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February 8, 2008


DiNapoli: Nassau County Surgical Facility Overcharged State’s
Health Insurance Program by $1.4 Million

$41 Million Identified in Overpayments
in Series of Audits of State Health Insurance Program

Inflated claims submitted by the Day Op of North Nassau led to more than $1.4 million in overpayments by the New York State Health Insurance Program’s (NYSHIP) Empire Plan according to an audit released today by New York State Comptroller Thomas P. DiNapoli. In 2007, audits by DiNapoli’s office of NYSHIP identified more than $41 million in overpayments to health care providers due to inappropriate practices, such as waiving out-of-pocket fees for patients and charging higher out-of-network rates.

“The Day Op chose to waive out-of-pocket charges for patients, but then submitted claims that included those costs,” DiNapoli said. “My office issued four reports two months ago highlighting this problem, but we continue to find abuse. Inflated claims hurt taxpayers and Empire Plan members, who are forced to pay higher premiums. We are working with the Department of Civil Service recover the overpayments and to make sure that taxpayers and plan members aren’t paying a dollar more than they should.”
Civil Service Commissioner Nancy G. Groenwegen said, "This practice of overcharging is all too common in some sectors of the health care industry, as audits by the Comptroller have demonstrated. While continuing to work closely with the Comptroller, my Department plans to deploy additional auditors that the Executive Budget recommends for us to intensify oversight of all providers. Every dollar New York spends on health insurance should go to providing benefits to our employees, not to fattening provider profits."

NYSHIP provides health insurance coverage to active and retired state, local government and school district employees. The Empire Plan is the primary health benefits plan for the program. The Department of Civil Service contracts with United HealthCare to oversee the Empire Plan. United contracts with medical providers who agree to provide medical services to members at agreed upon rates. United pays the providers directly based on claims they submit for services provided to members. Members also pay a nominal co-payment to the provider.

DiNapoli’s audit focused on claims submitted by the Day Op Center of North Nassau (Day Op), a gastroenterological surgical facility located on East Shore Road in Great Neck, New York. Day Op does not participate as a provider in the Empire Plan.

During the six-year period ending December 31, 2006, auditors found that United paid Day Op claims totaling $6.1 million for Empire Plan members. When auditors examined medical claims submitted by Day Op, they found that members’ out-of-pocket charges were waived for 159 of the 164 sampled bills. Day Op reported the entire billed amount, without reducing the claim for the waived members’ out-of-pocket costs. Based on their analysis, auditors project that United overpaid Day Op by $1,461,856. Auditors also determined that United erroneously processed 5 of the 164 claims twice and overpaid Empire Plan members by $13,093.

DiNapoli’s auditors recommended that United HealthCare recover the overpayments and work with the Department of Civil Service to pursue an appropriate course of action designed to prevent Day Op from waiving patients’ out-of-pocket costs. DiNapoli noted that United officials agree with the audit’s findings and recommendations, and have already taken actions to implement them.

Click here for a copy of the audit.

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