Medical Providers Abusing New York State
Health Insurance Program
Twenty medical providers submitted inflated claims to the New York State Health Insurance Program (NYSHIP) after they inappropriately waived out-of-pocket costs for state and local government employees, costing the state nearly $14 million, according to a report released today by State Comptroller Thomas P. DiNapoli. To date, the New York State Insurance Department and the New York State Department of Civil Service have recovered more than $9 million in over-billings and fines from five of the providers.
“These medical providers misled patients and submitted false bills to the state,” DiNapoli said. “And this was only a small sample of providers. The abuse out there could be more widespread. Even in good fiscal times, abuse of taxpayer dollars is unacceptable. But now, when every dime counts, we have to crack down even harder on anyone who tries to manipulate the system and scam tax dollars. My office will keep working with the Insurance Department and the Department of Civil Service to protect taxpayers.”
“If non-participating providers are allowed to waive out-of-pocket costs and charge higher fees than those who play by the rules, the state’s health insurance costs will explode, hurting everyone,” Insurance Superintendent Eric Dinallo said. “At a time when Governor Paterson has warned us of the severity of the fiscal crisis facing the state, health care providers who use abusive billing practices to try to take advantage of the state must be held accountable. The Department of Civil Service and the State Comptroller’s Office have been invaluable in helping to ensure this practice does not continue.”
Civil Service Commissioner Nancy G. Groenwegen said, “This kind of systemic abuse makes it harder to comply with Governor Paterson’s mandate to provide good health care benefits to workers at a cost that is affordable to the state, local governments and workers themselves. By negating the financial incentive for members to use the network of participating providers, it undermines a key cost-control feature of the Empire Plan. As a result of actions by our three agencies, significant overpayments and fines have been recovered. Four of the providers have become NYSHIP participating providers. This will produce additional reimbursement savings for the Empire Plan of more than $4 million each year. It also means greater access to quality care for Empire Plan members.”
The Comptroller’s office conducts regular audits of NYSHIP, which is administered by the Department of Civil Service. Auditors initiated a series of audits in 2007 examining the practices of individual medical providers and have uncovered widespread problems.
DiNapoli’s auditors examined 22 providers (see attached list of providers) that were not participating providers in the Empire Plan, the primary health insurance plan for state and local employees. These providers received reimbursement rates up to 80 percent higher than participating providers. When Empire Plan members receive services from a non-participating provider, they are responsible for paying a larger portion of their medical bill.
Auditors found that 20 of the 22 providers were routinely waiving out-of-pocket costs for patients and passing those costs onto the state by submitting inflated bills to the Empire Plan. These providers apparently waived the fees to attract patients who would not otherwise pay higher costs to see non-participating providers. In addition, this practice allowed providers to remain non-participating providers and collect significantly higher reimbursement rates. Patients were generally unaware that providers were billing the state at a higher rate or that the providers did not participate in the Empire Plan.
Under New York State law, submitting an insurance claim with false information may constitute insurance fraud.
The Comptroller’s office previously referred six of the providers to the Insurance Department after those audits were completed, and is now referring the other 14. To date, the Insurance Department has received more than $9 million in refunds and $78,551 in fines from five providers. Four providers have agreed to stop waiving out-of-pocket costs, reimburse the state for overpayments and pay civil fines. The four also have signed agreements to become participating providers in the Empire Plan. The providers are:
- Endoscopy Center of Long Island, which reimbursed the state $3,135,834 and paid a civil penalty of $31,358;
- Capital Region Ambulatory Surgery Center, Albany, which paid $2,225,015 in reimbursement and $22,250 in fines;
- Digestive Health Center of Huntington, Huntington, which repaid $1,332,120 and paid $13,321 in fines; and
- Day Op of North Nassau, Great Neck, which repaid $1,162,232 and paid a fine of $11,622.
One facility, Day-Op Center of Long Island, Inc., Mineola, repaid the state $1.165 million, but has not agreed to discontinue its practice of waiving out-of-pocket expenses and may still be subject to further enforcement action. The other 15 providers identified in the audits are still under review.
Other DiNapoli audits of NYSHIP have found that individual providers have billed for services not provided or submitted duplicate bills, as well as other billing problems.
DiNapoli’s auditors are also working with the New York State Insurance Department’s Frauds Bureau and United Healthcare, which administers the Empire Plan, to recover any overpayments from providers who have submitted inflated bills. Additional audits of NYSHIP are currently underway.
NYSHIP is the largest public employer health insurance program in the nation, aside from the Federal government, providing health insurance to more than 1.2 million current and former state and local government employees.
Click here for a copy of the report.
Click here for a list of providers.