Fraud safeguards called weak
WASHINGTON -- A review of safeguards against fraud and abuse in the Federal Employees Health Benefits Program shows serious weaknesses in government supervision and has resulted a call for immediate changes in management controls.
Acknowledging that the government has made some improvements in the insurance program's internal control system, the recent General Accounting Office review found that the agency still "cannot reasonably ensure that program funds are adequately protected from fraud and abuse."
The nation's largest employer-sponsored health insurance plan, the Federal Employees Health Benefits Program serves about 10 million federal employees, retirees and dependents.
The GAO report of the review says the health plans were "highly vulnerable" to fraud and points to millions of dollars in misappropriations that were found in seven of the 25 fee-for-service health plans. These incidents include:
* About $1.2 million embezzled from the American Postal Workers Union plan in 1984 and 1985.
* Approximately $7.2 million improperly charged by Aetna Life and Casualty for federal income taxes between 1982 and 1987.
* Improper investment of health-plan funds by the American Federation of Government Employees, which used the monies to finance AFGE operations, resulting in a $350,000 loss of investment income.
* Three cases of embezzlement over a four-year period in the National League of Postmasters health plan, amounting to a loss of nearly $200,000.
Restitution has been made in each of these incidents, according GAO and Office of Personnel Management records, but the safeguards that would prevent them from recurring are not yet in place, especially regarding intentional and unintentional errors that could involve the huge number of claims processed under the overall health benefits plan.
"Additionally, the plans are inherently vulnerable to fraud and abuse by enrollees and providers of health-care services and supplies because most program funds are spent for benefit payments," says the report. "Because the benefit payments involve processing millions of claims, it is impractical to individually scrutinize each claim."
In 1988, for example, more than 37 million claims totaling about $6.7 billion were processed. "If only a small fraction of these claims were fraudulent, millions of dollars would be added to the program's costs," the report says.
The GAO recommended a variety of measures, including immediate correction of deficiencies turned up by the inspector general -- some of the deficiencies were uncorrected 10 years after the initial audit -- and the development of an aggressive program for preventing and detecting fraud by enrollees and providers.
Such problems with the Federal Health Benefits Program were not exactly news for Rep. Gary L. Ackerman, chairman of the House subcommittee on compensation and employee benefits and sponsor of the Federal Employees Health Benefits Reform Act of 1991.
The legislation, introduced earlier this year after prolonged congressional hearings during the last Congress turned up the magnitude of the problem, would reform the 30-year-old health benefits program, which Ackerman says has "strayed from the principle of group insurance and is no longer meeting the needs of its 10 million beneficiaries."
As one example, Ackerman, D-N.Y., says the typical federal worker receives about $1,100 a year less in employee-paid benefits than the average private-sector worker.
The new plan would replace the current 19 fee-for-service health-plan options with a two-option plan, which would be managed by the Office of Personnel Management in consultation with a newly created Federal Employees Health Benefits board.
Ackerman's proposal would consist of a standard option and a high option, for either individual or family coverage. Enrollees who elect to participate in the high-option plan would pay less out-of-pocket expenses if they choose providers who have negotiated agreements with the plan.
But despite last year's hearings and the July GAO report calling for immediate remedies, Ackerman's bill is on hold, pending a decision by Rep. William L. Clay, D-Mo., the new chairman of the House Post Office and Civil Service Committee.
"What happens at this point is not exactly clear," says Ackerman spokesman Howard Doyle. "Mr. Clay is interested in having consultants look at the problem . . . so he and Mr. Ackerman are talking it over. . . ."
Doyle says the two congressmen were in negotiations every day before the August recess and have since discussed the matter two or three times. An agreement should be reached in September, he says.
The U.S. Department of Veterans Affairs announced last week that one of its own had achieved the presidency of the Baltimore Association of Nurse Recruiters.
Ann Thanner Melvin, R.N., the nurse recruiter at the Baltimore VA Medical Center since 1988, is the new association president.
The 41-member association promotes "ethical and sound principles" of nurse recruitment and retention in the Baltimore area, according to the Department of Veterans Affairs announcement.
Melvin is also vice president of the VA Nurse Recruiters