OPM Should Do More to Prevent Improper FEHBP Payments

A government watchdog agency on Monday reported that although the Office of Personnel Management has recently implemented a new system to reduce the risk of fraud within the Federal Employees Health Benefits Program, additional steps are needed to monitor participants’ eligibility.

The Government Accountability Office said that from FEHBP’s inception until 2018, OPM has delegated responsibility for determining whether relatives of federal employees were eligible for coverage under the federal government’s health insurance program, which currently covers around 8 million people across 276 different insurance plans. Regulations issued in 2018 allow federal agencies or OPM to request proof of family members’ eligibility for the program, such as a birth certificate.

And in 2021, OPM issued guidance to agencies and insurance carriers requiring them to verify the eligibility of family members of federal workers when they are hired and upon enrollment changes made due to significant life events, like getting married or the birth of a child. But GAO reported that the requirement does not extend to when feds change their enrollment as part of the annual open season period.

“According to OPM’s 2021 guidance and OPM officials, employing offices may—but are not required to—verify family member eligibility during the FEHB open season,” GAO wrote. “Similarly, FEHB health insurance carriers are not required to verify family member eligibility during open season. Officials from OPM told us that verifying eligibility during the approximately four to five week open season is currently not feasible because of the high number of enrollment transactions that occur during the period.”

Additionally, OPM does not have a system in place to monitor how or whether agencies are complying with the 2021 guidance. GAO said that it polled five agencies about the guidance, and one agency said they are not yet in compliance with the directive, although they are working with OPM to implement the policy change “in the future.”

“Without monitoring the population of FEHB employing offices and carriers responsible for verifying family members’ FEHB eligibility during a new hire or [qualifying life event], OPM cannot be certain of how many employing offices and carriers are not meeting OPM’s eligibility verification requirements because of information technology or staffing limitations, high transaction volume, or other reasons,” the report states. “Unless OPM establishes a mechanism to monitor employing offices and carriers to ensure they are implementing requirements to verify family members’ eligibility, the FEHB program may continue to be vulnerable to improper payments resulting from ineligible family member participation in FEHB.”

As a result, OPM does not have a “precise estimate” of the number of people insured via FEHBP who are actually ineligible for the program, and cost savings from performing an audit of dependents’ eligibility across the program could run between $360 million and $1 billion in future spending. However, the agency said it does not have adequate funding to perform the audit, either on a one-time basis or spread out over several years.

“During our review, OPM officials told us they believed performing a one-time audit of all FEHB members was not feasible given the size and scope of the FEHB program population,” GAO wrote. “We recognize the challenge of performing a one-time audit of all FEHB members given the size and scope of the FEHB program population. However, we also note that [dependent eligibility verification audits] may be structured with different scopes and methodologies.”

Instead, OPM is in the process of developing and pursuing funding for a government-wide program that would centralize FEHBP enrollment across government, although current plans do not include establishing a system to monitor enrollees’ family members’ eligibility.

GAO recommended that OPM establish a monitoring mechanism to ensure agencies are verifying participants’ eligibility in the program, to remove ineligible enrollees, and assess the likelihood and potential impact of the fraud risk related to ineligible people being covered through FEHBP. OPM mostly concurred with the recommendations, albeit with some caveats.

“OPM agreed that further monitoring through comprehensive audit may be appropriate,” GAO wrote. “The steps described in OPM’s comments are positive actions to help ensure compliance. However, as OPM acknowledged, it may need to take additional action to implement a monitoring mechanism to ensure employing offices and FEHB carriers are verifying family member eligibility going forward.”