Third Party Administrator Claim Audit Report - WSHIP

1 Third Party Administrator Premium and billing Audit Report Customer Service Audit Report Final Report of Findings May 5, 2005 _____ Onsite Audit Conducted By: Ann Harris and W. Wade Gayheart Insurance Compliance Consulting Services, Inc. (ICCS) Requested By: Joe Patton General Counsel CRS Solutions Group Date of Onsite Audit : January 25- 27, 2005 Location: BMI 2015 16th Street Great Bend, KS 67530 BMI Contacts.

2 Chad Somers, President Chris Clasen, Claims Manager Sharon Manning, Supervisor - Premium billing & Enrollment Dept, State Pools Objective: Assessment of premium collection and billing Assessment of customer service Attachments: Complete Audit Member List Customer Service Spreadsheet 1 I. General Information The Washington State Health Insurance Pool ( WSHIP ) provides health benefits to approximately 2,600 enrollees.

3 Benefit Management Inc (BMI) was the contracted Third Party Administrator (TPA) that provided the membership and billing information for the period audited. The onside Audit was conducted at Benefit Management Inc (BMI). For the onsite Audit , BMI provided original member files and individual spreadsheets of the member s premium payments. Sharon Manning provided the initial premium reconciliation and answered questions and provided additional documentation during the Audit . She also provided follow-up documentation post- Audit regarding member files.

4 The auditors conducted an Audit of BMI s billing and Premium Processes and Records to determine proper enrollment of members and verification of proper billing and premium collection. The auditors also conducted an Audit of BMI s Customer Services Procedures to ensure accurate and timely response to customer service inquiries from members and providers. II. Scope of Audit In preparation for the Audit , a total of 186 members were randomly selected from a member enrollment list produced by BMI. The data included billing and membership information for April 1, 2004 through September 30, 2004.

5 Margin of error on this sample is 4%, with a confidence level of 95% applied. The Washington State Health Insurance Pool offers three health insurance plans to its enrollees. Plan 1 is a major medical plan with deductible options of $500, $1,000 or 2$1,500. Plan 2 is available to enrollees that are covered by Medicare Part A and Part B and does not have a deductible. Plan 3 is a PPO plan with deductible options of $500, $1,000, $2,500 and $5,000. BMI receives applications for enrollment from either a potential member, an agent who represents the potential member, or from members represented by advocacy groups.

6 BMI has Policy and Procedures set up for enrollment and information verification of new applicants. An applicant file folder is prepared and a checklist form is completed on each applicant. If an applicant is approved, an enrollment packet is mailed to the policyholder, which includes the approval letter, ID card, policy, schedule of benefits, privacy notice, personal representative form, web access reference guide, WSHIP GIG letter 1, a photo copy of the original application, and a PPO directory if the policyholder is a Plan 3 enrollee.

7 If the applicant is declined coverage, the applicant is notified by letter and all original documents and the original un-cashed check are returned to the applicant. All correspondence to and from the applicant are scanned and stored in electronic folders. The original correspondence is filed in the applicant file folder. BMI uses Complete Health Benefits Administration System software by Complete Health Systems to perform various functions including eligibility, premium billing and accounts receivable management.

8 A WSHIP member is billed based on their payment cycle. The billing cycles are monthly, quarterly, semi-annual and annual. The member selects the cycle at the time of application. BMI has Policies and Procedures in place for any billing cycle changes. 1 The WSHIP GIG letter contains helpful hints to the new policyholder covering topics about the claims process, billing , administrative policies, grievance procedures, and correspondence. 3 Premium is submitted to BMI through Electronic Funds Transfer (EFT) and Live Deposits other than other than EFT.

9 All checks are sent to the appropriate lockbox for deposit. Each member has a Client Ledger where premiums are posted upon collection. Lock-Box Premium is posted weekly. ACH Premium is posted approximately ten business days following the ACH deposit to the WSHIP Key Bank account. The ACH transactions occur on the first Friday of each month that falls on or after the fourth day of the month. Premium amounts are verified and reconciled to the member s individual ledger. BMI has Policy and Procedures for Application Premium Handling, Lock-Box Premium Receipt, ACH Premium Receipt, HCA (Health Care Authority) Premium Receipt, Stop-Pay, Voids, Refunds Requests and Receivables.

10 Premium Rate increases occur when state-mandated rate changes occur, and also when a member s birth date places the member into a different rate classification. A birth date rate increase occurs when the member s age changes to a different age bracket. The member is notified of any rate changes. BMI has Policies and Procedures in place to identify those members. III. Audit Findings Member Enrollment and Eligibility Member enrollment data was reviewed in the individual member file. The file included the application and WSHIP checklist.