The New York State Health Insurance Program (NYSHIP), administered by the
State Department of Civil Service (Civil Service), is one of the nation’s largest
public sector health insurance programs. NYSHIP covers over 1.2 million active
and retired State, local government, and school district employees, and their
dependents. The Empire Plan is the primary health benefits plan for NYSHIP,
covering 1.1 million of the NYSHIP members. The Empire Plan provides its
members with four types of health insurance coverage: medical/surgical, hospital,
prescription drugs, and mental health and substance abuse services.
Civil Service contracts with UnitedHealthcare (United) to administer the medical/
surgical portion of the Empire Plan. Medical/surgical benefits cover a range of
services including, but not limited to: office visits, diagnostic testing, outpatient
surgery, physical therapy, chiropractic services, home care services, and durable
medical equipment. United processes and pays claims submitted by health care
providers on behalf of Empire Plan members.
United contracts with a large network of participating (in-network) providers
who deliver medical/surgical services to Empire Plan members at rates
established by United. Empire Plan members may also choose to receive
services from non-participating (out-of-network) providers. United bases payment
for most services provided by out-of-network providers either on the MultiPlan,
Inc. rate or the reasonable and customary (R&C) rate. MultiPlan, Inc. is the
provider network leased by United to supplement its own network. If the out-of-network
provider does not receive the MultiPlan rate, United will reimburse the
provider at the R&C rate. The R&C rate is generally based on provider charges
for the same or similar service in the same or similar geographic region.
United’s reimbursement rates for out-of-network services are generally higher —
often significantly higher — than United’s in-network reimbursement rates.
Consequently, services provided by out-of-network providers are more costly
to the State. During the five years 2012 to 2016, United paid $1.7 billion for
out-of-network services. United’s payments, based on the R&C rate, totaled
approximately $902 million for 4,003,040 services. By comparison, United’s
payments based on the MultiPlan rate totaled approximately $832 million for
8,681,167 services. During the five year period, United’s payments based on
the in-network rate totaled about $6.5 billion for 226,128,077 services. To
illustrate, the average reimbursement for a routine office visit in 2016 was
$29 for in-network, $72 for MultiPlan, and $147 for R&C.