Purpose

To determine the implementation status of the three recommendations made in our audit report, UnitedHealthcare: Improper Payments for Medical Services Designated By Modifier Code 59 (Report 2013-S-82).

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 is the primary health benefits plan for NYSHIP. The New York State Department of Civil Service (Department) contracts with UnitedHealthcare (United) to process and pay medical and surgical claims for services provided to Empire Plan members. United’s payments to medical providers are based, in part, on procedure codes billed on claims that indicate the medical services performed. Modifier code 59 is used to indicate that a provider performed a procedure that was distinct or independent from another procedure that was performed on the same day for the same patient. Modifier 59 is used to identify procedures or services that are not normally billed together, but are appropriate under the circumstances.

We issued our initial audit report on January 8, 2015. Our objective was to determine whether United improperly paid for medical services designated with modifier code 59 that were not distinct and independent from other services provided on the same day. The audit covered the period from September 1, 2012 to August 31, 2013. In our initial audit, we reviewed a random sample of 245 claims with modifier 59. We identified 13 claims that were overpaid by $39,345 because a distinct or independent service was not provided despite the claims’ designation of modifier 59. To develop an estimate of the total overpayments resulting from the improper use of modifier 59, we used statistical sampling techniques to project the 13 overpayments to the population of modifier 59 claims. Based on this projection, we estimated that United overpaid between $1.6 million and $5.2 million for services that included modifier 59 during the one-year period ending August 31, 2013.

We recommended that United: recover the $39,345 in overpayments and credit the Department; formally remind providers on the proper use of modifier 59; and perform a formal risk assessment to identify providers with unusual modifier 59 billing patterns and take appropriate actions, including recovery of overpayments.

Key Findings

United  officials made significant progress in addressing the issues we identified in the initial audit. Of the initial report’s three audit recommendations, two were implemented and one was partially implemented. United recovered $29,856 of the $39,345 in identified overpayments. In addition, United published guidance on the proper usage of modifiers. Further, as a result of our initial audit and direction from the Department, United implemented a new fraud and abuse detection program to identify aberrant billing patterns, including inappropriate uses of modifier 59.

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: UnitedHealthcare - Improper Payments for Medical Services Designated By Modifier Code 59 (2013-S-82)