Stronger Management Needed To Improve Employee Organization Health Plans' Payment Practices

HRD-79-87: Published: Sep 7, 1979. Publicly Released: Sep 17, 1979.

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The Office of Personnel Management (OPM) has not done an effective job of guiding and overseeing the Employee Organization Plans participating in the Federal Employees Health Benefits program. OPM has allowed the plans to make claim payments without determining whether the claims represented sound comprehensive systems to determine the reasonableness of charges as the contracts require.

The Plans have paid claims without having information necessary to demonstrate medical necessity. Paid claims were found that: (1) appeared to represent noncovered routine physical examinations; (2) had been paid with no indication of symptoms or diagnoses; (3) had diagnoses or symptoms that were not clearly related to the tests provided; (4) were for hospitalizations that appeared either unnecessary or too long; and (5) were paid as emergencies when the patients' diagnoses did not indicate emergencies. The Plans' payment system did not fully comply with the contracts. The Plans are required to develop reasonable charge allowances and pay only up to those amounts except in unusual circumstances. OPM has been aware of some of these problems, but it has provided little formal guidance to help the plans determine medical necessity or reasonable allowances.

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