Assist Audit of HCFA's FY 1997 Financial Statements at Blue Cross Blue Shield of Florida

EXECUTIVE SUMMARY:

We performed our audit work at Blue Cross and Blue Shield of Florida (BCBSFL) serving as both the fiscal intermediary and carrier for the State of Florida. Our audit objective is to assist in expressing an opinion on the Health Care Financing Administration's (HCFA) Fiscal Year (FY) 1997 combined financial statements and to report on their compliance with laws and regulations. An aspect of overall work is to determine whether the Medicare fee-for-service benefit payments expenses are made in accordance with the provisions of Title XVIII and implementing regulations in Title 42 of the Code of Federal Regulations. Specifically, we were to determine if services were: (1) furnished by certified Medicare providers to eligible beneficiaries; (2) reimbursed by Medicare contractors in accordance with Medicare laws and regulations; and (3) medically necessary, accurately coded, and sufficiently documented in the beneficiaries' medical records.

We selected a stratified random sample of 50 beneficiaries for whom BCBSFL had adjudicated 779 claims during the second quarter of FY 1997 - our audit period. The BCBSFL paid $412,703 for these claims. With the assistance of BCBSFL and peer review organization medical review personnel, we identified overpayments totaling $41,126 for these claims. The overpayments occurred for various reasons, including insufficient documentation, incorrect coding of procedures, and lack of medical necessity.

Other independent auditors under contract with the Office of Inspector General identified reportable conditions with respect to electronic data processing (EDP) controls and non-claims activities and addressed recommendations in separate reports to BCBSFL.

We recommend that BCBSFL: (1) initiate recovery of the overpayments and periodically provide us with the status of recovery actions; and (2) address the recommendations made by the independent auditors with respect to EDP controls and non-claims activities and provide us a copy of such responses.

In a written response to our draft report, BCBSFL agreed to seek recovery of the overpayments and keep us apprised of the results. Also, BCBSFL generally agreed with the recommendations made by the independent auditors and has taken, or is taking, correction actions. Further, BCBSFL suggested that our report contain descriptions of the sampling methodology employed. This methodology is being described in the nationwide report to which this report contributes. Finally, BCBSFL agreed to address the concerns that we expressed in the "Other Matters" section of the report concerning ambulatory surgical center claims and cash receipts.