Federal Employees Health Benefits - Experience Rated Carriers
Program level Payment Integrity results
Sponsoring agency: Office of Personnel Management
PROGRAM METRICS
$67,219 M
in FY 2025 outlays, with a
99.9%
payment accuracy rate
-
Improper payment estimates over time
View as:
Chart toggle amounts:Proper paymentsOverpaymentUnderpaymentTechnically improperUnknown
Payment Integrity results
-
FY 2025 improper payment estimates
Chart legend and breakdown
Payment accuracy rate
Improper payment rate
Unknown payment rate
Sampling & estimation methodology details
Sampling timeframe:
10/2024 - 12/2024
Confidence interval:
95% to <100%
Margin of error:
+/-2.5
Causes
Carriers reported a variety of specific root causes for each of the root cause types identified above. These include human errors, system errors, and recordkeeping errors. Scenarios of human errors include improper application of Medicare Allowance to members covered by Medicare, improper application of coordination of benefits, and improper application of retroactive provider agreements. Scenarios of system errors and recordkeeping errors include contract terms not being entered into systems timely, records not being maintained, coordination of benefits being applied improperly, and identified required adjustments not being performed.
| Overpayment root cause | Overpayment amount |
|---|---|
| Amount of overpayments within the agency's control | $0.0 M |
| Amount of overpayments outside the agency's control | $26.91 M |
| Amount of overpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist | $0.0 M |
| Amount of overpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment | $0.14 M |
| Amount of overpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment | $26.77 M |
| Underpayment root cause | Underpayment amount |
|---|---|
| Amount of underpayments | $26.3 M |
| The amount of underpayments that occurred because the data/information needed to validate payment accuracy prior to making a payment does not exist | $0.35 M |
| The amount of underpayments that occurred because of an inability to access the data/information needed to validate payment accuracy prior to making a payment | $7.58 M |
| The amount of underpayments that occurred because of a failure to access data/information needed to validate payment accuracy prior to making a payment | $18.36 M |
| The amount of improper payments that were paid to the right recipient for the correct amount but were considered technically improper because of failure to follow statute or regulation | $18.19 M |
| The amount that could either be proper or improper but the agency is unable to determine whether it was proper or improper as a result of insufficient or lack of documentation | $23.44 M |
Prevention
100% of the improper payments identified and reported are outside the direct control of OPM. OPM requires Carriers who have identified and reported improper and unknown payments to develop corrective action plans (CAPs) designed to correct the causes of improper and unknown payments and prevent future improper and unknown payments. Carriers are responsible for implementing, monitoring, and evaluating their corrective action plan’s effectiveness, with assistance and oversight from OPM. Most corrective actions identified by Carriers have already been taken, but some have completion dates in the future.
Carriers are required to report on prior years’ findings annually. OPM will monitor future reports from carriers to identify whether the CAPs have been effective in reducing improper and unknown payments.
Carriers are required to identify the root cause type for all identified improper payments. Corrective action plans also identify actions either planned or taken to prevent repeated occurrence of the causes of improper payments. OPM does not require Carriers to pursue recoveries for identified improper payments when the cost of pursuing those recoveries will exceed the value of the funds recovered.
Most of the corrective actions planned and taken by Carriers involve changes in processes and trainings directed at the root causes of the improper or unknown payments. The types of root causes typically included failure to access data, inability to determine if the payment was proper and failing to meet statutory requirements. Corrective actions typically include automation, behavioral/psychological influences, and auditing to identify and correct errors. The value of process changes and training which is directed at the root causes can be estimated by projecting the savings to the program similar to how the projected improper payment is estimated. For example, an individual overpayment of $25 may result in a statistical projection of over $140,000 in overpayments for a carrier in a year. A process change that successfully prevents future improper payments from the same root cause would result in a savings of over $140,000 the following year, and in subsequent years. Carriers can use this type of analysis to evaluate the value of corrective actions proportionate to the savings anticipated to be realized.
OPM requires all Carriers who have identified and reported improper and unknown payments to develop corrective action plans designed to correct the causes of improper and unknown payments and prevent future improper and unknown payments. Future reports from Carriers must include updates on prior years’ findings. This is the first year OPM has been able to generate statistically valid data. OPM will monitor future reports from Carriers to evaluate whether corrective actions are adequate and are reducing improper and unknown payments.
In a review of the FY2024 Corrective Action Plans, OPM noted many instances where Carriers either planned or have taken actions to implement policy changes or trainings to mitigate or eliminate future Improper Payments based on their root cause analyses. Carriers have reported corrections and recoveries of numerous specific overpayments identified in the sampling and testing.
| Payment type | Mitigation strategies taken | Mitigation strategies planned |
|---|---|---|
| Overpayments | Audit, Automation, Change Process, Training | Audit, Change Process, Training |
| Underpayments | Audit, Change Process, Training | Automation |
| Technically improper payments | Change Process, Training | Automation, Change Process, Training |
| Unknown payments | Audit,Change Process,Training | Automation,Change Process |
| Eligibility element/information needed | Description of the eligbility element/information |
|---|---|
| Receiving Benefits from Other Sources | Beneficiary or recipient is receiving benefits from an additional source |
Additional information
Reduction target
0.14 %OPM has undergone significant staffing changes in 2025 and has adjusted workloads and priorities to maintain mission critical operations. Throughout these adjustments coming into compliance with PIIA’s reporting requirements has remained a top priority. As the Experience-Rated Activity began capturing statistically valid data, that data and the process through which it has been gathered has continually been evaluated and analyzed. This analysis includes attempting to identify ways to improve payment integrity, improve accuracy of payment integrity reporting, increase efficiency in identifying and recapturing erroneous payments, and minimizing the costs associated with these activities. OPM plans to continue these efforts and to leverage lessons learned in developing and implementing its Sampling and Estimation Methodology Plan as to minimize improper payments and maximize program oversight. As potential improvements are identified, the costs and resources required to implement changes to achieve those improvements will be evaluated to determine whether costs associated with preventing and recovering improper payments would exceed the value of the improper payments prevented and recovered.
The Experience-Rated Activity requires a statistician to prepare the Sampling & Estimation Methodology Plan and to ensure the statistical validity of the aggregation of data from Carriers. OPM completed a procurement action in 2022 to obtain statistical services through an outside contractor. The current procurement ends in November 2025. OPM has requested a new procurement action to secure a contractor to provide statistical services to the Experience-Rated Activity beginning in November 2025. The costs associated with the contract for statistical services are expected to be significantly less than the costs of hiring a statistician as a full-time employee.
OPM’s budget submission did not request specific resources to establish and maintain payment integrity for the Experience-Rated Activity. OPM has numerous mechanisms in place to prevent and recover improper payments. OPM will use existing personnel and resources to analyze the data being collected to establish a baseline, identify a tolerable rate and maintain or improve the improper payment and unknown payment rate and therefore has not made a budget request.
OPM is committed to effective oversight and administration all its activities. The structure of the Experience-Rated Activity is one in which the individual Carriers bear the risk of claims, not the federal government. This structure serves dual purposes of mitigating risk to the government and incentivizing Carriers to minimize improper payments. In addition, OPM requires Carriers to proactively identify erroneous payments through robust internal controls and statistically valid reviews. Those requirements are in addition to the statistically valid sampling and testing the Experience-Rated Activity required of carriers to provide the data necessary to produce a statistically valid IP Estimate. Additionally, OPM requires Carriers to take prompt and diligent actions to recover erroneous payments and must report on the average time between the discovery of an erroneous payment and the initiation of recovery efforts for the erroneous payment. Failure of Carriers to act timely to recover erroneous payments will negatively impact their performance assessment scores and may result in charges to the program being disallowed.
Because the Experience-Rated Activity has not published an estimate above the statutory threshold, it is not required to identify a reduction target for the Experience-Rated Activity or individual Carriers. However, because it has not established a baseline, the Experience-Rated Activity is required to continue publishing an IP Estimate until a baseline is established. OPM is working to establish a baseline and is on track to continue the process for obtaining statistically valid IP estimates for the Experience-Rated Activity. OPM will use the data it obtains from this process to improve payment integrity, improve the process for obtaining payment integrity information, establish a baseline, and, if necessary, a reduction target.