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HomeMy WebLinkAboutHR12-159 - Original - EideBailly LLP - Perform Audit of Premera Blue Cross 2011 Claims - 06/01/2012 EideBailly. May 18,2012 �� CPAs&BUSINESS ADVISORS Becky Fowler The City of Kent 220 4`n Ave. S Kent,WA 98032 Introduction. We are pleased to confirm our understanding of the nature and limitations of the services we are to perform for the City of Kent that is subject to the WAC Standards in Section 200-100-120. Attached and incorporated herein as Exhibit A is the Work Plan outlining the scope of the agreed- upon procedures for the purposes of satisfying the State of Washington requirements related to regulation of self-funded government plans Such requirements require both individual and self- funded plans to obtain an audit of claims filing procedures,internal financing control mechanisms and claims adjustment expense records every three years per WAC 200-100-120. This engagement is solely to assist the City of Kent in complying with the requirements of WAC 200- 100-120. Our engagement to apply agreed-upon procedures will be conducted of Premera Blue Cross(Premera)in accordance with the attestation standards established by the American Institute of Certified Public Accountants.The sufficiency of the procedures is solely the responsibility of those parties specified in the report Consequently,we make no representation regarding the sufficiency of the procedures described in the attached schedule either for the purpose for which this report has been requested or for any other purpose If, for good cause,we are unable to complete the procedure,we will describe any restrictions on the performance of the procedure in our report,or will not issue a report as a result of this engagement Because the agreed-upon procedures listed in the attached schedule do not constitute an audit,we will not express an opinion on the financial condition or internal control environment of Premera hi addition,we have no obligation to perform any duties which are outside the scope of this engagement. Eide Bailly Duties We will submit a written report evaluating the results of the review for the City of Kent subject to the WAC standards. The report is intended to be solely for the use of the City of Kent,and should not be disclosed to or used by anyone other than these specified parties and their designated representatives. Our report will contain a paragraph indicating that had we performed additional procedures, other matters might have come to our attention that would have been reported to you. Eide Bailly, upon agreement with the City of Kent,will begin this engagement on or before June 1,2012, and will review Premera activities from January 1,2011,through December 31,2011, unless the dates of the review period are changed by the City of Kent Eide Bailly will submit its proposed Agreed-Upon Procedures Report to the City of Kent on or before August 15,2012,for review and comment. Eide Bailly will discuss the contents of the Agreed-Upon Procedures Report with the City of Kent. www.eidebailly.com 4310 17th Ave S I PO Box 2545 1 Fargo,ND 58106-2545 1 T 701 239 8500 1 F 701 239 8600 1 EOE We will protect and treat as confidential the Agreed-Upon Procedures Report and all information (whether provided orally, in writing of in any other form)provided to us during the scope of this review,and will not disclose or permit our employees or representatives to disclose the Agreed- upon Procedures Report of any information received from you (other than to our employees involved in the performance of services hereunder),or otherwise use such Agreed-Upon Procedures Report or information,except as contemplated in this letter agreement, or as may be required by law. If we receive any request or demand to produce the Agreed-Upon Procedures Report or any information received from you or to provide any testimony related thereto,whether pursuant to a subpoena, summons,governmental order or otherwise,we will notify you immediately of such request or demand If you object to the release of the Agreed-Upon Procedures Report of other information,we agree to give you sole control of the defense of such request or demand and will not release the Agreed-Upon Procedures Report or other information unless ordered by a court of competent jurisdiction,provided that you will indemnify us for any expenses incurred in connection with resisting such release. T/te City of Kent's Duties. The City of Kent agrees to perform the following functions in connection with this agreement: a. Make all management decisions and perform all management functions pertaining to the Agreed-Upon Procedures. b. Designate a competent individual to oversee the Agreed-Upon Procedures on behalf of the City of Kent. c. Provide Eide Bailly with access to appropriate personnel at Premera and all relevant documentation and information Eide Bailly deems reasonably necessary to carry out the Agreed-Upon Procedures. The City of Kent will review the Agreed-Upon Procedures Report and discuss the findings with Eide Bailly. Casts of Audit. The City of Kent will pay for all reasonable fees incurred by Eide Bailly in association with this Agreed-Upon Procedures .We estimate that our fees for performing the Agreed-Upon Procedures will be$10,500.00. You will also be billed for our actual travel and other out-of-pocket costs related solely to the Agreed-Upon Procedures, such as report production,work processing, postage, etc,but not to exceed$3,500 The fee and travel and other out-of-pocket cost estimate is based on two to three days working onsite to perform interviews and process walkthroughs, offsite performance of detail claims test work at our home offices,and on anticipated cooperation from Premera and the assumption that unexpected circumstances will not be encountered during the engagement If significant additional time is necessary,we will discuss it with you and arrive at a new fee estimate before we incur the additional cost. Each fee estimate is based upon each associate's rate, hours worked and out-of-pocket expenses relating to the Agreed-Upon Procedures Our invoices for these fees will be rendered each month as work progiesses. All invoices received by the City of Kent will be paid within 30 days of receipt In accordance with our firm policies,work may be suspended if your account becomes 60 days or more overdue and will not be resumed until your account is paid in full If we elect to terminate our services for nonpayment, our engagement will deem to have been completed upon written notification of _r termination even if we have not completed our report. You will be obligated to compensate us for all time expended and to reimburse us for all out-of-pocket expenditures through the date of termination. Conclusion We appreciate the opportunity to assist you and believe this letter accurately summarizes the significant terms of our engagement. If you have any questions, please let us know. If you agree with the terms of our engagement as described in this letter,please sign the enclosed copy and return it to us If the need for additional procedures arises, our agreement with you will need to be revised It is customary for us to enumerate these revisions in an addendum to this letter If additional specified parties of the report are added, we will require that they acknowledge in writing their responsibility for the sufficiency of procedures. Very Trul Yours, Eide ailly LLP RESPONSE: This letter ly sets forth the un rstandi f the City of Kent. By: Ti O!'� Date: ' ��L Exhibit A: Expected Methodology The phases involved in the project and estimate of time to complete each phase is noted below. A more detailed description of our approach follows: Phase Estimated Timing Planning May/June Fieldwork June/Jul Report Writing Jul Reporting August Plannine• Project planning consists of the following activities: 1. Meet the contacts from each company to be reviewed. Arrange the timing of the on-site fieldwork 2. Obtain information for each client company, including: a. Claims administration program and guidelines, b. Claims appeal program and guidelines, c Claims processing guidelines,reserving guidelines, and adjusting and payment procedures, d. Available health plan documents, e Adjudicated claims populations, f Administrative contracts, g. SAS 70/SOC reports covering the claims process, h. Available internal audit claims review reports for each Plan, i. Available Sarbanes-Oxley claims process documentation and control testing for each Plan, j. Tailor other data and schedule requests as needed. 3. Set up testing templates. 4. Select samples for review. 5. Communicate expectations as to timing of work and presentation of draft reports and final results. Fieldwork This phase of the project includes the primary portion of the claims and appeals processing overview and detail claims examination on-site at Premera. During this phase,we will review the documentation of claims and appeals processes that are in place and will conduct walkthroughs to ensure that these items are documented and meet the minimum requirements of the WAC We will detail test a sample of adjudicated claims for each company(Medium reliance was requested which will be reflected in our sample sizes for testing) Our fieldwork is discussed in more detail as follows. 1. Review of Written Claims Administration Program 4 We will review the written claims administration program to ensure it includes formal documented claims filing procedures, internal financial control procedures and reporting, and claim and claim adjustment reporting requirements. 2. Review of Appeals and Grievance Procedures We will review the written appeals and grievance program to ensure it includes time limits for filing an appeal and a time limit for responses, and ensure it includes first and second level review procedures 3. Test of Detail Claims We will examine the documentation supporting each claim in each sample testing the following attributes. • Established procedures were followed per the administrative contract and followed during adjudication. • Claims reserves were established according to guidelines and were adequate for incurred amounts. • Claims reserves were appropriately reduced for claims paid according to guidelines. • Claims and claims adjustment expense reporting requirements met contract requirements. • Claim files were adequately documented. • Denied claims are appropriate per Plan benefits and notification requirements were followed. • Claims system attributes(EOB)match attributes in the claims file. • Payment or denial was timely and made to the proper party We will document any errors found and verify such with the administrator. Reporting We will assemble and report our finding to include at a minimum: • Total number of claims examined and total dollar amount represented in the claims audited. • Number of claims audited versus number of claims with errors,separately and combined for financial and procedural errors. • Summary of reasons for any denied claims included in the sample. • Processing time(calendar days)from receipt in the claims office to date of processing and date of payment or denial notification sent. • Determination of whether the written claims administration program and appeals procedures met the minimum requirements of the WAC. We can present our findings in person if desired and will be available to discuss any questions or concerns. For the detail testing phase per employer medium reliance testing level was requested including testing of 60 claim files per employer. Eide Bailly meets the claims auditor qualification requirements of WAC 200-110-020(7). IIIl ® DATE(MMIDDIYYYY) ACORID CERTIFICATE OF LIABILITY INSURANCE 6/8/2012 THIS CERTIFICATE IS ISSUED AS A MATTER OF INFORMATION ONLY AND CONFERS NO RIGHTS UPON THE CERTIFICATE HOLDER THIS CERTIFICATE DOES NOT AFFIRMATIVELY OR NEGATIVELY AMEND, EXTEND OR ALTER THE COVERAGE AFFORDED BY THE POLICIES BELOW THIS CERTIFICATE OF INSURANCE DOES NOT CONSTITUTE A CONTRACT BETWEEN THE ISSUING INSURER(S), AUTHORIZED REPRESENTATIVE OR PRODUCER,AND THE CERTIFICATE HOLDER IMPORTANT If the certificate holder Is an ADDITIONAL INSURED,the pollcy(Ies)must be endorsed If SUBROGATION IS WAIVED,subject to the terms and conditions of the policy,certain policies may require an endorsement A statement on this certificate does not confer rights to the certificate holder In lieu of such endorsement(s) PRODUCER N A T Ryan HQffMan NAME Dawson Insurance Agency PHONENo_AIC. Exti.701-237-331 1 FAICC Not 701-232-4442 721 1 st Avenue North E-MAIL Fargo ND 58107 ADDRESS INSURERS AFFORDING COVERAGE NAIC 9 INSURER A Travelers 5606 INSURED INSURERB Continental Ede Bailly L L P INSURERC PO Box 2545 INSURER D Fargo ND 58103 INSURER E INSURER F COVERAGES CERTIFICATE NUMBER 819290624 REVISION NUMBER THIS IS TO CERTIFY THAT THE POLICIES OF INSURANCE LISTED BELOW HAVE BEEN ISSUED TO THE INSURED NAMED ABOVE FOR THE POLICY PERIOD INDICATED NOTWITHSTANDING ANY REQUIREMENT, TERM OR CONDITION OF ANY CONTRACT OR OTHER DOCUMENT WITH RESPECT TO WHICH THIS CERTIFICATE MAY BE ISSUED OR MAY PERTAIN, THE INSURANCE AFFORDED BY THE POLICIES DESCRIBED HEREIN IS SUBJECT TO ALL THE TERMS, EXCLUSIONS AND CONDITIONS OF SUCH POLICIES LIMITS SHOWN MAY HAVE BEEN REDUCED BY PAID CLAIMS INSR TYPE OF INSURANCE ADDL SUBR POLICY EFF POLICY EXP lJM1T3 IINSR VIVID POLICY NUMBER MM/DDNYYY MMIDD/YYYY A GENERAL LIABILITY 6307206X3B5 /29/2012 /29/2013 EACH OCCURRENCE $1,000,000 X DAMAGE TO RENTED COMMERCIAL GENERAL LIABILITY PREMISES Ea ocwrrence $300,000 CLAIMS-MADE FIOCCUR M ED EXP(Any one person) S10,000 PERSONAL B ADV INJURY S1,000,000 GENERAL AGGREGATE $2,000,000 GEN'L AGGREGATE LIMIT APPLIES PER PRODUCTS-COMPIOP AGG $2,000,000 POLICY X I PRO- LOC $ JECTA AUTOMOBILE LIABILITY 8107206X385 /29/2012 /29/2013 COMBINED 1,000,000 ANY AUTO BODILY INJURY(Per person) $ ALL OWNED SCHEDULED BODILY INJURY(Per accident) $ AUTOS AUTOS X HIRED AUTOS d NON-OWNED PROPERTY DAMAGE $ AUTOS Per accident A UMBRELLA LAB OCCUR CUP7206X385 /29/2012 /29/2013 EACH OCCURRENCE $6,000,000 EXCESS LIAB CLAIMS-MADE AGGREGATE $6,000,000 DED X RETENTION 10,000 IS A WORKERS COMPENSATION PFUB7206X385 /29/2012 /29/2013 X I NCSTATU- OTH- AND EMPLOYERS'LIABILITY Y/N ER ANY PROPRIETORIPARTNER/EXECUTIVE❑ NIA EL EACH ACCIDENT $1,000,000 OFFICERIMEMBER EXCLUDED? (Mandatory in NH) EL DISEASE-EA EMPLOYE $1,000,000 If yes describe ugder DESCRIPTION OF OPERATIONS below EL DISEASE-POLICY LIMIT $1,000,000 B Employee Theft and r7424652 /112012 M12i Limit $5,000,000 Dishonesty Ded $25,000 Crime Policy DESCRIPTION OF OPERATIONS I LOCATIONS I VEHICLES (Attach ACORD 101,Additional Remarks Schedule,if more space is required) Workers Compensation applies to AZ,CO,IA,ID,ME,MI,MN,MO,NE,NV,OK SD,TX,VT,IL,NY,NC,WY CERTIFICATE HOLDER CANCELLATION SHOULD ANY OF THE ABOVE DESCRIBED POLICIES BE CANCELLED BEFORE THE EXPIRATION DATE THEREOF, NOTICE WILL BE DELIVERED IN City of Kent ACCORDANCE WITH THE POLICY PROVISIONS 220 4th Ave Kent WA 98032 AUTHORIZED REPRESENTATIVE /—lIIYSI IG- • �"� ©1988-2010 ACORD CORPORATION All rights reserved. ACORD 25(2010105) The ACORD name and logo are registered marks of ACORD L E M M E Insurance Brokers and Consultants VERIFICATION OF INSURANCE ISSUED TO: City of Kent 220 Fourth Ave S Kent, WA 98032 We, the undersigned Insurance Brokers, hereby verify that Lexington Insurance Company has issued the following described insurance which is in force as of the date thereof- PROFESSIONAL LIABILITY INSURANCE NAME OF INSURED Eide Bailly LLP and others as more fully described in the Policy POLICY NUMBER: 044177426 PERIOD OF INSURANCE: 12 01 a m May 1, 2012 to 12:01 a m. May 1, 2013 SUM INSURED $1,000,000 Each claim and Annual Aggregate for each policy period including costs, charges and expenses excess of the applicable retention as stated in the policy. SUBJECT TO ALL TERMS, CONDITIONS AND LIMITATIONS OF THE POLICY This document is furnished to you as a matter of information only and is not insurance coverage. Only the formal policy and applicable endorsements offer a comprehensive review of the coverage in place The issuance of this document does not make the person or organization to whom it is issued an additional insured, nor does it modify in any manner the contract of insurance between the Insured and the Insurer Any amendment, change or extension of such contract can only be effected by specific endorsement attached thereto. Issued at Chicago, Illinois me Insur roup, Inc Date: June 7, 2012 Executive Vice President 4^* 1 REQUEST FOR MAYOR'S SIGNATURE KENT Please Fill to All Applicable Boxes WASHINGTON Routing Information (ALL REQUESTS MUST FIRST BE ROUTED THROUGH THE LAW DEPARTMENT) Originator: ti Phone (Originator): Date Sent: _ I 6^k Date Required: Return Signed Document to: '� �L CONTRACT TERMINATION DATE: VENDOR NAME: � �� DATE OF COUNCIL APPROVAL: (� Brief Explanation of Document: OF 0A6LAtAD6vTCA- IMANDAfic.D A�1.�-Dt,—[- D1--- 1 � 3�u-i'i CRS�bs ZNbu.rua-+v c FoR.w�S Tc F0u0UD, 3o t n4T e"o� t.D Ln L�LTt I:S OF TujLL�'�L L.tA L `J►>TO>\.7 D J C 0 L—T All Contracts Must Be Routed Through the Law Department (This Area to be Completed By the Law Department) Received: /A rEIVEDy�z ` Approval of City Attorney: r(• City Attorney Comments JUN 0 7 2012 City of Kent y r Date Forwarded to Mayor: DEPlO ! Lf Shaded Areas to Be Completed by Administration Staff JS 3t vi _ai x i 11 � f, {i i..e 3 CPt t Zr `tea Z i Recelv�. - - u , , a � � - E: Recommendations & Comments: luu jug- - 5 201 Disposition: ' / f — — GFTYOF-YINt y ai7Y GLER1t Date Returned: a Iage5870 • 2/04