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Home My WebLink About09072010 HEALTH CLAIMS AUDIT' II I I ,. . 9/7/201U Healthcare Horizons Cansulting Group, inc. Optima Health Claims Audit Report September 7, 2010 Summary of Recovery Audit Overview • Purpose: Identify claim errors resulting in incorrect payments and to assess underlying conditions contributing to any errors identified. • Scope: Review 100% of claims processed by Optima with paid dates March 2009 through December 2009 totaling $61 M ($36M Schools and $25M City). City a 1 • In addition, overpayments totaling $23,112 were found to be recovered after the data extract but prior to the delivery of the claims. 3 9/~/zo~~ School Findings • The amount of errors identified in the sample indicates that Optima has effective procedures in place to prevent duplicate payments. • Identified two members with claims paid incorrectly as primary. • Identified overpayments for missed multiple procedure reduction opportunities due to fragmented billing by providers. Areas of Testing • Duplicate Claims • Eligibility • Contract Audit • Assistant Surgeon • Multiple Procedure Reductions • Benefits • Pricing • Other Insurance • High Units • Medical Edits • Overlapping Inpatient • Subrogation • Hospital Mistakes • Cosmetic Surgery • Reinsurance Findings • Optima has process in place to identify and recover claims affected by retroactive eligibility terminations. • Identified instances where the $100 outpatient copayment was not applied. • Found that the $20 Primary Care Physician office visit copayment is not taken when the $100 annual deductible is taken on same claim. 2 9/7/201(1 Findings • Identified a member eligible for Medicare Part B who did not elect to pay for the coverage • Disagreed with 2 examples of outpatient therapy where separate episodes of care were authorized by Optima. Findings • Optima is now utilizing two external audit vendors through its Special Investigations Unit that perForm overpayment identification similar to Healthcare Horizons. • Healthcare Horizons did not identify other areas of concern for systems overpayments. „ Findings • Based on site visit claims, Optima's policy for secondary claims is to pay the member liability from the primary payer's explanation of benefits regardless of the contract allowable by Optima on the claim. • Contract audit did not yield any agreed overpayments, but three cases of facility multiple procedure errors were identified on last audit & recovered before site visit. ,o Recommendations 1. Discuss options with Optima for cases when a member is eligible for Medicare Part B but elects not to take it. Many plans estimate what the Medicare benefit would have been and reduce their secondary payment using the estimate. This prevents members from having an mcentive to opt out of paying for Medicare Part B due to the plan covering all such claims in full. 2. For secondary claims, explore the possibility of limitin the entire combined payment (primary and secondary} up to Optima's normal contractual allowable. This is a common limitation in many plans audited by Healthcare Horizons. ,z 3 9/7?201C ~ Recommendations 3. Clarifv the intent of the plan on whether to charge the patient an office visit copayment when a deductible is also due. Typically, Healthcare Horizons would expect the copayment to apply first in such a scenario and then the deductible for any remaining plan payment due. 4. Define the criteria used by Optima to determine when a separate illness or condition exists for the purposes of granting separate authorizations for outpatient therapy services. 5. Determine a solution to prevent overpayments caused by multipie claim submissions by providers for surgeries performed during the same operative session. 6. Monitor the recovery of claims due to retroactive terminations on a monthly basis. 13 Conclusion • Whilethe audit has produced meaningful recoveries for the City, the percentage of overpayments compared to the total paid amount in the data is very low. • Optima should be commended for performing at a high level in the administration of healthcare claims for the City. • Overall results represent exceptional performance by Optima in the administration of healthcare claims. 4 ~HE CITY QF ~IRGINIA E3EAGH AND THE SGHQQL ~Q~4RD OF THE CITY QF VIRGINIA E~EACH OPTIMAHEALTH CLAIMS AUDIT REPORT August 27, 2010 Heaithcare Horizons Consulting Group, Inc. - Healthcare Horizons Consulting Group, Inc. TABLE OF CONTENTS CITY QF ~f lRGIN1A B-EACH CLAIMS AUDIT REPORT Executive Summary .............................................................................................. Process Overview ................................................................................................. 4 Areas of Testing .................................................................................................... 5 Site Visit Selection ...............................................................................................11 Findings . . .. .. .. ... .. . . . . . . ... . . ... .. . . . . . . ... .. .. . .. . . . .. .. .. . . . . . .. .. . . ... . . . . . . . . .. .. .. ... . . .. . . . ... . . . . .. . . . . .. .. . . .12 Conclusion ...........................................................................................................16 Site Visit Detail .................................................................................... Appendix A Out-of-Sample Claims ......................................................................... Appendix B Optima Response ................................................................................. Appendix C August 27, 2010 Page 1 - Healthcare Horizons Consulting Group, Inc. CITY OF VIRGINIA BEACH CLAIMS AUDIT REPORT EXECUTIVE SUMMARY The City of Virginia Beach engaged Healthcare Horizons to perform an audit of claims processed by Optima for paid dates of March 2009 through December 2009. Healthcare Horizons received $61,380,761 in paid claims data from Optima and performed a full electronic review of claims processing. Of this total amount, $36,163,884 was paid for school membership and $25,216,877 for the city. The purpose of the audit was to identify claim errors resulting in incorrect payments and to assess underlying conditions contributing to any errors identified. A site visit was conducted the week of June 28, 2010, to review a sample of 225 claims selected by Healthcare Horizons as potential errors or as higher dollar claims needing review. In addition, Healthcare Horizons was provided access to the top fifteen paid facility contracts during the site visit in order to test pricing and contractual terms. The contract audit resttlted in 4 additional write-ups for a total of 229 audit items. All audit items were resolved by the end of the site visit. Healthcare Horizons identified a total recovery amount of $24,732 from the audit. In addition, overpayments totaling $23,112 were found to be recovered after the data extract but prior to the delivery of the claims. These are not included as audit findings, but they are notable for the City as they represent continued errors that should be monitored on an ongoing basis. The findings by category are as follows: ther Insurance . . $9,097.42 .. . . $0.00 . • . . $0.00 ..• . . . $0.00 . ~ . . . . $9,097.42 Multi le Procedure Reductions $2,181.52 $0.00 $81.26 $6,242.15 $2,262.78 Out atient Thera Benefit Ma~cimum $5,407.25 $0.00 $0.00 $0.00 $5,407.25 Du licates $4,015.03 $1,160.75 $0.00 $0.00 $4,015.03 Out atient Sur e Co a $800.00 $0.00 $1,400.00 $0.00 $2,200.00 Seconda Pa ent Hi her Than Prima $1,188.00 $0.00 $0.00 $0.00 $1,188.00 Eli ibilit - Afrer Termination $265.35 $10,504.95 $0.00 $0.00 $265.35 Out atient Durin In atient $101.20 $0.00 $0.00 $0.00 $101.20 Emer enc Room Co a ment $100.00 $0.00 $0.00 $0.00 $100.00 Assistant Sur eon Multi le Procedures $95.26 $0.00 $0.00 $0.00 $95.26 Contract Audit $0.00 $5,204.00 $0.00 $0.00 $0.00 $23>251.03 $16,869.70 $1,481.26 $6,242.15 $24,732.29 August 27, 2010 Page 1 - Healthcare Horizons CITY OF VtRGIN1A BEACH ConsultingGroup,~~c. CLAIMS AUDIT REPORT The tables below detail the findings between the city and school membership: citv ther Insurance ~ $0.00 . ~ • $0.00 • . • $0.00 • . . ~ . $0.00 . $0.00 Multi le Procedure Reductions $80.13 $0.00 $0.00 $1,798.11 $80.13 Ou atient Thera Benefit Maximum $5,407.25 $0.00 $0.00 $0.00 $5,407.25 Du licates $1,986.41 $0.00 $0.00 $0.00 $1,986.41 Ou atient Sur e Co a $300.00 $0.00 $100.00 $0.00 $400.00 Seconda Pa ment Hi her Than Primaz $1,188.00 $0.00 $0.00 $0.00 $1,188.00 Eli ibili - After Termination $215.75 $6,966.89 $0.00 $0.00 $215.75 Ou atient Durin In atient $101.20 $0.00 $0.00 $0.00 $101.20 Emer enc Room Co a ment $100.00 $0.00 $0.00 $0.00 $100.00 Assistant Sur eon Multi le Procedures $95.26 $0.00 $0.00 $0.00 $95.26 Contract Audit $0.00 $2,427.00 $0.00 $0.00 $0.00 $9>474.00 $9,393.89 $100.00 $1,798.11 $9,574.00 Schools ther Insurance . • $9,097.42 .. . •~ . $0.00 • . . ~ . $0.00 • ~ ~ .~ . •~ • $0.00 . •• . .. • •. $9,097.42 Multi le Procedure Reductions $2,101.39 $0.00 $81.26 $4,444.04 $2,182.65 Ou atient Thera Benefit Maximum $0.00 $0.00 $0.00 $0.00 $0.00 Du licates $2,028.62 $1,160.75 $0.00 $0.00 $2,028.62 Out atientSur e Co a $500.00 $0.00 $1,300.00 $0.00 $1,800.00 Seconda Pa ent Hi her Than Prima $0.00 $0.00 $0.00 $0.00 $0.00 Eli ibili - After Termination $49.60 $3,538.06 $0.00 $0.00 $49.60 Ou atient Durin In atient $0.00 $0.00 $0.00 $0.00 $0.00 Emer enc Room Co a ment $0.00 $0.00 $0.00 $0.00 $0.00 Assisrant Sur eon Multi le Procedures $0.00 $0.00 $0.00 $0.00 $0.00 Conuact Audit $0.00 $2,777.00 $0.00 $0.00 $0.00 $13,777.03 $7,475.81 $1,381.26 $4,444.04 $15,158.29 While this audit has produced meaningful recoveries for the City of Virginia Beach, the percentage of overpayments compared to the total paid amount in the data is very low. Based on our experience in the industry, Optima should be commended for performing at a high level in the administration of healthcare clauns for the City of Virginia Beach. Based on the findings of the audit, Healthcare Horizons ofFers the following recommendations for the City of Virginia Beach regarding the administration of its healthcare pla:n: August 27, 2010 Page 2 - Healthcare Horizons Consulting Group, Inc. CITY ~F ~/tRGIN1A ~EAGH CLAIMS AUDIT REPORT • Discuss options with Optima for cases when a member is eligible for Medicare Part B but elects not to take it. Many plans estimate what the Medicare benefit would have been and reduce their secondary payment using the estimate. This prevents members from having an incentive to opt out of paying for Medicare Part B due to the plan covering all such claims in full. • For secondary claims, explore the possibility of limiting the entire combined payment (primary and secondary) up to Optima's normal contractual allowable. This is a common limitation in many plans audited by Healthcare Horizons. • Clarify the intent of the plan on whether to charge the patient an office visit copayment when a deductible is also due. Typically, Healthcare Horizons would expect the copayment to apply first in such a scenario and then the deductible for any remaining plan payment due. • Define the criteria used by Optima to determine when a separate illness or condition exists for the purposes of granting separate authorizations for outpatient therapy services. • Determine a solution to prevent overpayments caused by multiple claim submissions by providers for surgeries performed during the same operative session. • Monitor the recovery of claims due to retroactive terminations on a monthly basis. August 27, 2010 Page 3 - Healthcare Horizons Consulting Group, Inc. ~ITY QF VIRGtNt~- BEAGH CLAIMS AUDIT REPORT PROCESS OVERVIEW Healthcare Horizons systematically reviews 100% of claim payments by the administrator on behalf of our clients via our proprietary electronic claims edits. A series of standard algorithms are utilized to identify potential areas of claims overpayments in areas such as eligibility, pricing, duplicates and medical edits. In addition, customized queries are created specific to each client based on variable factors such as benefits design. Based on the results of our electronic analysis, Healthcare Horizons targets areas with significant overpayment potential based on the dollar amount and our experience with the categories in question. Many areas are resolved by Healthcare Horizons without inclusion in the claims sample due to low findings from the electronic analysis or our determination that the claims flagged are exceptions rather than errors. For the areas that warrant additional research, a sample of claims is selected for review during the site visit with the administrator. Within each category, Healthcare Horizons strives to select a sample that is representative of all claims identified for the particular issue and covers significant potential errors. The goal of the site visit is to work with the administrator to verify the presence of an error on each claim and to solidify the logic used to identify the claims for full reports. Healthcare Horizons recommends the delivery of additional claims beyond the site visit sample for review and recovery by the administrator if warranted by the site visit findings. For example, if Healthcare Horizons and the administrator agreed that nineteen of twenty eligibility claims were recoverable overpayments, Healthcare Horizons would deliver a full report from the entire data set meeting the same criteria. Once an agreed listing of overpaid claims has been identified and placed into recovery by the administrator, Healthcare Horizons monitors the collections process to a point of completion that is satisfactory to both Healthcare Horizons and our client. The following section describes the general areas of testing by Healthcare Horizons. August 27, 2010 Page 4 - Healthcare Horizons CITY QF ~IRGINIA E~EACH ConsultingGroup,~n~. CLAIMS /~1UDIT REPORT AREAS OF TESTING 17uplicate Claims Healthcare Horizons runs a series of duplicate claim edits across the claims data set to identify claims that have been billed and paid more than once. Healthcare Horizons identifies duplicate claims at both the claim level and individual procedure level. The duplicate claim queries vary with matches and mismatches on fields such as patient, provider, service date, billed charge, and procedure code. While most clients would e~cpect duplicate claims to be rare, they are actually quite common in healthcare claims payments and usually result in recoveries on every project conducted by Healthcare Horizons. Eligibility In addition to claims data, Healthcare Horizons requests a full eligibility file from the administrator in order to validate coverage on the service date. Employer groups often submit retroactive terminations to the administrator, resulting in an opportunity for overpayments unless the administrator has a process in place to identify and recover these claims. Every administrator should have a process for identifying and recovering claims affected by a retroactive termination as they are common in the claims industry. In addition to claims paid after the termination date, Healthcare Horizons identifies claims paid during a gap in coverage and claims paid without an eligibility record on file. ContractAudit Healthcare Horizons normally requests a review of the signed provider contracts for the top 30 utilized hospitals for each group. While on-site at the administrator, Healthcare Horizons uses the claims data to test pricing and other contractual terms present in the contract for all claims paid to that provider in the claims data set. Other terms in the contract may include readmissions, outpatient services on the day of admission, pre-admission testing, timely filing, and transfers. Some administrators do not allow this type of comprehensive audit of provider contracts in which Healthcare Horizons tests all claims according to the terms present in the contracts. If this is not made available, Healthcare Horizons selects site visit sample claims to test pricing and the following items on a more limited basis. August 27, 2010 Page 5 - Healthcare Horizons CITY QF YIRGINIA BEACH ConsultingGroup,~nc. (r'LAIMS AUDIT REPORT • Readmissions - If provider contracts have Diagnosis-Related Group (DRG) case rate reimbursement, readmissions to treat the same illness may not be allowed if the patient is readmitted within a certain number of days. This prevents facilities from being compensated a greater amount for an inappropriate discharge. • Outpatient Services on Day of Admission - If a patient receives outpatient services such as an emergency room visit, and is later admitted on the same day, these charges should be combined with the inpatient claim according to most provider contracts. If the provider is reimbursed based on per diems or DRG case rate, no additional payment is made for the outpatient services. • Pre-admission Testing - If a patient undergoes tests related to a scheduled admission within 24 to 72 hours, these services may be included with the inpatient claim and not paid in addition to the inpatient stay for per diem or DRG case rate reimbu.rsement. Examples of these tests include lab work and a baseline chest x-ray. • Timely Filing - Provider contracts often state that claims must be submitted to the administrator within a certain time period (such as one year) to be eligible for payment. Otherwise the claim should be denied and the patient is held harmless. • Transfers - Provider contracts based on DRG case rate inpatient reimbursement often contain special pricing if the patient is transferred to another acute care hospital for treatment. Since the patient was transferred, the initial hospital is not due the full case rate amount to treat the illness. Transfer payments are often based on a specific per diem rate in the contract. Assistant Surgeon In some circumstances, a procedure may require the services of an assistant in addition to the primary surgeon. Healthcare Horizons tests two common areas of overpayments for assistant surgeons: pricing and coding. Assistant surgeons usually receive 20-25% of the normal fee schedule rate for the codes used with assistant modifiers. Healthcare Horizons utilizes the claims data to identify the payment to the primary surgeon and then isolates assistant surgeon claims paid greater than 20-25% of this rate. In our e}cperience, this analysis yields a high rate of assistant surgeon lines that are overpaid. In addition, The Center for Medicare Services produces a publicly available listing of procedure codes for which it does not allow a payment for assistant surgery. These are services that> by their natttre, do not lend themselves to requiring an assistant. Healthcare Horizons identifies assistant surgeon claims for these procedures as possible overpayments. Although this Medicare guideline is not a requirement that must be followed by commercial insurance carriers, most administrators should have some similar list of codes not payable for assistants. August 27, 2010 Page 6 - Healthcare Horizons Consulting Group, Inc. ~ITY 4F VIR~INIA BEAGH CLAIMS AUDIT REPORT Multiple Procedure Reductions When multiple services are performed in the same session, secondary procedures are priced at a reduced percentage (usually 50%) of the normal contract rate to account for economies and efficiency gained by not having to duplicate preparation of the patient for each procedure. Healthcare Horizons flags claims that may have missed this standard discount by reviewing the secondary procedure allowance in relation to the primary procedure allowance for the session of care. Benefits Healthcare Horizons creates customized queries to model the benefits present in the summary plan documents (SPDs) provided by the employer group. Likely areas of testing for benefits are application of copayments and coinsurance, annual dollar or visit maximums, non-covered benefits, coordination of benefit rules, and other specific items flagged by our auditors as potential errors. A Healthcare Horizons auditor reviews the SPDs in full for each claims audit and selects the benefit areas where testing is possible. Some benefits do not lend themselves to systematic testing in the data and can only be reviewed on selected sample claims. Pricing Healthcare Horizons takes steps to verify accurate pricing of certain claims in the data set such as high dollar, no discount, and those with variability in pricing. These steps are described further below. Healthcare Horizons selects the highest paid claims in the data set to ensure correct pricing by the administrator. Often these claims are more complex, which raises the possibility of error. Claims priced at billed charges. with no discount are targeted for pricing verification. Given the broad networks of the larger administrators, as well as the availability of national rental networks, the majority of claims should receive some type of discount. Healthcare Horizons verifies that pricing was not missed in error on higher paid claims. Healthcare Horizons profiles top facilities and establishes payment patterns and trends. Claims that fall outside of the normal patterns will be questioned for payment errors. This area is especially important if a contract audit is not available as part of the audit process. August 27, 2010 Page 7 - Healthcare Horizons Consulting Group,lnc. CITY OF V'IRGINIA BEAGH CLAIMS AUDIT REPORT Since Healthcare Horizons has found that pricing of claims is one of the largest categories of errors at many administrators, we take aggressive steps to identify as many potential errors as possible for detailed review. Other Insurance The presence of other primary insurance usually reduces the payment due by the employer group if they are secondary. In some cases, a secondary policy will pay as primary, such as when primary benefits are exhausted or the primary policy does not cover a particular service. Healthcare Horizons utilizes the claims data to identify claims paid as primary that may have other insurance based on the following categories: • Other Claims Paid as Secondary - Healthcare Horizons utilizes the claims data to create a date range for each patient where claims have been paid as secondary based on the presence of a coordination of benefits (COB) savings amount. Any claims paid within this date range without a COB amount may be questioned for the presence of other primary coverage. • ESRD -- After 33 months of treatment for ESRD, Medicare automatically becomes the primary insurer for the patient. Healthcare Horizons identifies patients with an extended period of treatment for ESRD to ensure the administrator is correctly tracking the Medicare primary effective date. Healthcare Harizons also scrutinizes claims that are paid as secondary with a paid amount higher than that of the primary camer. Normally, the secondary payment is lower than the primary plan payment as it likely only covers remaining member responsibility after the primary payment. High Units Healthcare Horizons queries the claims data for unit counts that are abnormally high for the procedure code billed. An error in units may cause the claim to default to billed charges as the fee schedule is multiplied by an incorrect unit count. Medical Edits Healthcare Horizons applies medical edits to the claims data to identify mutually exclusive procedures and cases of procedure unbundling. Mutually exclusive edits identify procedure combinations that cannot be reasonably performed on the same patient on the same day. Unbundling occurs when a provider bills multiple component codes versus a single August 27, 2010 Page 8 - Healthcare Horizons Consulting Group, Inc. ~ITY OF VIRGINIA BEACM CLAIMS AUDIT REPORT comprehensive code, often resulting in higher reimbursement. Payers have much discretion over which medical edits to apply as there is not a commonly accepted group of these throughout the industry; therefore, Healthcare Horizons is generally looking for a reasonable application of a set of edits and questions selected claims that seem to be clear errors. Overlapping Inpatient Healthcare Horizons identifies cases where patients have claims reporting that they are inpatient at different facilities for the same service date. These are often the result of provider billing errors or manual data entry mistakes. Subrogation Healthcare Horizons queries the claims data for possible subrogation opportunities where third party liability (TPL) may exist. A common e~cample is medical services related to an auto accident where the auto insurer is liable for a portion of the medical claims. These claims are identified via accident-related diagnosis codes. Hospitalllllstakes Many payers across the country have adopted policies to investigate and subsequently deny payment for hospital mistakes and avoidable conditions, such as objects left in patient during surgery, fractures incurred in the hospital, blood incompatibility, and certain types of infections. Healthcare Horizons examines the claims data for these types of hospital errors and expects recovery opportunities for these errors as more administrators adopt such policies. Cosmetic Surgery Healthcare Horizons maintains a listing of procedure codes that may be considered as cosmetic, but judgments on these claims are highly subjective. Healthcare Horizons is usually looking at the total paid for these types of codes to make sure it is not excessive. If any of these claims are selected for the sample, we request that the administrator provide evidence that the claim was considered for medical review and that reasonable review took place. Medical necessity issues such as cosmetic surgery are not areas that result in significant recovery, but can be issues that our clients want to address proactively for future cost savings. August 27, 2010 Page 9 - Healthcare Horizons Consulting Group, Inc. CITY QF ~/IRGlNIA BEACH CLAIMS AUDIT REPORT Reinsurance~ If the employer group has stop loss or reinsurance coverage, Healthcare Horizons utilizes the claims data to identify members that should have resulted in a credit due back to the group. Healthcare Horizons verifies with the administrator that the credits have been issued to the group. August 27, 2010 Page 10 - Healthcare Horizons Consulting Group, Inc. ~lTY QF VIRGINIA ~EACH CLAIMS AUDIT REPORT SITE VISIT SELECTION The following chart details the composition of the site visit claims selection as well as the errors identified during the site visit. u licates - Claim Level . 12 ~• . .. . 3 . . $2,870.41 .. ~- . •~ . 1 . . •. . $1,085.00 Du licates - Line Level 13 2 $1,144.62 1 $75.75 Assistant Sur eon Multi le Procedures 3 1 $95.26 0 $0.00 OtherInsurance 8 2 $9,097.42 0 $0.00 Second Pa ent Hi her Than Prima 8 1 $1,188.00 0 $0.00 Hi h Seconda Pa ent 4 0 $0.00 0 $0.00 ESRD 5 0 $0.00 0 $0.00 Timel Filin 2 0 $0.00 0 $0.00 Out atient Durin In atient 2 1 $101.20 0 $0.00 Overla in In atient 2 0 $0.00 0 $0.00 Admission from Emer en Room 2 0 $0.00 0 $0.00 Multi le Procedure Reducrions 26 8 $2,181.52 0 $0.00 Eli ibili - After Termination 55 5 $265.35 47 $10,504.95 Eli ibili - Not on File 2 0 $0.00 0 $0.00 Out atient Sur e Co a 10 8 $800.00 0 $0.00 Office Visit Co a 10 0 $0.00 0 $0.00 Emer enc Room Co a ment 5 1 $100.00 0 $0.00 Subro ation 3 0 $0.00 0 $0.00 Out atient Thera Benefit Maximum 46 6 $5,407.25 0 $0.00 PHCS POS Benefit 2 0 $0.00 0 $0.00 Pricin 5 0 $0.00 0 $0.00 Contract Audit 4 0 $0.00 3 $5,204.00 229 38 $23,251.03 52 $16,869.70 August 27, 2010 Page 11 - Healthcare Horizons Consulting Group, Inc. GITY QF VIRGINIA BEACH CLAIMS AUDIT REPORT FINDINGS The immaterial amount of errors identified in the sample indicates that Opti.ma has effective procedures in place to prevent duplicate payments. In total, Healthcare Horizons identified $5,176 in duplicate payments in the site visit sample, which we view as insignificant given the volume of claims processed by Optima. All material potential overpayments were presented in the site visit sample; therefore> no additional follow-up is required in this area. Healthcare Horizons identified two members with clai.ms paid incorrecdy as pri.mary. For audit items 30 and 35, other insurance should have paid as primary. It is likely that the other insurance information was obtained after the claims were processed, but Optima should have procedures to identify claims impacted by updated information for reprocessing. Audit item 30 had a refund request issued previously, but this amount has not been recovered or credited to the group to date. Healthcare Horizons is citing the overpayment amount ($4,859) as a finding and will track the overpayment to recovery. Based on the site visit findings, Healthcare Horizons submitted 39 additional out-of-sample claims for one of these members, however, Optima responded that all of these services fell under Medicare Part B coverage, therefore, no overpayment occurred since the member only had Part A. If the plan design called for an estimate of Part B benefits, additional savings would have applied. Healthcare Horizons identified overpayments for missed multiple procedure reduction opportunities due to fragmented billing by providers, but most payers have procedures in place to identify these cases for reduction as the billing pattem is not uncommon. It appears that Optima does not have a process in place to identify multiple procedure reduction opportunities when providers bill on separate claims. This was also a finding in the previous Optima audit. Healthcare Horizons identified $2,182 in multiple procedure overpayments from the site visit sample selection and delivered eight additional cases covering sixteen claims for review by Optima. All eight cases were agreed as errors, however, Optima indicated the majority of overpayments were already recovered ($6,242 of $6,323) prior to delivery by Healthcare Horizons. While the total dollar amount is not significant, this area likely represents ongoing overpayments. Healthcare Horizons recommends that Optima e~cplore options to eliminate this type of overpayment, even if it can only be done through post-payment audits. Opti.ma has a process is in place to identify and recover clai.ms affected by retroactive eligibility terminations, but the ti.meliness and consistency of this process should be closely monitored by the plan. The majority of claims sampled by Healthcare Horizons in this category were recovered prior to sample delivery, but the majority of these adjustments were August 27, 2010 Page 12 - Healthcare Horizons Consulting Group, Inc. ~ITY QF ~f IRGiN1A E~EA~H CLAIMS AUDIT REPORT performed just prior to the audit by Healthcare Horizons. Given the paid date ranges of the claims in question, we believe that Optima needs to follow-up on these claims more consistently in the future. Healthcare Horizons suggests that the group monitor eligibility recoveries monthly to ensure that claims are adjusted on a timely basis. Healthcare Horizons identified instances where the $100 outpatient surgery copayment was not applied, but the root cause has not been identified yet on these clai.ms. Optima agreed to eight overpayments from the site visit selection where the copayment was not applied. No explanation was provided for the errors; therefore, we request that Optima examine the root cause of this error. Based on the findings from the site visit, Healthcare Horizons provided fifteen additional claims for review by Optima resulting in fourteen agreed errors totaling $1,400. Healthcaze Horizons found that the $20 Pri.mary Caze Physician office visit copayment is not taken when the $100 annual deductible is taken on the same claim. While this seems to match the plan's intent based on the discussion at the exit meeting, this is not the manner in which we normally see this adjudicated. Typically the copayment would apply first and then the annual deductible would apply to any balance due from the plan on the claim. Further, Optima is only applying the copayment if there is a plan balance due on the evaluation and management CPT code on these types of claims. Most office visits include additional ancillary charges such as lab or diagnostic radiology codes. Healthcare Horizons noted cases where all additional codes on an office visit claim were allowed at 100% with no copayment even though the copayment was not applied to the evaluation and management line due to the deductible issue cited above. Healthcare Horizons would consider all services performed as part of the office visit and not just the specific evaluation and management code, thus leading to application of the copayment in cases where it is missed by Optima. Healthcare Horizons only estimates an overpayment of $1,498 on PCP claims for the audit period, so the impact is not significant. As long as the plan understands the application of this bene~it and agrees to it, then no follow-up is necessary in this category. Healthcare Horizons identified a member eligible for Medicare Part B who did not elect to pay for the coverage, resulting in a higher amount paid by the City of Virginia Beach. Medicare Part A is free to Medicare-eligible persons and generally covers inpatient hospital stays. Medicare Part B is available for a monthly premium and covers physician and outpatient facility claims, so a member with coverage through a group health plan may be incentivized to omit the election of Part B if the group coverage does not contain provisions to coordinate with estimated Part B benefits. For audit item 36, the claim was for a physician August 27, 2010 Page 13 - Healthcare Horizons Consulting Group, Inc. GITY QF VIF~GINIA ~EACH CLAIMS AUDIT REPORT service, so no coordination was required with Medicare Part A. The absence of Part B resulted in a higher liability for the plan as it paid primary on the claim. Some employers include language in their plan benefits to estimate Part B coverage in these cases for the purpose of reducing plan payment using the estimated benefits. The City may wish to explore this type of provision, though the overall impact should be relatively low given the limited cases of Medicare-eligible members on the plan. Healthcare Horizons disagrees with two examples of outpatient therapy where separate episodes of care (and separate 30-visit maximums) were authorized by Opti.ma. It appears that minor variations in diagnosis code can result in separate authorizations for an additional benefit of 30 visits. The examples from the site visit are as follows: Audit Items 189-194 - Three sevarate authorizations Occupational Therapy 955.2 Injury to ulnar nerve NA NA Occupational Therapy 882.2 Open wound of hand 955.2 Injury to ulnar nerve Phvsical Theranv 882.2 Ouen wound of hand 955.2 Iniurv to ulnar nerve Audit Items 195-201- Two authorizations ~ Physical Therapy ~ 728.87 ~ Muscle weakness ~ NA ~ NA ~ Phvsical Theravv 728.2 Muscular wasting NA NA For the cases outlined above, services were provided consecutively with no break that would suggest a recovery and therefore a new benefit period. We request that Optima's clinical area revisit these cases and provide feedback on why each authorization above was considered a separate illness or condition. Based on the site visit clai.ms, it appears the Optima policy for secondary cla.i.ms is to pay the member liability from the primary payer's explanation of benefits regardless of the contract allowable by Optima on the claim. There may be an opportunity for additional cost savings on these claims if Optima limits the combined primary and secondary payments to its contractual allowable. This is a common provision in plan documents in our e~cperience, and Healthcare Horizons made a similar recommendation in the prior Optima audit. August 27, 2010 Page 14 - Healthcare Horizons Consulting Group, Inc. GITY 4F VIR~INIA BEACH CLAIMS AUDIT REPORT The contract audit did not yield any agreed overpayments, however, Healthcaze Horizons noted three cases of facility multiple procedure errors that were identified on the last audit that had been recovered shortly before our site visit. Optima has long-standing agreements with most of the top providers and has established standard pricing methodologies that result in an exceptional degree of accuracy in the pricing of facility claims. It is commendable that Optima identified and corrected the three claims referenced above prior to identification by Healthcare Horizons, but the City should note that these errors have e~risted for a number of months and were likely prioritized based on the expected external audit. Opti.ma noted in the exit meeti.ng that it is now utilizing two external audit vendors through its Special Investigations Unit that perform overpayment identification similaz to Healthcare Horizons. As no details were available from the staff present at that meeting, the City should follow-up with Optima management to negotiate access to reports of findings from these vendors on the plan's claims. Reports from these vendors could identify areas of concern or highlight audit procedures in place that would impact future audit plans by the City. We request that Optima include the names of the vendors and a general description of their work on the City's claims in response to this audit report. Healthcare Horizons did not identify other areas of concem for systemic overpayments. Beyond other insurance, multiple procedures, and the outpatient surgery copayment, Healthcare Horizons does not recommend review of additional out-of-sample claims. All other overpayments identified in the site visit sample selection were indicative of manual errors. August 27, 2010 Page IS - Healthcare Horizons Consu Iting Group, Inc. CITY QF ~IRGiNEA BEAGH CLAIMS AUDIT REPORT CONCLUSION Healthcare Horizons appreciates the opportunity to perform this claims audit on behalf of the City of Virginia Beach. The overall results represent exceptional performance by Optima in the administration of healthcare claims. Healthcare Horizons requests that Optima place all agreed overpayments into recovery and report any negative potential member impact to both Healthcare Horizons and the City of Virginia Beach prior to any collections activity. Once all overpayments are in recovery> we request that a monthly collections report be delivered to Healthcare Horizons and the City of Virginia Beac~a until a satisfactory percentage of collections is achieved. August 27, 2010 Page 16 APPENDtX A SITE VIStT L'~ETAIL - Healthcare Horizons Consulting Group,lnc. ~ITY QF ~/IRGINIA ~EACH APPENDIX A SITE VISIT DETAIL I Du licates - Claim Level $0.00 $0.00 CorreM claim Schools 2 Du licates - Claun Level $884.00 $0.00 Error Schools 3 Du licates - Claun Level $522.04 $0.00 Error Ci 4 Du licates - Claun Level $0.00 $0.00 Correct claim Ci 5 Du licates - Claun Level $0.00 $1,085.00 Alread corrected rior to sam le and afrer data (5/13/10) Schools 6 Du licates - Claun Level $0.00 $0.00 Correct claim Schools 7 Du licates - Claim Level $0.00 $0.00 Correct claim Ci 8 Du licates - Claim I.evel $1,464.37 $0.00 Error - claim should have aid as second onl - Ci 9 Du licates - Claun Level $0.00 $0.00 LT modifier (Mod2 not in data) Schools 10 Du licates - Claun Level $0.00 $0.00 RT modifier (Mod2 noi in data) Schools 11 Du licates - Claun Level $0.00 $0.00 Different roceduzes Schools 12 Du licates - Claun Level $0.00 $0.00 Different rocedures Schools 13 Du licates - Line Level $0.00 $0.00 Two different ER visits Ci 14 Du licates - Line Level $0.00 $0.00 Two different ER visits Ci 15 Du licates - Line Level $0.00 $0.00 Correct claim Ci 16 Du licates - Line Level $0.00 $0.00 tllread corrected rior to sam le - ad ustment not in data Ci 17 Du licates - Line Level $0.00 $0.00 Alread corrected rior to sam le - ad us[ment not in data Ci 18 Du licates - Line Level $0.00 $0.00 Correct claim Schools 19 Du licates - Line Level $0.00 $7575 Alread conected rior to sam le and after data (5/20/10) Schools 20 Du licates - Line I.evel $0.00 $0.00 Correct claim Schools 21 Du licata - Line Level $1,085.00 $0.00 Error Schools 22 Du licates - Line Level $0.00 $0.00 Correct claim Schools 23 Du lica[es - Line Level $59.62 $0.00 Error Schools 24 Du licates - Line Level $0.00 $0.00 Correct claim Schools 25 Du licates - Line Level $0.00 $0.00 59 modifier (Mod2 not in data) Schools 26 Assis[ant Sur eon Multi le Procedures $0.00 $0.00 No further reduction er medical olic Ci 27 Assistant Sur eon Multi le Procedures $0.00 $0.00 No further reduction er medical olic Ci 28 Assistant Sur eon Multi le Procedures $95.26 $0.00 Error Ci 29 Other Insurance $0.00 $0.00 No other insurance on service date er tima Ci 30 Other Insurance $4,859.42 $0.00 Refund re uested 4/4/10, however retraction has not cleared - findi Schools 31 Other Insurance $0.00 $0.00 Correctl allowed atient ortion from ri EOB Schools 32 Other Insurance $0.00 $0.00 tima ri Ci 33 Other Insurance $0.00 $0.00 Prun cazrier denied services Schools 34 O[her Insurance $0.00 $0.00 Prun carrier denied services Schools 35 O[her InsUrance $4,238.00 $0.00 Error - should rocess as Medicare rima - art A effective 2/1/03 Schools 36 Other Insurance $0.00 $0.00 Member has Medicare Parc A onl - recommend re uirin Part B Ci 37 Seconda Pa ent Hi her Than Prim $0.00 $0.00 Correctl allowed a[ien[ ortion from rim EOB Schools 38 Seconda Pa ent Hi her Than Pri $0.00 $0.00 Correcd allowed atient ortion from rim EOB Ci 39 Seconda Pa ent Hi her Than Prim $0.00 $0.00 Correctl allowed atient ortion from rim EOB Schools 40 Seconda Pa en: Hi her Than Pri $1,188.00 $0.00 Error - rima lan aid member in full Ci 41 Seconda Pa en: Hi her Than Prim $0.00 $0.00 Correctl allowed atient ortion from rim EOB Schools 42 Seconda Pa enx Hi her Than Prim $0.00 $0.00 Conectl allowed atient ortion from rim EOB Schools 43 Seconda Pa ent Hi her Than Pri $0.00 $0.00 Correctl allowed atien[ ortion from rim EOB Ci 44 Seconda Pa ent Hi her Than Prim $0.00 $0.00 Correctl allowed atient ortion from rim EOB Ci 45 Ai h Second Pa men[ $0.00 $0.00 Correctl allowed atient ortion From rim EOB Ci 46 Hi h Second Pa men[ $0.00 $0.00 Correcd allowed atienc ortion from rim EOB Ci 47 Hi h Second Pa ment $0.00 $0.00 Correctl allowed atient ortion from rim EOB Ci 48 Hi Second Pa men[ $0.00 $0.00 O tima is second and rima - coordinated to coaect allowable Ci 49 ESRD $0.00 $0.00 Medicare rim 6/I/09 Schools 50 ESRD $0.00 $0.00 Medicaze rim 6/1/11 Schools 51 ESRD $0.00 $0.00 Medicaze rim 6/1/11 Schools 52 ESRD $0.00 $0.00 Medicare rim 10/1/09 Ci 53 ESRD $0.00 $0.00 Medicaze rima 3/1/12 Ci 54 Timel Filin $0.00 $0.00 Timel filin waiver a roved Schools 55 Timel Filin $0.00 $0.00 Timel filin waiver a roved Ci 56 Ou auent Durin In atient $0.00 $0.00 In a[ient claim - informational onl Ci 57 Ou[ atient Durin In atient $10120 $0.00 Error Ci 58 Overla in In atient $0.00 $0.00 Informational onl Ci 59 Overla in In atient $0.00 $0.00 Member transferred [o se azate facili for one da Ci 60 Admission from Emer en Room $0.00 $0.00 Patient discha ed to home and admitted later after second ER visit Schools 61 Admission from Emer en Room $0.00 $0.00 In atient claim - informational onl Schools 62 Mulli le Procedure Reductions $0.00 $0.00 Prun rocedure - informational onl Schools 63 Multi le Procedure Reductions $586.93 $0.00 Ad usted 6/3/10 - audic findin Schools 64 Multi le Procedure Reductions $0.00 $0.00 Prun rocedure - informational onl Schools August 27, 20~0 Page 1 - Healthcare Horizons Consulting Group, Inc. GITY QF ~/IF~GINIA BEA~H APPENDIX A SITE VISIT DETAIL 65 Multi le Procedure Reductions $90.93 $0.00 Error - multi le claim submissions Schools 66 Muld le Pmcedure Reductions $0.00 $0.00 Prun rocedure - informational onl Schools 67 Multi le Pmcedure Reductions $72.49 $0.00 Error - mul~i le claim submissions Schools 68 Multi le Procedure Reductions $0.00 $0.00 Prim rocedure - infomiational onl Schools 69 Multi le Procedure Reductions $391.28 $0.00 Fsror - multi le claim submissions Schools 70 Multi le Procedure Reductions $0.00 $0.00 Prim rocedure - informational onl Schools 71 Multi le Procedure Reductions $117.51 $0.00 Error - multi le claim submissions Schools 72 Multi le Procedure Reductions $0.00 $0.00 Prim rocedure - informational onl Schools 73 Multi le Procedure Reductions $0.00 $0.00 Reduced correctl Schools 74 Multi le Procedure Reductions $0.00 $0.00 Prun rocedure - informational onl Schools 75 Multi le Procedure Reductions $0.00 $0.00 Reduced correcd Schools 76 Multi le Procedure Reductions $0.00 $0.00 Prun rocedure - informational onl Schools 77 Multi le Procedure Reductions $0.00 $0.00 Reduced correctl Schools 78 Multi le Procedure Reductions $0.00 $0.00 Prim rocedure - informational onl Schools 79 Multi le Procedure Reduc[ions $222.74 $0.00 Error - multi le claim submissions Schools 80 Multi le Pmcedure Reductions $0.00 $0.00 Prim rocedure - informational onl Ci Sl Multi le Procedure Reductions $80.13 $0.00 Error - multi le claim submissions Ci 82 Multi le Procedure Reductions $0.00 $0.00 No reduccions indicated u tima olic for Mod 22 Schools 83 Mulri le Procedure Reductions $0.00 $0.00 Reduced correcd Schools 84 Multi le Procedure Reductions $0.00 $0.00 Reduced correcd Schools SS Multi le Procedure Reductions $0.00 $0.00 Reduced correcd Schools 86 Muld le Procedure Reductions $0.00 $0.00 Reduced correctl Ci 87 Multi le Procedure Reductions $619.51 $0.00 Error Schools 88 Eli 'bilit - After Termination $0.00 $297.70 Ad usted 4/22/10 Ci 89 Eli ibilit - Afrer Termination $0.00 $56.39 Ad'usted 4/15/10 ~ 90 Eli ibilit - After Termination $0.00 $206.59 Ad'usted 4/22/10 Schools 91 Eli 'bilit - Afrer Termination $0.00 $93.27 Ad'usted 4/15/10 Schools 92 Eli 'bili[ - Afrer Termination $0.00 $52.62 Ad'usted 4/15/10 Schools 93 Eli 'bilit - After Terminacion $0.00 $125.58 Ad'usted 4/15/10 Schools 94 Eli 'bilit - After Termination $0.00 $124.52 Ad'usted 4/4/10 Schools 95 Eli 'bilit - Afrer Termination $0.00 $110.86 Ad'usted 5/27/10 Schools 96 F1i 'bilit - After Termination $0.00 $88.84 Ad'usted 4/15/10 Schools 97 Eli 'bilit - After Termination $0.00 $51.72 Ad usted 5/27/10 Schools 98 Eli 'bilit - tlfter Termination $0.00 $31.24 Ad'usted 4/4/10 Schools 99 Eli 'bilit - Afrer Termination $0.00 $21.01 Ad usted 5/27/10 Schools L00 Eli 'bilit - After Terminacion $0.00 $252.22 Ad'usted 5/6/10 Schools 101 Eli 'bilit - After Termination $0.00 $69.02 Ad'usted 5/6/10 Schools 102 Eli 'bilit - Afrer Termination $0.00 $69.02 Ad'us[ed 5/6/10 Schools 103 F1i 'bilit - Afrer Termination $0.00 $185.16 Ad'usted 4/22/10 Schools 104 E1i 'bilit - After Ternunation $120.68 $0.00 A reed Error Ci 105 F1i 'bilit - After Terminadon $0.00 $0.00 Ad'usted 12/17/09 - not in data Cirv 106 Eli 'bffit - After Termination $0.00 $0.00 Ad'usted 12/17/09 - not in data Ci 107 Eli 'bilit - Afrer Termination $0.00 $97276 Ad usted 5/27/10 Citv 108 Eli 'bilit - After Termination $0.00 $263.05 Ad'usted 5/27/10 Ci 109 Eli bilit - Afrer Termination $0.00 $125.69 Ad usted 5/27/10 Ci I 10 Eli 'bili[ - After Termination $0.00 $125.00 Ad'us[ed 5/27/10 Ci I I1 Eli 'bilit - After Termination $0.00 $125.00 Ad'usted 5/27/10 Ci l12 Eli 'bilit - Afrer Termination $0.00 $12170 Ad usted 5/27/10 Ci I13 Eli 'bilit - After Termination $0.00 $42.60 Ad~ustmen[ da[e not available due to MH Ci 114 Eli 'bili - After Termination $0.00 $145.48 Ad'usted 4/15/10 Schools I15 Eli 'bilit - After Termination $0.00 $32.84 Ad~ustment date not available due to MH Ci 116 Eli 'bilit - After Ternunation $0.00 $452.10 Ad'usted 5/27/10 Ci I17 Eli bilit - Afrer Termination $0.00 $19.63 Ad ustment date not available due to MH Schools 118 Eli 'bili~ - Afrer Teraunation $0.00 $1,950.00 Ad'usted 6/17/10 Ci 119 Eli 'bilit - Afrer Terminacion $0.00 $536.68 Ad'usted 5/27/10 Ci 120 Eli 'bilit - Afrer Terntination $0.00 $480.00 Ad usted 4/15/10 Ci 121 Eli 'bilit - After Temunation $0.00 $61.26 Ad usted 4/15/10 Ci 122 F1i 'bilit - Afrer Termination 532.84 $0.00 reed &ror Ci 123 Eli 'bilit - After Termination $0.00 $0.00 Ad usted 12/24/09 - not in data Schools 124 Eli bilit - Afrer Termination $0.00 $43.68 Ad usted 4/15/10 Schools 125 Eli 'bilit - Afrer Temunation $0.00 $40.00 Ad usted 4/15/10 Schools 126 Eli 'bilit - After Ternunation $0.00 $379.40 Ad"usted 4/1/10 Schools 127 Eli 'bili[ - Afrer Termination $49.60 $0.00 A reed &ror Schools 128 Eli 'bilit - After Termination $19.63 $0.00 reed Error Ci August 27, Z010 Page 2 ~ Healthcare Horizons Consulting Group, Inc. CITY QF YlRGiN1A BEACH APPENDIX A SITE VISIT DETAIL 129 Eli 'bilit - Afrer Termination $0.00 $92.25 Ad'usted 4/15/10 Schools 130 Eli 'bilit - Afrer Termina[ion $0.00 $34.13 Ad ustment date no[ available due [o MH Schools 131 Eli 'bilit - Afrer Terminacion $0.00 $455.97 Ad usted 4/15/10 Schools 132 F1i 'bilit - Afrer Termination $0.00 $59.71 Ad usted 4/15/10 Schools 133 F1i 'bilit - After Termination $0.00 $19.49 Ad ustment date not available due to MH Ci 134 Eli 'bili~ - Afrer Termination $0.00 $238.80 Ad usted 4/15/10 Schools 135 Eli 'bilit - Afrer Termination $0.00 $211.57 Ad usted 4/15/10 Schools 136 Eli "bili[ - Afrer Termination $0.00 $77.41 Ad'usted 4/15/10 Schools 137 Eli bilit - A£[er Termination $0.00 $65.52 Ad usted 4/15/10 Schools 138 Eli 'bili[ - Afrer Termina[ion $0.00 $140.58 Ad'usted 5/27/10 Schools 139 F1i 'bilit - Afrer Termination $0.00 $52.26 Ad'usted 4/29/10 Schools 140 Eli 'bili~ - Afrer Termina[ion $0.00 $1,163.12 Ad'usted 4/15/10 Ci 141 Eli bilit - After Termination $0.00 $141.51 Ad'usted 4/15/10 Ci 142 F1i 'bilit - Afrer Termination $42.60 $0.00 reed Error Ci 143 F1i ibilit - Not on File $0.00 $0.00 Member active er O tima s stem Schools 144 Eli bilit - Not on File $0.00 $0.00 Member active er O tima s tem Schools 145 Out atientSur e Co a $100.00 $0.00 Error Schools 146 Out atientSur e Co a $100.00 $0.00 Error Ci 147 Out atientSur e Co a $100.00 $0.00 Error Ci 148 Ouc azient Sur e Co a $100.00 $0.00 Error Ci 149 Out adent Sur e Co a $100.00 $0.00 Error Schools 150 Out atient Sur e Co a $100.00 $0.00 Error Schools 151 Out atient Sur e Co a $100.00 $0.00 Error Schools 152 Ou[ atient Sur e Co a $0.00 $0.00 Co a taken - multi le service dates billed Schools 153 Out atient Sur e Co a $0.00 $0.00 Co a taken - multi le service dates billed Schools 154 Out atient Sur e Co a $100.00 $0.00 &ror Schools 155 Office Visit Co a $0.00 $0.00 Current rocessin seems to maich ou in[ent Schools 156 Office Visit Co a $0.00 $0.00 Current rocessin seems to match rou intent Schools 157 Office Visit Co a $0.00 $0.00 Curren[ rocessin seems to match ou intent Schools I58 Office Visit Co a $0.00 $0.00 Current rocessin seems to match rou intent Ci 159 Office Visit Co a $0.00 $0.00 Current rocessin seems to match rou intent Schools 160 Office Visit Co a $0.00 $0.00 Current rocessin seems to match ou intent Ci 161 Office Visit Co a $0.00 $0.00 Current rocessin seems to match ou intent Schools 162 Office Visit Co a $0.00 $0.00 Current rocessin seems to match ou intent Schools 163 Office Visit Co a $0.00 $0.00 Current rocessin seems to match ou intent Schools 164 Office Visit Co a $0.00 $0.00 Current rocessin seems to match rou intent Ci 165 Emer en RoomCo a ent $100.00 $0.00 Error Ci 166 Emer en Room Co a ent $0.00 $0.00 Co a taken as out atient sur e Schools 167 Emer en Room Co a ent $0.00 $0.00 Co a taken - multi le service dates billed Schools 168 Emer en Room Co a ent $0.00 $0.00 Seconda claim, no co a due, COB amount noc in data Ci 169 Emer en Room Co a ent $0.00 $0.00 Second claim, no co a due, COB amount no[ in data Ci 170 Subro ation $0.00 $0.00 Grou does notsubro ate Ci 171 Subro ation $0.00 $0.00 Grou does notsubro ate Ci 172 Subro ation $0.00 $0.00 Grou does no[subro a[e Ci 173 Out atient Thera v Benefit Ma~cimum $0.00 $0.00 Classified b O cima as out atient rehab with 90 da limit Schools 174 Out atient Thera v~nefit Ma~cimum $0.00 $0.00 Classified b O tima as ou atien[ rehab with 90 da limic Schools 175 Out atient Thera y Benefit Ma~cimum $0.00 $0.00 Classified b O tima as out atient rehab with 90 da limit Schools 176 Ou[ atient Thera y Benefit Maacimum $0.00 $0.00 Classified b O tima as ou atient rehab with 90 da limit Schools 177 Out atien~ Thera y Benefit Maximum $0.00 $0.00 Did not exceed out atient thera limit when out atient rehab excluded Schools 178 Out atient Thera y Benefit Maximum $0.00 $0.00 Did not exceed out atient thera limit when ou atient rehab excluded Schools 179 Out atient Thera Benefit Ma3cimum $0.00 $0.00 S eech [hera has se azate 30 visit limit Schools 180 Out atient Thera Benefit Ma~cimum $0.00 $0.00 S eech thera has se aza[e 30 visit limit Schools 181 Out atient Thera Benefit Ma~cimum $0.00 $0.00 Did no[ exceed out atient thera limit when ou atient rehab excluded Schools 182 Out atient Thera y Benefi[ Ma~cimum $0.00 $0.00 S eech ffiera has se azate 30 visit limit Schools 183 Out atient Thera ~ Benefit Maximum $0.00 $0.00 Informational onl Ci 184 Out atient Thera y Benefit Maximum $0.00 $0.00 Informational onl Ci 185 Out atient Thera ~ Benefit Ma~cimum $1,233.23 $0.00 Error - rocessed incorrecd under SNF benefit Ci 186 Out adent Thera Benefit Maximum $746.70 $0.00 Error - rocessed incorrectl under SNF benefi[ Ci 187 Out atient Thera y Benefit Maximum $1,568.07 $0.00 Error - rocessed incorrectl under SNF benefit Ci 188 Out atient Thera y Benefit Masimum $442.54 $0.00 Error - rocessed incorrectl under SNF benefit Ci 189 Out atieni Thera y Benefit MaYimum $0.00 $0.00 InformaCional onl Ci 190 Out atient Thera y Benefit Masimum $0.00 $0.00 Informational onl Ci 191 Ou~ atient Thera y Benefit Maximum $1,141.10 $0.00 Error Ci 192 Out atien[ Thera Benefit Maximum $0.00 $0.00 Authorized se azatel as PT - similaz dia osis - will detail in re ort Ci August 27, 2010 Page 3 - Healthcare Horizons Consulting Group, Inc. ~ITY QF VIRCINIA BEAGH APPENDIX A SITE VISIT DETAIL 193 Ou adent Thera Benefit Ma~cimum $0.00 $0.00 Authorized se aratel - similar dia nosis - will detaIl in re rt Ci ] 94 Ou atient Thera Benefi[ Mauimum $0.00 $0.00 Authorized se azarel - similar dia nosis - will detaIl in re rt Ci 195 Ou auent Thera Benefit Maximum $0.00 $0.00 Two se arate authorizations for 30 visits of PT - similar dia osis Schools 196 Ou arient Thera Benefit Maximum $0.00 $0.00 Two se arate authorizations for 30 visits o£ PT - similar dia osis Schools 197 Ou auent Thera Benefit Maximum $0.00 $0.00 Two se arate authorizadons for 30 visits of PT - similar dia osis Schools 198 Ou arient Thera Benefit Maximum $0.00 $0.00 Two se arate authorizarions for 30 visiu of PT - similar dia osis Schools 199 Ou atient Thera Benefit Maximum $0.00 $0.00 Two se arate authorizadons for 30 visiu of PT - sunilar dia osis Schools 200 Ou atient Thera Benefit Maximum $0.00 $0.00 Two se arate authorizadons for 30 visiu of PT - sunilar dia osis Schools 201 Ou adent Thera Benefit Maximum $0.00 $0.00 Two se arate authorizadons for 30 visiu of PT - sunilar dia osis Schools 202 Ou adent Thera Benefit Maximum $0.00 $0.00 Se arate marz for each ou atient thera Ci 203 Ou auent Thera Benefit Maximum $0.00 $0.00 Se arate max for each ou atient thera Ci 204 Ou atient Thera BeneFit Ma~cimum $0.00 $0.00 Se arate ma~c for each out atient thera Ci 205 Ou atient Thera Benefit Ma~cimum $0.00 $0.00 Se arete ma~c for each ou atient thera Ci 206 Ou atient Thera Benefit Maximum $0.00 $0.00 Se axate ma~c for each ou adent thera Ci 207 Ou arient Thera Benefit Mazcimum $0.00 $0.00 Se arate max for each ou atient thera Ci 208 Ou arient Thera Bene£it Maximum $0.00 $0.00 Se arate max for each ou atient thera Ci 209 Ou atient Thera Benefi~ Ma~cimum $0.00 $0.00 Se arate ma~c for each ou atient thera Ci 210 Ou adent Thera Benefit Maacimum $0.00 $0.00 Se arate ma~c for each ou atient thera Ci 211 Ou arient Thera Benefit Maximum $0.00 $0.00 Se arate max for each ou atient thera Ci 212 Ou atient Thera Benefit Maacimum $0.00 $0.00 Se arate ma~c £or each out atient thera Ci 213 Ou atient Thera Benefit Maximum $0.00 $0.00 Se ardte max for each out atient thera Ci 214 Ou auent Thera Benefit Maximum $0.00 $0.00 $e arate max for each ou atient thera Ci 215 Ou arient Thera Benefit Maximum $0.00 $0.00 Se arate max For each out atient thera Ci - 216 Ou arient Thera Benefit Maximum $0.00 $0.00 Se arate maac for each ou atient thera Ci 217 Ou atient Thera Benefit Maacimum $275.61 $0.00 Error Ci 218 Ou adent Thera Benefit Maximum $0.00 $0.00 Se arate mas for each out atient thera Ci 219 PHCS POS Benefit $0.00 $0.00 Authorized to rocess as in network Schools 220 PHCS POS Benefic $0.00 $0.00 Member met ouo-of- ocket Ci - 221 Pricin $0.00 $0.00 Coxrect rcent of char e er URN contract for trans lant Ci 222 Pricin $0.00 $0.00 Paid coaectl r DRG case rate Schools 223 Pricin $0.00 $0.00 Correct rcent of char e Schools 224 Pricin $0.00 $0.00 Correct r da rate Schools 225 Pricin $0.00 $0.00 Paid correctl for obal trans ]ant Ci 226 Conttact Audit $0.00 $0.00 Non ar rovider Ci 227 Conttact Audit $0.00 $852.00 Findin from reviovs audit - onl allow rima sur e Schools 228 Contract Audit $0.00 $1,925.00 Findin from revious audit - onl allow rima sur e Schools 229 Contract Audit $0.00 $2,427.00 Findin from revious audit - onl allow rima sur e Ci - 523,751.03 516,869.70 August 27, 2010 Page 4 ~#PRENDIX ~'- QUT-Q-F-S~AMPLE GLAIMS - Healthcare Horizons Consulting Group, Inc. CITY QF VIRGINIA ~~A~H APPENDIX B OUT-OF-SAMPLE CLAIMS 230 Other Insurance $0.00 $0.00 Services covered under Medicare Part B, member onl has Part A Schools 231 Other Insurence $0.00 $0.00 Services covered under Medicare Part B, member onl has Part A SchooLs 232 O[her Insurance $0.00 $0.00 Services covered under Medicare Part B, member onl has Part A Schools 233 Other Insurence $0.00 $0.00 Services covered under Medicaze Part B, member onl has Part A Schools 234 Other Insurance $0.00 $0.00 Services covered mmder Medicare Part B, member onl has Part A Schools 235 Other Insurance $0.00 $0.00 Services covered under Medicare Part B, member onl has Pan A Schools 236 Other Insurance $0.00 $0.00 Services covered under Medicare Part B, membex onl has Part A Schools 237 Other Insurance $0.00 $0.00 Services covered under Medicaze Part B, member onl has Part A Schools 238 Other Insurance $0.00 $0.00 Services covered under Medicaze Part B, member onl has Part A Schools 239 Other Insurance $0.00 $0.00 Services covered under Medicaze Part B, member onl has Part A Schools 240 Other Insurance $0.00 $0.00 Services covered under Medicaze Part B, member oni has Part A Schools 241 Other Insurance $0.00 $0.00 Services covered under Medicare Part B, member onl has Part A Schools 242 Other Insurance $0.00 $0.00 Services covered under Medicaze Part B, member onl has Part A Schoo]s 243 Other Insurance $0.00 $0.00 Services covered under Medicaze Part B, member onl has Part A Schools 244 Other Insurance $0.00 $0.00 Services covered mmder Medicaze Part B, member onl has Part A Schools 245 Other Insurance $0.00 $0.00 Services covered mmder Medicaze Part B, member onl has Part A Schools 246 Other Insurance $0.00 $0.00 Services covered under Medicare Part B, member onl has Part A Schools 247 Other Insurance $0.00 $0.00 Services covered under Medicare Part B, member onl has Pazt A Schools 248 Other Insurance $0.00 $0.00 Services covered under Medicare Part B, member onl has Pazt A Schools 249 Other Insurance $0.00 $0.00 Services covered under Medicare Part B, member onl has Part A SchooLs 250 Other Insurance $0.00 $0.00 Services covered under Medicare Part B, member onl has Part A Schools 251 Other Insurance $0.00 $0.00 Services covered under Medicare Part B, member onl has Part A Schools 252 Other Insurance $0.00 $0.00 Services covered under Medicare Part B, member onl has Part A SchooLs 253 Other Insurance $0.00 $0.00 Services covered under Medicare Pan B, member onl has Pazt A SchooLs 254 Other Insurance $0.00 $0.00 Services covered under Medicare Part $ member onl has Part A Schools 255 Other Insurance $0.00 $0.00 Services covered under Medicare Parc B, member onl has Part A SchooLs 256 Other Insurance $0.00 $0.00 Services covered under Medicare Part B, member onl has Part A Schools 257 Other Insurance $0.00 $0.00 Services covered under Medicare Part B, member onl has Part A Schools 258 Other Insurance $0.00 $0.00 Services covered under Medicare Part B, member onl has Part A Schools 259 Other Insurence $0.00 $0.00 Services covered under Medicaze Part B, member onl has Part A SchooLs 260 Other Insurance $0.00 $0.00 Services covered under Medicare Part B, member onl has Part A Schools 261 Other Insurance $0.00 $0.00 Services covered under Medicaze Part B, member onl has Part A Schools 262 Other Insurance $0.00 $0.00 Services covered under Medicare Part B, member onl has Part A SchooLs 263 Other Insurance $0.00 $0.00 Services covered under Medicare Part B, member onl has Part A Schools 264 Other Insurance $0.00 $0.00 Services covered under Medicare Part B, member onl has Part A Schools 265 Other Insurance $0.00 $0.00 Services covered mmder Medicaze Part B, member onl has Pazt A Schools 266 Other Insurance $0.00 $0.00 Services covered under Medicaze Part B, member onl has Parc A Schools 267 Other Insurance $0.00 $0.00 Services covered under Medicaze Part B, member onl has Part A Schools 268 Other Insurance $0.00 $0.00 Services covered under Medicaze Part B, member onl has Part A Schools 269 Mulri le Procedure Reducdons $0.00 $0.00 Prim rocedure - informational onl Schools 270 Mulri le Procedure Reducdons $38.55 $0.00 Missed 50%reducrion Schools 271 Mula le Procedure Reducdons $0.00 $0.00 Prim rocedure - informadonal onl Ci 272 Mula le Procedure Reducaons $0.00 $35.11 Missed 50% reducrion Ci 273 Mula le Procedure Reductions $0.00 $0.00 Pzima rocedure - informational onl Schools 274 Mula le Procedure Reductions $42.71 $0.00 Missed 50% reduction Schools 275 Multi le Procedure Reductions $0.00 $0.00 Pruna rocedure - informaaonal onl SchooLs 276 Mulri le Procedure Reductions $0.00 $37.04 Missed 50% reducdon Schools 277 Mulri le Procedure Reductions $0.00 $0.00 Prima rocedure - informational onl Schools 278 Multi le Procedure Reductions $0.00 $700.00 Missed medical edit for unbundlin Schools 279 Mula le Procedure Reductions $0.00 $1,944.00 Should onl allow sin le case rate Schools 280 Mula le Procedure Reducrions $0.00 $0.00 Correct claim with co a SchooLs 281 Multi le Procedure Reductions $0.00 $0.00 Correct claim with co a Schools 282 Multi le Procedure Reductions $0.00 $1,763.00 Should onl allow sin le case rate Schools 283 Multi le Procedure Reducdons $0.00 $0.00 Correct claim with co a Cit 284 Multi le Procedure Reductions $0.00 $1,763.00 Should onl allow sin le case rate Ci 285 Out atient Sur e Co a $100.00 $0.00 Missed co a Schools 286 Ou atient Sur e Co a $0.00 $0.00 False labor - no co a re uired Schools 287 Out atient Sur e Co a $100.00 $0.00 Missed co a Schools 288 Out atient Suz e Co a $100.00 $0.00 Missed co a Schools 289 Out atient Sur e Co a $100.00 $0.00 Missed co a Schools August 27, 2010 Page 1 - Healthcare Horizons Consulting Group, Inc. ~ITY OF VIRGINIA ~EACH APPENDIX B OUT-OF-SAMPLE CLAIMS 290 Out atient Sur e Co a $100.00 $0.00 Missed co Schools 291 Out acient Sur e Co a $100.00 $0.00 Missed co a Schools 292 Ou[ atient Sur e Co a $100.00 $0.00 Missed co Schools 293 Ouc atient Sur e Co a $100.00 $0.00 Missed co Schools 294 Ouc atient Sur e Co a $100.00 $0.00 Missed co a Schools 295 Ouc atient Sur e Co a $100.00 $0.00 Missed co a Schools 296 Out atient Sur e Co a $100.00 $0.00 Missed co a Schools 297 Out atient Sur e Co a $100.00 $0.00 Missed co a Ci 298 Out atient Sur e Co a $100.00 $0.00 Missed co a Schools 299 Out atient Sur e Co a $100.00 $0.00 Missed co a Schools 51,481.26 56,242.15 August 27, Z010 Page 2 APPENQIX ~ ORTlMA RESPQNSE ~ O tima:Health~~ p August 25, 2010 Mr. Lyndon Remias City Auditor City of Virginia Beach 2401 Courthouse Drive Virginia Beach, VA 23456 RE: 2009 Health Plan Audit Dear Lyndon, Optima Health 4417 Corporation Lane Virginia Beach, Virginia 23462 Tel 757-687-6060 Fax 757-687-6031 www. opti m ah ealth.com Thank you for the opportunity to respond to the Optima Health Claims Audit Report for the The City of Virginia Beach and The School Board of the City of Virginia Beach prepared by Healthcare Horizons dated July 26, 2010. As you know this is the second year we have had a 100% medical claims audit conducted by Healthcare Horizons. For this recent audit, over 278,700 claims were reviewed by Healthcare Horizons representing over $61 million in paid claims for the City and Schools. The end result was a 99.9°Io financial accuracy. We hope you and others within the City and Schools will be pleased with the result. We believe this helps validate Optima Health as the best in class health plan partner for the City and Schools. Below please find our response to the findings as listed in the Healthcare Horizons report. Health Plan Audit findings by category: 1. Duplicates There may be instances where a provider has sent the same came to the health plan twice. We have a process in place to ensure that duplicate claims are processed correctly which involves running a daily report for possible duplicates. As noted in the findings by Healthcare Horizons "Optima has effective procedures in place to prevent duplicate payments...no additional follow- up is required in this area. " 2. Identification of Primary Payor There were two claims identified where other insurance should have paid as primary. One of these claims had already been corrected prior to the on-site audit. The recommendation was for Optima Health to have process in place to identify claims impacted by updated insurance information for processing. Once we receive information a member has dual coverage, we validate the other insurance with the other carrier and the effective date, update the member's information in the system, and reprocess any applicable claims. A Service of Sentara Mr. Lyndon Remias August 25, 2010 Page 2 3. Multiple Procedure Reduction Opportunities The recommendation was for Optima Health to develop a process to identify multiple procedure claims reduction opportunities when providers bill on separate claims. Optima Health Plan has akeady developed a process to identify multiple procedure claims reduction opportunities with an Alert System for our claims processors. We continue to add additional post audit processes in our day to day operations to identify multiple procedure claims reduction opportunities. 4. Eligibility/Retroactive Terminations A suggestion was made for Optima Health to monitor eligibility recoveries monthly to ensure that claims are adjusted on a timely basis. Each month, we run a termination report and will reverse claims associated with a terminated member. We are also conducting internal audits on the retro termination reports, and depend on the City and Schools to notify us on a timely basis so we can retract applicable claims. 5. Outpatient Surgery Copay A small amount of claims did not have the $100 Outpatient Surgery Copay applied to the claim. There were a total of eight agreed upon during the on-site visit, and an additional fifteen identified throughout the entire set of claims. Based on the findings we are researching unique billing scenarios to identify opportunities to ensure the applicable copay is applied to the claim. Again, this only applied to a small number of claims throughout the entire set of claims. 6. Office Visit Copay There was a small set of claims in question, totaling $1,498, where the $20 office visit was not applied on a claim when the $100 deductible applied. Based on our research, this is correct. A claim will only pull a copay, when the deductible is applied, if the service being rendered requires a copay. 7. Medicare Part B Healthcare Horizons identified a member who was eligible for Medicare Part B but did not elect to pay for the coverage, resulting in a higher amount paid by the City. The recommendation was to explore options with Optima Health to limit this from happening so members do not have an incentive to refuse Part B. Currently, Optima Health does not have any policies or procedures in place to require a member to have Medicare Part B. 8. Outpatient Therapy The request was for Optima Health to provide feedback on why authorizations were given for separate illnesses or conditions where there was a minor variation in the diagnosis. The City and Schools outpatient therapy benefit is set up to be administered at covered up to 30 visits per illness or condition. A provider can request authorization for up to 30 visits for a different diagnosis, different illness or condition, or different benefit such as Physical Therapy versus Speech Therapy. We're happy to revisit the administration of this benefit if it is desired. A Service of SenWra Mr. Lyndon Remias August 25, 2010 Page 3 9. Other Insurance Healthcare Horizons recommended that Optima consider limiting the secondary payment by combining primary and secondary payments to our allowable fee schedule. We did consider this a possible method in the prior audit as noted in our follow up. However, we believe that the most efficient way to administer coordination of benefits is to continue with our current policy of paying the secondary insurance based off of the primary insurance explanation of benefits. As noted in the prior audit by Healthcare Horizons, this process is not unreasonabl~ and has been found in other health plan audits. 10. Multiple Procedure Reduction Opportunities Optima Health has a process to identify multiple procedure claims reduction opportunities with an Alert System for our claims processors. When these provider claims are being processed, the claims processor will receive an alert to verify or review other provider claims for the same procedure on the same date of service. There were three claims noted by Healthcare Horizons we had corrected as part of an internal audit prior to their identification by Healthcare Horizons. 11. Optima Health Audit Vendors Optima. Health does contract with external audit vendors to conduct internal audits. Specifically, we've contracted with Price Waterhouse to audit our claims processing. We also contract with KPMG to audit our internal controls to be in compliance with the Model Audit Rule. As referenced in the findings, Optima Health's Special Investigations Unit contracts with two vendors, Sentinal and CGI Federal Incorporated to help identify irregular billing patterns. Claims being reviewed by these vendors include all claims processed by the health plan, including those for Virginia Beach City and Schools. 12. Systemic Errors As noted by Healthcare Horizons, they did not identify other areas of concern for systemic overpayment, therefore no action is need on this item. Again, thank you for the opportunity to respond. We look forward to our continued partnership and providing a quality health plan for the Virginia Beach City and School employees and family members. If you have any questions or need anything further please let me know. I can be reached at 687-6060 or srfuaua @ sentara. com. Sincerely, ~Ccc y ~ ~~,~^y..~-- Stacy Fuqua Sr. Client Executive A Service of Sentara