Carriers offer plans in which eligible individuals may enroll to  receive health care coverage. The Healthcare & Insurance—Federal Employee Insurance  Operations office, the contracting office, is responsible for  administering the FEHBP, contracting with carriers, and overseeing  carriers’ compliance. OPM’s Requirements and Guidance for FEHBP Carriers’ Fraud and Abuse Programs

OPM requires FEHBP carriers to establish programs to prevent, detect,  and eliminate fraud and abuse. Each carrier is required by contract to:  conduct a program to assess vulnerability to fraud and abuse; operate a system designed to detect, eliminate, and follow up on fraud submit a report on fraud and abuse by March 31 of each year; demonstrate that a statistically valid sampling technique is used  routinely to compare FEHBP claims against the carrier’s quality  assurance standards and its fraud and abuse prevention standards; maintain records of fraud prevention activities; implement any corrective actions ordered by an OPM contracting  officer to correct a deficiency in its fraud prevention program; provide timely notification to the OIG of credible evidence of a  violation of federal criminal law involving fraud found in Title 18 of the  U. S. Code by a principal, employee, agent, or subcontractor; and provide timely notification to the contracting officer of any significant  event, including fraud, that might reasonably be expected to have a  material effect on the carrier’s ability to meet its obligations. OPM’s Contracting Office Monitors Compliance with Fraud and Abuse Program Requirements and Guidance by Reviewing Information and Conducting Site Visits

OPM’s contracting office staff conduct several activities to monitor  carriers’ compliance with fraud and abuse program requirements and  agency guidance, including reviewing carriers’ annual reports to OPM’s  contracting office, conducting site visits, reviewing and resolving OIG  audit findings, and reviewing disputed claims and enrollee complaints. Officials from OPM’s contracting  office told us that they review this report and assess the information  contained in the report against fraud and abuse program requirements  to determine the extent to which carriers met, and were thus in  compliance with, requirements. Officials from OPM’s  contracting office told us that, as part of their oversight, contracting  officers follow up with carriers whose reports suggest possible  noncompliance for the purpose of bringing them into compliance. Site Visits of Carriers

OPM contracting office staff also assess carriers’ compliance with fraud  and abuse program requirements and guidance during periodic site visits. Review and Resolution of OIG Audit Findings

OPM contracting office staff review and resolve OIG audit findings as part  of their oversight of carriers’ fraud and abuse programs. Officials told us that contracting officers’ reviews of disputed  claims may reveal suspicious patterns of drug utilization, multiple  complaints involving a single provider, or other indicators of potential   In addition to reviews of enrollees’ disputed claims,  fraud or abuse.OPM contracting office staff review enrollees’ complaints about other  aspects of the FEHBP, which could also indicate potential fraud or abuse,  and they intervene as necessary. OPM Contracting Office Staff Review Fraud and Abuse Program Outcomes, but Several Factors Contribute to the Challenge of Assessing Program Effectiveness

OPM contracting office staff review certain outcomes of carriers’ fraud  and abuse programs, but program outcomes do not provide complete  information about program effectiveness. For example, in 2011, carriers reported that  the outcomes of their fraud and abuse programs included 29 criminal  convictions and more than $23 million in recoveries to FEHBP. However, program outcomes do not measure the success of strategies  intended to prevent or minimize fraud and abuse such as systems for  preauthorization or precertification. OPM contracting office staff reported that they have not adopted specific  measures of program effectiveness for FEHBP fraud and abuse programs  because they have not identified an appropriate way to measure the  effectiveness of antifraud programs. Several factors contribute to  difficulties in developing a measure of the effectiveness for health care  antifraud programs. These factors include the following:
A lack of information about the baseline amount of fraud and abuse in  health care. The difficulty of establishing a causal link between antifraud activities  and the amount of health care fraud or abuse. The difficulty of measuring the effect of efforts to prevent or deter  fraud and abuse. Agency Comments

OPM and the OPM OIG reviewed a draft of this report and provided  technical comments, which we incorporated as appropriate. Appendix I: Requirements for Carriers and OPM to Report Information about Potential Fraud and Abuse

There are requirements and procedures for reporting potential fraud and  abuse that apply to both the carriers that offer health care plans through  the Federal Employees Health Benefits Program (FEHBP) and the Office  of Personnel Management (OPM).
Why GAO Did This Study

The FEHBP provides health care coverage to millions of federal employees, retirees, and their dependents through health insurance carriers that contract with OPM. Carriers offer plans in which eligible individuals may enroll to receive health care benefits. OPM negotiates these contracts; requires that each carrier establish a program to prevent, detect, and eliminate fraud and abuse; and oversees carriers' fraud and abuse programs. Although the extent of fraud and abuse in the FEHBP is unknown, any fraud or abuse that does occur contributes to health care costs and may be reflected in the premiums for FEHBP enrollees.
GAO was asked to review OPM's oversight of FEHBP fraud and abuse programs. This report describes (1) oversight of fraud and abuse programs by OPM's contracting office and (2) the OPM contracting office's approach to measuring the effectiveness of FEHBP carriers' fraud and abuse programs. To do so, GAO reviewed documents that specify program requirements and guidance, such as carrier contracts and letters from OPM to carriers; documents that assist oversight of fraud and abuse programs, such as annual reports that OPM requires from carriers; and documents demonstrating oversight of carriers, such as memos to carriers from OPM contracting office staff regarding carriers' compliance. GAO also reviewed published work about measuring the effectiveness of antifraud programs. GAO interviewed OPM officials and officials from entities with expertise related to antifraud programs and measurement.

What GAO Found

The Office of Personnel Management (OPM) Healthcare & Insurance--Federal Employee Insurance Operations office, which we refer to as OPM's contracting office, monitors Federal Employees Health Benefits Program (FEHBP) carriers' compliance with requirements and other guidance for preventing, detecting, and eliminating fraud and abuse. These requirements include establishing a program to assess vulnerability to fraud and abuse, reporting annually on program outcomes, reporting potential fraud to OPM's Office of Inspector General (OIG), and implementing corrective actions to address deficiencies in fraud prevention programs. OPM's guidance encourages carriers to implement certain program standards, such as formal fraud awareness training for all employees. To monitor carriers' compliance with these requirements and other guidance, OPM's contracting office staff conducts the following activities.
Review carriers' annual reports: Staff review information contained in annual reports from carriers that describe the carriers' fraud and abuse programs and their outcomes. Officials told us that they assess information in carriers' annual reports against program requirements and guidance and follow up with carriers whose reports suggest possible noncompliance.
Conduct site visits: Staff also inspect and follow up on carriers' fraud and abuse programs during periodic site visits. Using a risk based site selection strategy, OPM contracting office staff conducted site visits of 27 carriers whose plans covered about 70 percent of FEHBP enrollees in 2012.
Review and resolve OIG audit findings: Staff review and resolve OIG audit findings that identified areas of carriers' noncompliance.
Review disputed claims and enrollee complaints: Staff review disputed claims and enrollee complaints to identify indicators of potential fraud or abuse, such as suspicious patterns of drug utilization.
OPM contracting office staff review certain outcomes of carriers' fraud and abuse programs, but several factors contribute to the challenge of assessing program effectiveness. Program outcomes in 2011 included 29 criminal convictions and more than $23 million in recoveries to the FEHBP, but program outcomes do not provide complete information about program effectiveness because they do not measure the success of efforts to prevent or minimize fraud and abuse. OPM contracting office staff reported that they have not adopted specific measures of program effectiveness for FEHBP fraud and abuse programs because they have not identified an appropriate way to measure the effectiveness of antifraud programs. Several factors contribute to difficulties in assessing the effectiveness of health care antifraud programs. These factors include lack of information about the baseline amount of fraud and abuse, difficulty establishing a causal link between antifraud activities and the amount of fraud and abuse, and difficulty measuring the effect of efforts to prevent or deter fraud and abuse.
OPM and the OPM OIG provided technical comments, which we incorporated as appropriate.