U.S. Office of Personnel Management FY 2000 Budget Justification/Performance Plan

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		Require experience-rated FEHBP carriers to expand their audits using independent public accountants (IPAs) engaged by the insurance carrier.
		Prepare an audit guide that will set forth the scope of audit requirements to be used by IPAs. Focus OIG resources on contract performance on FEHBP carriers where we have program expertise such as the allowability and allocability of administrative expenses, allowability of benefit payments, and the detection of benefit payment fraud and abuse.
		Audit all OPM financial statements to ensure compliance with government auditing standards.
		Monitor the use of IPAs.
		Change in number of material weaknesses. FMFIA material weaknesses increased by 1 in FY 1998.

VERIFICATION AND VALIDATION

The verification and validation mechanisms that are in place for the OIG’s performance measures include:

Audit Reports Tracking System (ARTS): ARTS is a automated tracking system that provides information regarding audits of FEHBP carriers. This information is cross-referenced twice a year with information maintained by RIS in their automated tracking system and any discrepancies are resolved and agreed to by OIG and RIS. This system is currently being updated and it will meet both OIG and RIS needs. The information captured in this system is reported in the OIG’s Semiannual Report to Congress.

Investigations Tracking System (ITS): ITS is an automated tracking system that provides the status and resolution of investigative activities. The information captured in this system is also reported in the OIG’s Semiannual Report to Congress.

U.S. Attorney review of criminal cases: A number of the OIG’s investigations are criminal in nature and forwarded to the Department of Justice for prosecution. These cases are scrutinized by the U.S. Attorney.

Administrative Sanctions: FEHBP administrative sanctions are based on information provided by the Department of Health and Human Services (HHS). The OIG informs HHS of any discrepancies that we discover with the information that they provide. The General Services Administration publishes the name and relevant information of the individuals that are sanctioned by the OIG.

Evaluations and Inspections: Program offices that request, or where the OIG imposes, an evaluation or inspection of their operations are provided with a draft report for comment. The comments provided by the program office are used to ensure the accuracy of the final report.

FY 2000 BUDGET CHANGES:

An increase of $500,000 and 5 FTE is requested to increase the frequency of FEHBP carrier audits helping OPM progress toward an overall five year or better audit cycle. This increase is the second phase of a request made, and appropriated by Congress, for FY 1999. These additional funds will be used to finance the salaries and benefits for the increased FTE, audit travel expenses, training for the new staff, and necessary ADP equipment and supplies.

Description of Issue:

The preferred audit cycle for carriers that participate in the FEHBP ranges between three and five years. The Office of the Inspector General believes that high risk carriers (based on relative size and past audit experience) should be audited at least every three years while the remaining carriers should be audited no less than every five years. Any cycle longer than five years exposes the FEHBP to the risk of substantial loss because contractual provisions and federal regulations limit retention of FEHBP administrative records to five years.

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