Open Recommendations

We recommend that the contracting officer require Anthem to return $7,739,902 to the FEHBP for the questioned ACA costs that were overcharged to the FEHBP for contract years 2018 and 2020.

We recommend that the contracting officer require Anthem to return $5,638,360 to the FEHBP for applicable LII calculated through June 30, 2025, on the questioned subrogation recovery fees that were charged to the FEHBP, as well as LII accruing after June 30, 2025.

We recommend that the contracting officer require the Association to provide evidence or supporting documentation demonstrating that Anthem has implemented the necessary corrective actions to ensure that unallowable profits are not charged to the FEHBP. The contracting officer should also require the Association to provide a certification that Anthem has implemented these corrective actions.

We recommend that the contracting officer require Anthem to also return all subrogation recovery fees, which included unallowable and/or unreasonable profit costs, and that were charged to the FEHBP from July 1, 2023, through the resolution of this audit finding, as well as applicable LII.

We recommend that the contracting officer require the Association to provide evidence or supporting documentation demonstrating that Anthem has implemented the necessary corrective actions to ensure that unallowable and/or unreasonable profit costs are excluded from the Carelon subrogation recovery fees that are charged to the FEHBP. The contracting officer should also require the Association to provide a certification that Anthem has implemented these corrective actions.

We recommend that the contracting officer require the Association to provide evidence or supporting documentation demonstrating that Anthem has implemented the necessary corrective actions to ensure that claim overpayments are adequately pursued, monitored, recovered, and returned to the FEHBP, as required by Section 2.3(g) of contract CS 1039. The contracting officer should also require the Association to provide a certification that Anthem has implemented these corrective actions.

Due to Anthem's lack of due diligence with recovery efforts, we recommend that the contracting officer require Anthem to return $658,703 to the FEHBP for the questioned provider offsets where Anthem had not recovered and/or returned funds to the FEHBP for three FEP claim overpayments.

We recommend that the contracting officer require the Association to provide evidence or supporting documentation demonstrating that Anthem has implemented the necessary corrective actions to ensure that cash receipt refunds are timely returned to the FEHBP (i.e., deposited into the FEP investment account within 30 days after receipt and returned to the LOCA via drawdown adjustments within 60 days after receipt). The contracting officer should also require the Association to provide a certification that Anthem has implemented these corrective actions.

We recommend that the contracting officer require the Association to provide evidence or supporting documentation demonstrating that Anthem has implemented the necessary corrective actions to ensure that all SPI amounts are timely processed and returned to the FEHBP (i.e., deposited into the FEP investment account within 30 days after receipt and returned to the LOCA via drawdown adjustments within 60 days after receipt). The contracting officer should also require the Association to provide a certification that Anthem has implemented these corrective actions.

We recommend that the contracting officer require the Association to provide evidence or supporting documentation demonstrating that Anthem has implemented the necessary corrective actions to ensure that the ACA health insurance provider fees and federal income taxes related to ACA health insurance provider fees are correctly calculated and charged to the FEHBP. The contracting officer should also require the Association to provide a certification that Anthem has implemented these corrective actions.

We recommend that the contracting officer require Anthem to return $1,438,102 to the FEHBP for the questioned LII calculated through June 30, 2025, on the ACA cost overcharges, as well as additional LII accruing after June 30, 2025.

We recommend that the contracting officer require the Association to provide evidence or supporting documentation demonstrating that Anthem has implemented the necessary corrective actions to ensure that costs that are directly identifiable to the FEP, such as claim overpayment recovery fees, are charged directly to the FEHBP instead of allocated. The contracting officer should also require the Association to provide a certification that Anthem has implemented the corrective actions.

We recommend that the contracting officer require Anthem to return $891,405 to the FEHBP for the unallowable profits that were charged to the FEHBP for contract year 2018 through June 30, 2023.

We recommend that the contracting officer require Anthem to return $143,262 to the FEHBP for the questioned LII calculated through June 30, 2025, on the unallowable profits charged to the FEHBP, as well as additional LII accruing after June 30, 2025.

We recommend that the contracting officer require the Association to provide evidence or supporting documentation demonstrating that Anthem has implemented the necessary corrective actions to ensure that unallocable cost center expenses are not charged to the FEHBP. The contracting officer should also require the Association to provide a certification that Anthem has implemented these corrective actions.

We recommend that the contracting officer require the Association to provide evidence or supporting documentation demonstrating that Anthem has implemented the necessary corrective actions to ensure that unallowable and/or unallocable pension and PRB costs are not charged to the FEHBP. The contracting officer should also require the Association to provide a certification that Anthem has implemented these corrective actions.

We recommend that the contracting officer require the Association to provide evidence or supporting documentation demonstrating that Anthem has implemented the necessary corrective actions to ensure that employee compensation charges are correctly calculated and charged to the FEHBP. The contracting officer should also require the Association to provide a certification that Anthem has implemented these corrective actions.

We recommend that the contracting officer require the Association to provide evidence or supporting documentation demonstrating that the Association and Anthem have implemented the necessary corrective actions to meet all communication and reporting requirements of fraud and abuse cases that are contained in the Carrier Letter 2017-13.

Rec. 1: The DoD OIG recommended that the Commander, Air Force Life Cycle Management Center, evaluate the current and future need for the Air Force to provide the delayed missiles to the UAF and institute all appropriate contract actions, which might include modification or termination of the contract, to ensure that all funds, including the $63.7 million allocated to the contract, are put to their best use.

FHFA's DBR should assess the extent to which FHLBanks are relying on redacted ROEs when reviewing membership applications or performing ongoing monitoring.

FHFA's DBR should clarify and reinforce DBR’s expectation to the FHLBanks that they should request and receive from federal and state regulators ROEs that are not substantively redacted, and that other relevant supervisory reports should be collected when necessary.

FHFA's DBR should conduct outreach to federal financial regulators to reinforce the need for compliance with 12 U.S.C. § 1442(a)(1), which requires their production of reports, records, and information relating to the condition of any member of any FHLBank upon request by an FHLBank. As part of this outreach, make clear that such materials extend beyond ROEs, and that materials produced in response to an FHLBank requests should be provided without substantive redactions.

FHFA's DBR should assess the extent to which restrictions on access to state-issued ROEs may hinder the FHLBanks in making fully informed decisions when evaluating applications for membership and when making determinations to limit or deny member requests for advances in accordance with applicable FHFA regulations.

FHFA's DBR should, if applicable, continue to pursue outreach with the Conference of State Bank Supervisors and state regulators to assist FHLBanks in accessing state-issued ROEs.

FHFA's DBR should complete its assessment of the extent of weaknesses in the FHLBanks’ enforcement of members’ material adverse change notification requirements, and provide guidance to FHLBanks on best practices, such as issuing periodic reminders of notification requirements, to help ensure members’ compliance with the FHLBanks’ contractual requirements.