrectly The auditors reviewed Referral Analysis reports, Single Provider Payment Listings and Acordia's schedule of overpayments from the May 27, 2003 audit and found additional claim processing errors. The breakdown of the claims in the supplemental audit are as follows: Dimension Providers (938 Claims) $83,997.72 KPHA Providers (223 Claims) $3,774.68 Dentists (2,144 $22,685.90 Claims) Total $110,458.30 1. Dimension provider claims paid as referrals +'ndin2: Numerous Dimension provider claims were paid as referrals, but the providers are actually participants in the Dimension Network. This was determined by review of the Referral Analysis Report. Providers paid as referrals were paid at the in network rate of 80% or 100%. A laboratory that joined the Dimension Network on January 1, 1999 had claims paid as referrals and the claims should have been paid based on the Dimension Fee Schedule. For example, one procedure code (82784) had a charge of$359.42 and Acordia paid$288.00. The Dimension Fee 1 Schedule amount was $27.60. Therefore, Acordia should have only paid $22.08 (80% of $27.60). The overpayment for Monroe County's 80% portion on this one CPT code was r, $208.32. A claim should only be processed as a referral if it is not a network provider. Acordia's management produced computer reports to determine the extent of the overpayment. For the period January 1, 1999 through August 18, 2003, five Dimension providers were overpaid a total of $83,997.72. Acordia is in the process of recouping the overpayments. Acordia has received payment from one Dimension provider in the amount of$7,058.19. Recommendation(s): 1. Group Insurance Management should establish a program of audits and inquiries on a periodic basis to ensure that the plan is functioning as intended. 2. Group Insurance Management should monitor the collection process of the overpayment due the County. County Administrator's Response: 1. Management believes claims should always be processed as network provider and if no network shows up, the system should check for referral before decision to assess penalty. The referrals are generally lab tests and the quantity of them should not be prohibitive for checking. The processing of lab tests on a referral basis was implemented because management believed it was unfair to the participants to have them responsible for finding a network lab. Group Insurance Management is reviewing the Referral Analysis Report to prevent this from occurring again. 2. Group Insurance Management is aware that the collection process is taking a significant amount of time. Providers are very upset that we can go back for a longer period of time than they have been allowed to bin claims. They believe the process has been unfair to them. KPHA has received numerous complaints; and as of March 1, 2004, we have had eight providers opt out of the network. 3. As identified above by the auditors, Acordia is already in the process of recouping the overpayments. Management will be sure that this continues. In the future, management will establish a periodic review of claims by the County's insurance consultant for the purpose of identifying and resolving problems. 2. KPHA provider claims paid as referrals Finding: Numerous KPHA provider claims were paid as referrals, but the providers are actually participants in the KPHA Network. This was determined by review of the Referral Analysis Report. Providers paid as referrals were paid at the in network rate of 80% or 100%. A claim should only be processed as a referral if it is not a network provider. Acordia's management produced computer reports to determine the extent of the overpayment. For the period January 1, 1999 through August 18, 2003, the KPHA providers were overpaid a total of $3,774.68. 2 • Recommendation(s): 1. Group Insurance Management should establish a program of audits and inquiries on a periodic basis to ensure that the plan is functioning as intended. 2. Group Insurance Management should monitor the collection process of the overpayment due the County. County Administrator's Response: 1. Management believes claims should always be processed as network provider and if no network shows up, the system should check for referral before decision to assess penalty. The referrals are general lab tests and the quantity of them should not be prohibitive for checking. The processing of lab tests on a referral basis was implemented because management believed it was unfair to the participants to have them responsible for fmding a network lab. Group Insurance Management is reviewing the Referral Analysis Report to prevent this from occurring again. 2. Group Insurance Management is aware that the collection process is taking a significant amount of time. Providers are very upset that we can go back for a longer period of time than they have been allowed to bill claims. They believe the process has been unfair to them. KPHA has received numerous complaints; and as of March 1, 2004, eight providers have left the network. 3. This is a similar situation to the previous finding. Management will be sure that this continues. In the future, management will establish a periodic review of claims by the County's insurance consultant for the purpose of identifying and resolving problems. 4. 3. KPHA dental providers added to Acordia's system incorrectly Finding: Five dental providers in KPHA were added to Acordia's system incorrectly or not properly updated. Acordia provided the auditors a report correctly calculating the discounts and an overpayment of $22,685.90 was made to the providers. Acordia corrected the discounts and notified the providers of the overpayments and$5,715.18 has been received. Incorrec t a ents would have yin continued indefinitely since the set-up did not contain accurate information. Acordia should furnish KPHA a provider listing with tax identification • numbers and discount percentages allowed to review and correct on a periodic basis. Recommendation(s): 1. Group Insurance Management should monitor the collection process of the overpayment due the County. T-� 3 2. Group Insurance Management should establish guidelines to ensure Acordia's listing of network providers is accurate. County Administrator's Response: 1. Group Insurance Management will continue the collection process. 2. Effective January 1, 2004, Monroe County has ceased being a self-insured provider of Dental services. Employees are paying for their own insurance through American GeneraL 3. Group Insurance Management will utilize the services of the insurance consultant for the purpose of monitoring Acordia's listing of all KPHA Network Providers to be sure that it is accurate. B. Payment Method Employed for Surgical Procedures Finding: Group Insurance stated that payment for surgical procedures should be calculated according to Medicare's Multiple Surgery Guidelines and was under the assumption that Acordia was using this method. This assumption was based on a letter sent to Acordia from Group Insurance requesting Medicare guidelines be used for unbundling. See Exhibit A - Letter to Acordia, June 18, 2001. i 14 Acordia states unbundling of charges and multiple surgeries guidelines are two different issues. See Exhibit B - E-mail from Acordia, August 26, 2003. Their system, Code Review, already bundles and unbundles procedure codes including surgeries. The multiple surgery guidelines are applied after the procedure codes have been bundled or unbundled. The following claim is an example of unbundling: CPT Code 43750 and 43246 were combined into one code 43246. There was also • another procedure code 36533 for $1,200. Acordia stated, our Nurses have indicated that this procedure was not performed through the same incision as the primary procedure, therefore, we did not reduce to 50% of the Medicode Fee. However, based on Medicare's Multiple Surgery, which differs from ours, this would have been reduced to 50%regardless and should have been limited to 50% of$1,200 or$600. The auditors requested Acordia to reprice all surgery claims from October 1, 2001 through June 30, 2003 and Acordia informed the auditors this was unrealistic and not feasible. See Exhibit B - E-mail from Acordia, August 26, 2003. The auditors were unable to determine the extent of overpayment resulting from the miscommunication between Acordia, KPHA and Group Insurance Management. Acordia is able to amend the plan with written instructions based on the e-mail of August 26, 2003 from Acordia. See Exhibit B -E-mail from Acordia, August 26, 2003. There has been no correspondence between the County and Acordia clarifying the guidelines to be implemented. 4 Recommendation(s): 1. Group Insurance Management should discuss the consequences of using Medicare's Multiple Surgery Guidelines with KPHA. 2. Group Insurance Management should also consider including an acknowledgment form to be signed by Acordia Management that states the change has been made and the date it was implemented. County Administrator's Response: 1. Group Insurance Management has discussed both Multiple Surgery Guidelines and Unbundling with KPHA. We are satisfied with the procedure being used by Acordia on unbundling. After much discussion and research, we have agreed to the following Multiple Surgical Procedures that will be included in the next plan revision: Surgery includes the medically necessary preoperative and post operative care, when performed by a Physician. If two (2) or more operations or procedures are performed on the same day, on the same patient, by the same Physician, benefits are described in the Schedule of Benefits and subject to the usual, customary, and reasonable charges (or network fee schedule) for the first procedure, and 50% of usual, customary, and reasonable charges (or network fee schedule) for any additional procedures performed. 2. Group Insurance Management will develop an acknowledgement form to be signed by Acordia stating the appropriate changes have been made and the date of the implementation. C. Discounts Rescinded by Providers Finding: The auditors reviewed Single Provider Payment Listing reports for the network hospitals and requested a sample of claims that did not have the appropriate discount applied. The review identified Fisherman's Hospital rescinding discounts on claims that were not paid within 30 days by Acordia. Acordia informed the auditors if additional information is requested the 30 days begins after receipt of all documentation necessary to analyze the claim and process appropriately. Acordia paid the original billed charges less the provider discount and if the claim was paid past the 30 day period the hospital would request the discount be paid. See Exhibit C - Sample Letter from Fisherman's Hospital. The sample of 6 claims revealed a total of$33,716.48 paid to Fisherman's Hospital based on discounts rescinded. The KPHA contract provides the following definition for provider compensation: Participating Provider Compensation: All claims for covered services, whether payable by the Employer or a Covered Person will receive a discount off of provider billed charges as specified in Attachment A. This discount will be rescinded if an appropriately documented and 5 non-contested claim is not paid to the Participating Provider within thirty (30) days of being received by the claims administrator(Acordia National). Group Insurance Management is working with KPHA to revise the contract language to define clean claims and disputed claims. See Exhibit D - Email from KPHA. Recommendation(s): 1. Group Insurance Management should ensure that Acordia calculates prompt pay discounts according to the terms of the KPHA Proposal and Agreement. 2. Group Insurance Management should review Refund and Reversal reports provided by Acordia to monitor provider discounts that have been refunded. County Administrator's Response: 1. The language in the KPHA contract was confusing as to what constituted a `non- contested claim'. In the new contract with KPHA, effective March 1, 2004, we have defined a "Clean Claim, "Notification of Claim Status" and "Disputed Claims". This should prevent the discrepancy caused with the handling of discounts such as those documented with Fisherman HospitaL 2. Group Insurance Management agrees with the recommendation to monitor the Refund and Reversal Report. 3. Group Insurance Management will officially inform KPHA that the practice identified for Fisherman's Hosptial is not within the scope of the Contract between the County and KPHA. KPHA will be asked to inform Fisherman's Hospital that practice must be discontinued. D. Overpayments Identified in May 2003 Health Benefit Program Audit 1. KPHA provider claims paid as referrals Finding: The initial audit dated May 27, 2003 identified physician claims for the KPHA network using an outdated Medicode Fee Schedule for the usual and customary comparison, which resulted in multiple claims being overpaid. The County requested the claims be reprocessed on August 5, 2003. See Exhibit E - Letter to Acordia, August 5, 2003. The total County adjustments calculated by Acordia resulted in an overpayment amount of$134,729.77. The providers have been notified and repayment of $36,666.22 has been received. As of February 12, 2004, the outstanding balance is $98,063.55. Recommendation(s): - 1. Group Insurance Management should monitor the collection process of the overpayment due the County. 2. Group Insurance Management needs to ensure procedures are in place to verify the Medicode Fee Schedule is updated annually. 6 County Administrator's Response: 1. Group Insurance Management is aware that the collection process is taking a significant amount of time. Providers are veryupsetthat we can go back for a longer period of time (15 months) than they have been allowed to bill claims. They believe the process has been unfair to them. KPHA has received numerous complaints; and as of March 1, 2004, eight providers have left the network. As of March 31, 2004 we have increased the repayment amount of $36,666.22 to $70,379.81_ 2. We were the only client of Acordia that was using Medicode. It created a very cumbersome system for processing and updating. Effective March 1, 2004, our contract with KPHA has started using P.H.C.S. (formerly HIAA) Fee Schedule. All other Acordia Clients use P.H.C.S. This should make the processing and updating easier and more efficient. Acordia will update their system and it will be effective for all their providers. KPHA providers have agreed to this new system in their contract with KPHA. 3. Group Insurance Management will semi-annually confirm that the P.H.C.S. Fee Schedule is being utilized appropriately. 2. Incorrect discounts for durable medical equipment Finding: The initial audit dated May 27, 2003 identified claims with incorrect discounts totalling $47,529.39. Included in the amount was $10,424.01 for durable medical equipment claims that did not have the standard KPHA discount of 15%. During the supplemental audit it was discovered the rates for medical equipment are negotiated by KPHA Case Management. The standard discount of 15% does not apply to durable medical equipment claims, but a case management fee is billed to the County. Subsequently, the auditors determined the overpayment identified as "incorrect discounts.for durable medical equipment" should not have been included as an overpayment in the initial audit. Group Insurance Management and KPHA agree the discount should not be applied to durable medical equipment. However, the contract does not indicate durable medical equipment is processed differently from other KPHA claims. Recommendation(s): 1. GroupInsurance Management should g document and include all processing conditions in the contract. County Administrator's Response: 1. Group Insurance Management will document the processing for Durable Medical Equipment in the next plan document. As much as Group Insurance Management would like to be able to document all processing in our plan document, we continue 7 to find unique medical situations that have to be handled administratively based on what serves the patient as well as what keeps the cost as low as possible for the plan. 2. 90th Percentile Medicode overpayment Finding: The initial audit dated May 27, 2003 identified claims being processed with the 1997 90th Percentile Medicode. Acordia ran preliminary reports identifying $52,877.70 as the overpayment due to the outdated Medicode. Included in the amount was $25,357.03 which was for one physician administrating prescription drugs. It had been determined by the County and KPHA that the service the physician provided would not be subject to the medicode comparison. However, the physician had discrepancies in his billing procedures and gave the appearance of an overpayment in the initial audit. For example, one claim was billed for 40 units at $30.09 with a total charge of$904.00 and a total of$858.80 was paid. The payment was correct even after being compared to the 90th Percentile of Medicode. The next claim billed 1 unit at $30.09 with a total charge of$904.00 and a total of$858.80 was paid, but the spreadsheet calculation gave the appearance of' the claim beingoverpaid rp aid $830.21The preliminary overpayment calculated by Acordia was prepared in a formula based spreadsheet and did not take into account examiner overrides. The physician will not be billed the calculated overpayment of$25,357.03 by Acordia. Recommendation(s): 1. Group Insurance Management should review all documentation provided by Acordia to ensure calculations and procedures are accurate. County Administrator's Response: 1. Group Insurance Management along with KPHA and Acordia are monitoring processing to maintain the accuracy of the system. Medicode will no longer be our basis; as of March 1, 2004, we will be using P.H.C.S. (formerly HIAA). E. Network Providers Billing with Multiple Tax Identification Numbers. Finding: Numerous providers are billing with more than one federal tax identification number. The claims were paid as out of network claims (70% coinsurance percentage and no discount) because the tax identification number did not match the one provided to Acordia by KPHA or Dimension. According to Acordia Management, this is a common issue for all networks. Providers don't always notify the networks when their tax identification numbers change and it ultimately results in claims being paid out of network. A provider can only be matched to a specific network if they bill their claims with the tax identification number provided to Acordia by the network. KPHA plans to provide both social security numbers and tax identification numbers to Acordia to update their claim system for all KPHA providers. The auditors also discovered many network providers have multiple suffixes added to their tax identification number. This can be a result of a change of address, data entry error or 8 multiple locations and the provider may not be updated to the appropriate network. In addition, providers may be Group-Based and also provide services on an individual basis, therefore creating new suffixes and the potential of inaccurate processing. Recommendation(s): 1. Group Insurance Management should establish a program of audits and inquiries on a periodic basis to ensure that the plan is functioning as intended. 2. Group Insurance Management should establish guidelines to ensure Acordia's listing of network providers is accurate. 3. Group Insurance Management should check the referral report on a monthly basis. County Administrator's Response: 1. Group Insurance Management is aware that some providers bill under more than one federal tax identification number. This is done for a variety of reasons including their affiliation with other providers and location for providing the service. Some physicians are affiliated with a network in one location and not while practicing in another. When the provider supplies different federal tax identification numbers for these reasons, they can actually not be part of a network. Participants who believe they used a network doctor and were penalized for using a non-network provider should contact Acordia or the Group Insurance Office for assistance. Networks change on a frequent basis and it is the responsibility of the participant to verify network status before seeking treatment. 2. Group Insurance Management will establish guidelines to insure Acordia's listing of network providers is accurate and will utilize the services of the County's insurance consultant on a periodic basis to check the system. F. Group Insurance.Management Should Perform Regular Audits of Acordia Claims and Reports Finding: Group Insurance Management has been provided the ability to access Acordia's Host On Demand online claim system to allow audit and inquiries of claims. Numerous monthly reports from Acordia were provided to the auditors. The auditors reviewed the reports and found they had substantial benefits in identifying potential claim miscalculations. The following reports can provide Group Insurance Management information to monitor.claims processed by Acordia: 1. Referral Report By Authorizing Provider - Monthly analysis of the report can quickly discover network providers paid as referrals and claims can be adjusted to ,properly reflect provider discounts. 2. Refund and Reversal Analysis - Monthly analysis of the report may help identify discounts rescinded and refunded to the provider. Timely review could provide the County the ability to document and correct discounts rescinded. 3. Single Payment Provider Listings - Monthly review may identify billed charges paid with an incorrect discount and can also provide claims to be selected for audit and inquiries. 9 4. Monroe County Employer Liaison Committee Agenda's - KPHA informs Group Insurance Management of provider additions and deletions. The changes need to be verified with Acordia to determine updates were completed accurately. Recommendation(s): 1. Group Insurance Management should establish a program of audits and inquiries on a periodic basis to ensure that the plan is functioning as intended. 2. Group Insurance Management should establish guidelines to ensure Acordia's listing of network providers is accurate. County Administrator's Response: 1. The above findings basically reflect a finding found throughout the audit. Management will be sure to develop ongoing monitoring and auditing ability so that these issues can be appropriately controlled. 2. Group Insurance Management is working with the consultant to establish a suitable method of audits and inquiries. 3. Group Insurance Management is concerned about proper listing of providers in the appropriate networks. However, the participant is the best source for insuring the proper accounting for network providers. The penalty for using an out-of-network provider is greater than many of our discounts. When an employee seeks medical treatment they should confirm that they are using a network provider. When precertifications are done, KPHA informs the participant when they have selected an out-of-network provider and will offer in-network alternatives to the participant. Group Insurance Management will continue to work on the accuracy of the network providers with Acordia. G. Group Insurance Management Should Provide Employee Education Regarding Health Care Claims Finding: Monroe County has established an employee benefit plan for the purpose of providing medical, prescription, dental, vision, utilization review and Cobra benefits for its employees. - Increasing health care cost has forced the County to implement changes that will financially impact the employees, dependents and retirees with the intent of decreasing the cost of health care for the County. As of January 1, 2004, the benefit plan was modified and resulted in an increased cost of dependent coverage, increased coinsurance payments, increased prescription copayments and provided the employee the option of paying a premium for elective dental and vision coverage. Employee participation is an integral part of controlling health care cost. With proper information and education employees will have the ability to assist in reducing the overall cost of benefits. • 10 The direct impact of increasing health care cost and decreasing employee benefits has provided employees an increasing awareness in monitoring their own claims. For example, an employee brought to the attention of the auditors they had received a check from Acordia for services that had not been rendered. The provider was requesting preauthorization, but submitted the request on a claim form and a check was issued to the employee. The check was Subsequently returned. In another instance, the employee had surgery and scrutinized the billing upon receipt. The employee discovered a charge of an additional hour of surgery time that was not performed. The employee has pursued the issue and the billing is being adjusted. Recommendation(s): 1. Group Insurance Management should establish a regular program to educate employees on health care benefits and provide the information necessary to scrutinize claims to protect the employee and the County from overpayments. County Administrator's Response: 1. GroupInsurance Training g is done at all New Employee Orientation with BOCC employees. All items that could cause discussion of the Group Health Insurance Program at a BOCC meeting are noticed to all active and retired participants in the insurance program. Changes to the Plan as adopted by the BOCC are noticed to all active and retired participants. In January 2002, Workers' Comp and Group began a county-wide program of training on those two programs. They were done in Plantation Key, Marathon, & Key West in January, February, March, April, June, and September, 2002 and January 2003. These training sessions were conducted with the various constitutional officers. Our Resource Link(newsletter for Board employees) notified employees that changes were to be voted on at the September 17' 2003 meeting of the BOCC and advising them that if they had not received the memo (that went to all employees and retirees) of the proposed changes, to contact the Group Insurance Office for a copy. Open enrollment was held in November outlining all changes to the program. American General did presentations on November 20. 2003 in Key Largo and Marathon and on November 21, 2003 in Key West on the Dental and Vision Programs. Group Insurance Management works diligently to keep all employees informed of the program requirements. Group Insurance will establish a new set of orientation sessions for employees throughout the Keys. • 11