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December 28, 2007


DiNapoli: State’s Health Insurance Program
Overpaid Health Care Providers by as Much as $20 Million

United Health Care Should Improve Controls and Closely Scrutinize Payments

The New York State Health Insurance Program’s (NYSHIP) Empire Plan overpaid providers between $10.5 million and $17.5 million for consultation services and $2.1 million for facility fees, according to two audits released today by State Comptroller Thomas P. DiNapoli.

“The billing of a facility fee by mobile service providers is abusive and potentially fraudulent,” DiNapoli said. “And there were repeated overpayments for consultation services that should have been billed as lower cost office visits. My office will continue to work closely with the Department of Civil Service to protect taxpayers from paying any unnecessary costs.”

NYSHIP provides health insurance coverage to active and retired state and local government employees, school district employees and their dependents. The Empire Plan is the primary health benefits plan for the program. The state Department of Civil Service contracts with United Health Care to process medical claims for the Empire Plan.

DiNapoli’s office initiated a series of audits, in collaboration with the Department of Civil Service, to examine payments and billing practices in NYSHIP. In the audits released today, auditors examined United Health Care’s facility fee payments to providers of Extracorporeal Shock Wave Therapy (ESWT) and United Health Care’s outpatient consultation services payments to a statistical sample of providers.

The first audit, covering the period of May 1, 2003 through December 21, 2006, found that United Health Care made inappropriate facility fee payments totaling $2.1 million for ESWT services rendered by two mobile service providers who did not own or rent the offices where the services were provided and therefore were not entitled to a facility fee. Auditors found these payments were made because United Health Care did not have adequate controls in place to prevent payment of facility fees to mobile service providers for ESWT. ESWT is a non-invasive shock wave treatment by portable device that is administered in a doctor’s office at the request of the doctor.

The second audit, covered the period January 1, 2004 to December 31, 2006, and estimated that United Health Care overpaid providers between $10.5 million and $17.5 million for consultation fees. Consultation fees are paid when one provider requests that another provider diagnose an illness or confirm the appropriateness of a treatment. However, auditors examined a statistical sample of claims for consultation services and determined that medical records did not support that such services had been rendered.

In both cases, DiNapoli’s auditors recommended that United Health Care recover the over payments and implement better controls and procedures to ensure proper use of state funds. Auditors also recommended that United Health Care further review consultation service claims paid during the audit period and analyze claims to identify practitioners with aberrant billing patterns and further educate providers about correctly billing for consultations.

Other recent audits of the NYSHIP program identified another $21.9 million in overpayments to health care providers because of inappropriate practices such as waiving out-of-pocket fees for patients and charging higher out-of-network rates among other problems. When combined with the two audits released today, overpayments identified as a result of the Comptroller’s audits of NYSHIP now total approximately $41.5 million.

Click here for a copy of the first audit regarding inappropriate facility fee payments for mobile services.

Click here for a copy of the second audit regarding overpayment of consultation fees.

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