Samaritan Health Plan Administration Review

1. September 9, 2008 Samaritan Health Plan Administration Review Hans LeitzingerRalph Trieselmann, CEBS, CLU

2. Background Due to unexplained increases in the Samaritan Health Plan 2007 and 2008 costs, Oregon PEBB approved a work plan that included internal reports, documentation and external audit deliverables. Mercer reviewed Samaritan Health Plan’s administrative procedures and controls. The audit areas primarily included: • Organization and staffing • Workflow • Claim System Capabilities • Provider Network Contracting • Internal Audit • Overpayment Recovery • Claim Adjustments • External Vendor Interface Note: An audit of selected claims to verify claim payment accuracy was not included in the review

3. Process Mercer requested Samaritan Health Plan (SHP) gather information in early July for the various review areas and then met with SHP personnel on July 22 and July 23 at their offices in Corvallis. Mercer staff have followed up with a number of additional questions and data requests. SHP personnel was cooperative throughout the process.

4. Summary Findings • FACETS system – capable of handling all claim types • Basic structure – SHP already has an established unit for processing Medicare and Medicaid claims • Management controls – functions such as overpayment recovery and internal audit are not being monitored to assure compliance with stated procedures • Internal audit – the random audit function is not being performed correctly • Provider discounts – level of discounts has decreased since 2006 to levels that are below market average • Overpayment recovery – stated procedures are not being followed • Performance guarantee reporting – reporting is not being done in accord with contract

5. Services provided by Mercer Health & Benefits LLC