Purpose

To determine the extent of implementation of the three recommendations made in our initial audit report, United HealthCare Insurance Company of New York: Empire Plan Drug Rebate Revenue (2013-S-41).

Background

The New York State Health Insurance Program (NYSHIP) provides health insurance coverage to active and retired State, participating local government, and school district employees and their dependents. The Empire Plan (Plan) is the primary health benefits plan for NYSHIP. The Plan covers many health care services, including prescription drugs. The State Department of Civil Service (Department) contracted with United HealthCare (United) to administer the Plan’s prescription drug program between January 1, 2008 and December 31, 2013. United subcontracted key functions of the prescription drug program to Medco Health Solutions, Inc. (Medco), including the negotiation, collection, and allocation of rebates offered by drug manufacturers. In 2012, Express Scripts Holding Company (Express Scripts) acquired Medco.

Our initial audit report, which was issued on September 26, 2014, identified $694,227 in drug rebate and discount revenue that was not credited to the Department for the period January 1, 2010 through December 31, 2012. Additionally, throughout the course of our initial audit, United and Express Scripts delayed access to information we requested and refused to provide certain other information. This limited our ability to ensure the Department was credited with all drug rebate and discount revenue due to the State. We recommended that United remit to the Department the $694,227 in rebate and discount revenue identified by our audit, and fully comply with contract provisions that require timely audit access to all documents and information deemed necessary.

Key Finding

• United officials made some progress in implementing the recommendations we made in our initial audit report. This included remitting $670,470 in additional drug rebate and discount revenue to the Department. However, additional actions are still needed. Of the initial report’s three audit recommendations, one was partially implemented, one was not implemented and one was no longer applicable.

Key Recommendation

• Officials are given 30 days after the issuance of the follow-up report to provide information on any actions that are planned to address the unresolved issues discussed in this report.

Other Related Audit/Report of Interest

New York State Health Insurance Program: United HealthCare: Payments for Fraudulent and Improper Claims Submitted by Davis Ethical Pharmacy (2012-S-10)