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Recent investigations into health insurance and prescription drug providers for federal employees have uncovered improper charges, illegal kickbacks and other cases of fraud, resulting in the recovery of more than $106 million for the Federal Employees Health Benefits Program.

The Office of Personnel Management inspector general's semiannual report, which was released on the agency's Web site last week, focused on health insurance and prescription drug abuse in FEHBP.

The largest case resulted in a $155 million settlement from Medco Health Solutions, which provides mail order prescriptions and related benefits to federal employees. The company settled a complaint that it paid kickbacks to health plans to gain their business, took money from drug manufacturers to favor their drugs and destroyed prescriptions to avoid penalties for delays in filling them.

Of the settlement amount, $137.5 million directly affected the FEHBP, of which $97 million went to the program's trust fund. The remainder went toward other programs that receive services from Medco, such as Medicare and the Defense Department's TRICARE health insurance program.

"This settlement represents the largest monetary settlement the Office of the Inspector General has generated as a result of a single investigation," IG Patrick McFarland said in a letter to lawmakers.

Medco did not acknowledge any wrongdoing, and in October, OPM promised not to bar the company from future participation.

Additionally, audits of health and life insurance carriers completed between Oct. 1 and March 31 uncovered $37 million owed to FEHBP, some of which has been recovered.

An audit of the Blue Cross Blue Shield plan, which insures nearly 60 percent of the enrolled employees, identified $9.8 million in overcharges to FEHBP. These stemmed from improper claim coordination between Blue Cross and Medicare. "As a result, the FEHBP incorrectly paid these claims when Medicare was the primary insurer," the report said.

The review found that 56 of the 63 Blue Cross sites reviewed by OPM did not properly coordinate claim charges with Medicare. In 86 percent of the cases, Blue Cross charged FEHBP because there was no information in the company's claims system to identify Medicare as the primary payer, auditors found. And even when the Medicare information was added to the system, Blue Cross failed to make retroactive adjustments in patients' prior claims to match the Medicare effective dates, the report said.

Another audit alleged $7.4 million in inappropriate health benefit charges by the MD Individual Practice Association, which provides medical services to members in the Washington, D.C., area. The company and OPM are in negotiations.

A separate audit of the Kaiser Foundation Health Plan, which also provides services to Washington, D.C., area employees, identified $4.7 million in overcharges and lost investment income, which represents the potential interest earned on the amount overcharged. Kaiser agreed with OPM's findings and returned the $4.7 million to FEHBP.

COMMENTS

• Amen to Ken Huffman, the percentage of fraud roughly amounts to .175 %. Shouldn't our leaders be sniffing up other trees? I wonder what the $140 million was really needed and used for! David Wallace Posted June 21, 2007 4:11 PM
• For once, I will make a positive statement about BC/BS. I have a chronic illness that costs thousands of dollars and could conceivably hit $1M before I retire. Thank God for mail order. It was never late, always correct, and I only had to pay $35.00 versus the thousands of dollars this medication costs. I consider myself to be lucky enough to have insurance, so you won't hear me whinning about this one. nolalive Posted June 21, 2007 2:04 PM
• Blue Cross Blue Shield is my insurance provider. I sometimes go to a non-participating provider. They have consistently lost claims from me. I had heard this from several other employees who have BCBS. All of my other mail gets to the places I mailed it to. I now send everything certified mail. In addition, their website does not list the correct mailing address for the claims. They also tend to do everything they can to delay payment of the claim. I had a gall bladder removed in 2005 and it took them almost a year to pay the MD. When I called them to find out why they had not paid the MD, they claim the reason they had not paid is they were not sure if the surgery took place in a hospital. I can't imagine a gall bladder being removed anywhere but in a hospital. The hospital had also billed them for my medical care relating to the surgery. So, it should have been obvious as to where the gall bladder was removed. I have many other examples of unethical actions by them. It is one delay tactic after another. I have thought about switching but my understanding is all of the insurance companies are doing this. Someone needs to investigate this. Please withhold my name as I am still doing business with them. Diane Pierce Posted June 20, 2007 8:55 AM