Payments by Beacon Health Options for Mental Health and Substance Abuse Services for Ineligible Members

Issued Date
May 13, 2022
Civil Service, Department of


To determine whether Beacon Health Options paid mental health and substance abuse (MHSA) claims for Empire Plan members who were not eligible for coverage. The audit covered the period from January 2015 through December 2020.

About the Program

The New York State Health Insurance Program (NYSHIP), administered by the Department of Civil Service (Civil Service), provides health insurance coverage to over 1.2 million active and retired State, local government, and school district employees, and their dependents. The Empire Plan is the primary health insurance plan for NYSHIP, serving about 1.1 million members. Civil Service contracts with Beacon Health Options (Beacon) to administer the MHSA program for the Empire Plan. From January 1, 2015 through December 31, 2020, Beacon processed and paid over $1.38 billion for MHSA claims.

Civil Service maintains eligibility and enrollment records for NYSHIP members in the New York Benefits Eligibility and Accounting System (NYBEAS). Civil Service provides Beacon with a daily update file of NYBEAS changes, and Beacon has access to NYBEAS to confirm eligibility information against its claims processing system, Connections Administrative System (CAS).

Typically, organizations that participate in NYSHIP (e.g., State agencies, local government employers, and school districts) have a Health Benefits Administrator (HBA) responsible for processing eligibility transactions, such as disenrollments, in NYBEAS. Accurate, up-to-date enrollment information in NYBEAS is crucial to prevent payment of ineligible claims. For example, if a member’s disenrollment is entered in NYBEAS after the effective date of the change in coverage, it is considered a retroactive disenrollment. There is a risk that claims submitted on the disenrolled member’s behalf during this interim period – after the effective date of disenrollment but before the date the transaction is entered in NYBEAS – will be paid.

Key Findings

We determined Beacon paid over $3.21 million on 5,059 claims on behalf of members who were not eligible for Empire Plan coverage. The majority of the improper payments (over $2.94 million) occurred because the member was retroactively disenrolled. In many cases, member disenrollment in NYBEAS was delayed for extended periods, taking an average of 300 days to cancel coverage. The remaining improper payments (nearly $270,000) stemmed from other causes, such as data transfer issues between NYBEAS and CAS and errors of oversight in Beacon’s manual processing of claims.

Key Recommendations

To Civil Service and Beacon:

  • Review the $3.21 million in ineligible payments and ensure appropriate recoveries are made.
  • Take steps to ensure eligibility information is complete, accurate, and up to date, including but not limited to continuing to perform periodic reconciliations and improving the reconciliation process.

To Civil Service:

  • Continue taking steps to ensure HBAs are properly informed of their responsibilities (including the importance of timely and accurate coverage updates) and continue to monitor whether HBAs are up to date on relevant training.

Andrea Inman

State Government Accountability Contact Information:
Audit Director: Andrea Inman
Phone: (518) 474-3271; Email: [email protected]
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236