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s 368.014 L72AEC 1996 STATE OF MONTANA ANALYSIS AND EVALUATION OF CLAIMS PROCESSING AND PAYMENT PROCEDURES March 1, 1994 Through February 29, 1996 STATE DOCUMENTS COLLECTION FEB ? 1 mi MONTANA STATE LIBRARY HELEN1A5,15MEO.N6TtAhNAAVE5.9S20 • . ! ii U Uf\ J Ui\l1 Wi^3 Prepared UnderContract With: MONTANA LEGISLATIVE BRANCH, AUDIT DIVISION PO Box 201705, Helena, MT 59620-1705 iiM,T,/MA.STATELIBRARY §,1.114,11 3 0864 0009 8091 5 STATE OF MONTANA ANALYSIS AND EVALUATION OF CLAIMS PROCESSING AND PAYMENT PROCEDURES March 1, 1994 Through February 29, 1996 Submitted By: THE SEGAL COMPANY 5080 N. 40th Street, Suite 400 Phoenix, Arizona 85018 Contact: MaryAnne L. Watson (602) 381-4031 I MONTANA LEGISLATIVE BRANCH LegislativeAuditor DeputyLegislativeAuditors: MaryBryson ScottA. Seacat OperationsandEDPAudit JamesGillett LegalCounsel: Financial-ComplianceAudit JohnNorthey JimPellegrini PerformanceAudit LEGISLATIVE AUDIT DIVISION October 1996 TheLegislativeAuditCommittee oftheMontanaStateLegislature: EnclosedisthereportonthespecialpurposeauditoftheMontanaEmployeeBenefit PlanadministeredbytheDepartmentofAdministrationforthetwofiscal yearsended February28, 1996. TheauditwasconductedbytheSegal Companyunderacontractbetweenthefirmand ouroffice. Thecommentsandrecommendationscontainedinthisreportrepresentthe viewsofthefirmandnotnecessarilytheLegislativeAuditor. Theagency'swrittenresponsetothereportrecommendationsis includedinthebackof theauditreport. Respectfullysubmitted, ScottA. Seacat LegislativeAuditor 96C-09 Room135,StateCapitolBuilding,POBox201705 Helena,MT59620-1705 Phone(406)444-3122 FAX (406)444-9784 TheSegal Company 5080North40lhStreet Suite400 Phoenix.Arizona 85018 602-381-4000 October 31, 1996 FAX:602-381-4090 State ofMontana Office ofthe Legislative Auditor Helena, Montana Re: State ofMontana Employee Benefit Plan Ladies and Gentlemen: It is a pleasure to submit this report, which sets forth the results of our evaluation of the claims processing andpaymentproceduresutilizedby Blue Cross and Blue Shield ofMontana (BCBS) and case management services provided by Vocational Resources Incorporated (VRI) for the State of Montana Employee Benefit Plan. Our onsite BCBS review was conducted in August, 1996 and the analysis of VRI case files was performed during September, 1996. The preliminary report was presented to BCBS, VRI and the State's Department ofAdministration for their review. Their responses are provided in Sections VIII, XIIIandXIV, respectively. Asappropriate, issuesofclarificationaddressedintheseresponses have been incorporated in this final report. This reportwould be incomplete withoutrecognitionofthecooperationand assistance ofBCBS and VRI staffand State personnel extended to us during the onsite audits and review process. On behalfofThe Segal Company, we appreciate the opportunity to assist the State ofMontana in this project. We look forward to discussing this report with you and answering any questions you may have. Sincerely, /It {A [{/V\aifcLeWnY\ MaryAnne L. Watson, HIA Manager, Claims Auditing Services Jg Enclosure Hanford Houston LosAngeles Minneapolis |Ac Multinational Group of Actuaries Toronto Washington.DC. WestPalmBeach '"t^fc Antwerp Hamburg London Laus TABLE OF CONTENTS SECTION I - INTRODUCTION 1 Purpose ofthe Audit 1 Dates and Locations 1 Segal Audit Personnel 2 SECTION II - HIGHLIGHTS 3 Blue Cross and Blue Shield ofMontana 3 Vocational Resources Incorporated (VRI) 4 SECTION III - BCBS ADMINISTRATION PROCEDURES REVIEW 5 Administrative Procedures Reviewed 5 Administrative Staff 6 Mail Handling 7 Enrollment and Eligibility Updates 7 Communications To Providers and Participants 8 Claims Processing Procedures 9 Precertification and Large Case Management 9 Subrogation/Third Party Liability 10 Reimbursement Allowances 10 Claims Processing System 10 Reports 11 Financial Procedures 11 Claim Control Measures 11 SECTION IV - STATE ADMINISTRATION PROCEDURES REVIEW 13 Enrollment and Eligibility 13 Subrogation/Third Party Liability 13 SECTION V - BCBS CLAIMS AUDIT REVIEW 15 Selection ofClaims 16 Determination ofErrors 16 Processing Accuracy 16 Summary ofErrors 17 Turnaround Time 18 EXHIBIT A - ERROR LISTING 19 EXHIBIT B - TURNAROUND TIME ANALYSIS 21 SECTION VI - BCBS PRIOR AUDIT RECOMMENDATIONS 23 Subrogation/Third Party Liability 23 Reimbursement Allowances 23 Reports 24 Eligibility Discrepancies 25 Premium Billings 26 Digitized by the Internet Archive in 2011 with funding from Montana State Library http://www.archive.org/details/analysisevaluati1996mart