Objective

To determine whether Empire BlueCross appropriately reimbursed physician-administered drugs. The audit covered the period from January 2017 through December 2021.

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, participating local government, and school district employees, and their dependents. The Empire Plan is the primary health benefits plan for NYSHIP, covering nearly 1.1 million of these members.

Civil Service contracts with Empire BlueCross (Empire) to administer the Hospital Program of the Empire Plan. Empire processes and pays claims for hospital services, which includes coverage for inpatient and outpatient services provided by a hospital, skilled nursing facility, or hospice. These benefits cover a range of services, including physician-administered drugs. A physician-administered drug is a drug, other than a vaccine, that is typically administered by a health care professional in a hospital or facility setting. From January 1, 2017 through December 31, 2021, Empire paid approximately $855 million for physician-administered drugs under the Hospital Program. In certain circumstances, physician-administered drugs provided in a hospital, skilled nursing facility, or hospice are paid under the Empire Plan’s separate Prescription Drug Program. However, both programs should not pay for the same physician-administered drug for the same patient on the same date of service.

Key Findings

We identified $2,776,510 in actual and potential overpayments for the cost of physician-administered drugs during the audit period, as follows:

• $1,690,853 was paid for physician-administered drugs under both the Hospital Program and the Prescription Drug Program, and another $45,546 in related physician-administered drug payments were incorrectly processed by Empire whereby Empire paid the full price even though the facility billed $0.01 (no-cost); and
• $1,040,111 was paid for physician-administered drugs that were not in compliance with guidelines.

As of June 21, 2023, Empire had started recoveries for $116,287 of the improper payments.

Key Recommendations

• Work with Civil Service to review the remainder of the $2,776,510 in overpayments and make recoveries, as warranted.
• Work with Civil Service to identify physician-administered drugs improperly paid by both the Hospital and the Prescription Drug Programs and develop a process to prevent future overpayments.