Objectives

To determine whether Empire BlueCross paid claims for special items according to the terms of its contract with Long Island Health Network and, if not, whether Empire BlueCross made overpayments on any of those claims. The audit covered the period January 1, 2013 through December 31, 2017.

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 benefits plan for NYSHIP, covering nearly 1.1 million members. Civil Service contracted with Empire BlueCross (Empire) to administer the hospital portion of this plan.

Empire processes claims for hospital services according to contracts it negotiates with hospitals. The hospital contracts include reimbursement fee schedules for inpatient and outpatient hospital services. Hospitals may be entitled to additional payments for special items (e.g., implants, drugs, and blood) that are not covered by standard fee schedules. Under Empire’s contract with Long Island Health Network (LIHN), which covered ten hospitals on Long Island, Empire paid about $180.5 million for 158,305 special item claims during the audit period.

Key Findings

• We found Empire did not pay for special item claims according to the terms of its contract with LIHN. From a sample of 874 claims, we found Empire overpaid LIHN hospitals $3,597,688 for 722 special item claims (83 percent of the claims sampled). As of July 23, 2019, Empire had recovered $262,467.

Key Recommendations

• Recover the remaining $3,335,221 out of $3,597,688 in special item claim overpayments.
• Develop a corrective action plan with LIHN hospitals to prevent these errors from occurring in the future.