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May 9, 2013

DiNapoli: Empire Continuing to Overpay for Special Medical Items

New York State health insurance provider Empire BlueCross BlueShield overpaid hospitals by nearly $490,000 for special medical items such as implants, drugs and blood, including more than $77,000 to just one hospital, over a six month period, according to an audit of the New York State Health Insurance Program (NYSHIP) released today by State Comptroller Thomas P. DiNapoli.

“New York State cannot afford to be squandering money and paying excessive amounts for these types of items,” DiNapoli said. “Given the number and amounts of the improper and questionable payments my auditors have found in this program, it is obvious Empire needs to significantly improve its oversight of this billing area.”

NYSHIP provides health insurance coverage to active and retired state employees, participating local government and school district employees and their dependents. The Department of Civil Service contracts with Empire Blue Cross and Blue Shield (Empire) to provide hospitalization coverage under the Empire Plan, the largest insurance option provided by NYSHIP. Empire processes plan claims for hospital services and medical items in accordance with agreements it negotiates with participating hospitals. Empire’s hospital agreements provide for additional payments for certain special items. Agreements with many member hospitals often limit payments for special items, but others do not.

DiNapoli’s auditors found that the overpayments included 52 claims from hospitals with contracts limiting the amounts they should have charged for special items. For example, Columbia Medical Center in Hudson, N.Y., was paid $109,557 for four claims which included special items. However, documents provided by the hospital supported payments totaling only $32,215.

Auditors also found Empire’s average payment to hospitals with reimbursement limits exceeded the hospitals’ estimated costs for cardiac devices by $2,818. For the hospitals without reimbursement limits, Empire’s average payment exceeded the estimated costs for the devices by $13,140 – more than four times the amount collected by hospitals with contract limitations. While the details of the special items cannot be disclosed due to proprietary concerns, examples of Empire’s excessive payments include:

graphic

DiNapoli recommended Empire:

  • Recover the overpayment from the hospitals for the improper claims identified;
  • Ensure that all agreements with hospitals limit the basis of reimbursement for all special medical items; and
  • Develop a system of internal controls to ensure that payments for special items are made according to agreements and are supported by appropriate documentation.

For the period July 1, 2011 through December 31, 2011, Empire paid 499,588 claims totaling nearly $1.1 billion for services provided to plan members. This included payments of more than $63 million for 37,508 claims for special items.

From December 2009 to today, DiNapoli has issued 18 audits that identified $12 million overpaid to hospitals for special items.

For other recent audits of the NYSHIP program, go to: http://www.osc.state.ny.us/audits/auditAgencyList.htm

Empire said it is committed to adding language to hospital agreements to help prevent excessive payments for special items. The company informed state auditors it recently amended agreements with a hospital network and a large independent hospital to limit the amounts claimed and paid for such items.

For a copy of the report visit: http://www.osc.state.ny.us/audits/allaudits/093013/12s3.pdf


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