Purpose

To determine whether UnitedHealthcare overpaid for out-of-network anesthesia services provided at Ambulatory Surgery Centers that were contractually required to use in-network anesthesia providers. The audit covered the five-year period January 1, 2012 through December 31, 2016.

Background

The New York State Health Insurance Program (NYSHIP), administered by the State Department of Civil Service (Civil Service), provides health insurance coverage to active and retired State, participating local government, and school district employees, as well as their dependents. The Empire Plan is the primary health benefits plan for NYSHIP. The Empire Plan provides its members with four types of health insurance coverage: medical/surgical, hospital, prescription drugs, and mental health and substance abuse. 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: physician office visits, diagnostic testing, outpatient surgery, physical therapy, and home care services. United processes and pays claims from health care providers for services provided to Empire Plan members, and Civil Service reimburses United for the payments it makes.

United contracts with in-network (participating) health care providers who agree to accept payments, at rates established by United, to furnish medical/surgical services to Empire Plan members. Members may also choose to receive services from out-of-network (non-participating) providers. United’s contracts with certain in-network Ambulatory Surgery Centers (ASCs) contain contract provisions that require all anesthesia services provided to Empire Plan members at their facilities to be performed by in-network providers. This acts to reduce Empire Plan costs because United’s payments for services by in-network providers are generally lower than the rates United pays to out-of-network providers for the same services.

Key Finding

We identified overpayments totaling $991,357 that occurred because United paid for out-of-network anesthesia services provided at ASCs that were contractually required to use in-network anesthesia providers.

Key Recommendations

• Recover the $991,357 in overpayments and refund Civil Service accordingly.
• Enhance controls designed to prevent as well as identify and recover improper payments for out-of-network anesthesia services provided at in-network ASCs, including instructing providers on the proper use and billing of out-of-network anesthesia services.

Other Related Audits/Reports of Interest

UnitedHealthcare: Improper Payments for Medical Services Designated By Modifier Code 59 (2013-S-82)
Preventing Inappropriate and Excessive Costs in the New York State Health Insurance Program (2016-D-1)