dependent eligibility verification project - Gongwer News Service

DEPENDENT ELIGIBILITY
VERIFICATION PROJECT
Executive Summary Report
[03.22.10]

Dependent Eligibility Verification Project
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Executive Summary
The project involved a full verification audit of all State of Ohio benefit-enrolled dependents to validate
compliance with existing dependent eligibility rules. Compliance was confirmed by participant submission of
specific documentation for each of their dependents enrolled in State of Ohio medical, dental and vision plans.
Coverage was cancelled for enrolled dependents through voluntary notification by the employee or when the
required documentation was not provided; thereby reducing unnecessary healthcare costs for the State of Ohio
and helping the State to continue offering affordable and comprehensive benefits to eligible participants and
their dependents.
One of the critical success factors for the State’s project was providing clear and consistent compliance
education communications and support services to each participant, explaining the documents that were
necessary to verify eligibility, and the deadline for assembling and submitting these documents. By employing
multiple outbound contacts using various methods (letters, phone calls, and emails), a 24/7 inbound call
center, and online compliance advocacy support services, the State of Ohio was assured that its participants
had sufficient notification, support and time to submit the required documentation.
Financial Impact
$17,584,632 – First Year Estimated Benefit Cost Reduction
40:1 – Project Return On Investment Estimate
($17,584,632 cost reduction against $436,142 project costs)
The total number of non-verified dependents is 6,372 as of 12/18/2009. To calculate savings, we used the
State’s average per dependent per year expense for medical, pharmacy, and mental health coverage. Due to
the decision to allow re-instatements on a prospective basis for certain dependents, the overall cost reduction
may be reduced. The first year cost reduction breakdown by child and spouse can be seen in the table below:
Child Spouse Total
Cost/Dependent $ 1,914 $ 5,168
# Non-Verified 4,716 1,656 6,372
Year 1 Cost Reduction $9,026,424 $8,558,208 $17,584,632
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Verification Population Analysis
In August 2009, the State of Ohio engaged Secova to audit dependents enrolled in State of Ohio medical,
dental and vision benefit plans. In total, after adjusting for terminations due to normal attrition (dependent
terminations that occurred as a result of employment terminations), 79,186 enrolled dependents from 36,469
benefit participants were subject to verification (total verification population includes 24 participants noted as
suspended as of the end of the project. The dependents for these participants are accounted for within this
report).
Over a period of 16 weeks, 95% of 36,469 State of Ohio benefit participants with enrolled dependents
provided documentation to confirm the eligibility of 72,814 dependents, or 92% of the original enrolled
dependent population still active as of the end of the project. In total, 6,372 dependents (8%) were identified
as ineligible during the term of the audit. Non-verified status was voluntarily reported for 3,087 dependents or
4% of the total population (2,519 children and 568 spouses). In addition, 3,285 dependents or 4% of the total
population (2,197 children and 1,088 spouses) could not be verified because no documentation was received
or documentation was insufficient.
State of Ohio - Employee Verification Status
Verified
95%
Incomplete /
Non-Responders
5%
Data effective as of 1/11/2010
State of Ohio - Dependent Verification Status
Verified
92%
Voluntary - Non
Verified
4%
Incomplete /
Non-Responders
4%
Data effective as of 1/11/2010
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Conclusion and Recommendations
Dependent Eligibility Verification – Significant Findings
Our analysis of the State’s dependent population determined the following:
1) Need for improved controls to ensure ongoing compliance with overage dependent eligibility
30.60% of pre-audit students were dropped from coverage
2) Need for improved controls to ensure compliance with dependent children eligibility
9.70% of pre-audit child dependents were dropped from coverage
Further, of the 6,372 dependents that were dropped from coverage as of the end of the project, approximately
52% (3,285) lost coverage due to either incomplete documentation or through no response by the participant.
This population should be further evaluated to determine compliance education and communication
effectiveness.
Dependent Eligibility Management – Post Audit Recommendations
Based on our audit findings and the $17,584,632 first year estimated benefit cost reduction achieved by this
project, Secova recommends the following initiatives as part of a comprehensive dependent eligibility
management program be implemented in order for the State of Ohio to control eligibility of all enrolled
dependents and ensure continued financial and fiduciary protection of State benefit plans:
Consolidate the enrollment and ongoing management of all State benefit participants and plans into a
centralized system and process environment.
Request all State benefit participants with enrolled dependents to annually attest to the eligibility of
every enrolled dependent.
Request, collect, audit and maintain the required eligibility verification documentation from all benefit
participants requesting a new dependent enrollment in an applicable benefit plan.
Recertify on a scheduled basis the eligibility verification documentation for all dependents enrolled in an
applicable benefit plan.
o Child Student – every 6 months
o Child – every 3 to 5 years
o Spouse – every 3 to 5 years
Develop and maintain an ongoing dependent eligibility compliance education program
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