Objective

To determine whether CVS Health paid pharmacy claims for Empire Plan members who were not eligible. The audit covered the period from January 1, 2014 through December 31, 2019.

About the Program

The New York State Health Insurance Program (NYSHIP) 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 insurance plan for NYSHIP, serving about 1.1 million members. Since 2014, the Department of Civil Service (Civil Service) has contracted with CVS Health to administer the prescription drug program. From January 1, 2014 through December 31, 2019, CVS Health processed and paid over 100 million pharmacy drug claims totaling $14.9 billion.

Civil Service maintains eligibility and enrollment records for NYSHIP members in the New York Benefits Eligibility and Accounting System (NYBEAS). Typically, organizations that participate in NYSHIP (e.g., State agency, local government, and school district employers) have Health Benefits Administrators (HBA) that process eligibility transactions in NYBEAS. Civil Service sends CVS Health daily files of NYBEAS member eligibility changes, and CVS Health has access to NYBEAS to confirm eligibility information. Timely and accurate member eligibility information is crucial to ensure members are disenrolled promptly and to prevent payment of ineligible claims on their behalf.

Key Findings

For the audit period, we identified 132,051 claims, totaling $30,695,221, that were paid for pharmacy services provided during periods when members were not eligible. Further, Civil Service paid CVS Health $170,359 in administrative fees for processing these claims. We found:

• 89,654 claims, totaling $18,180,403, were improperly paid due to errors in the data sharing procedures between Civil Service and CVS Health. For the first 5 years of the contract period – when most of the ineligible payments occurred – there was no process for reconciling member eligibility data between Civil Service and CVS Health systems to identify inconsistencies and prevent improper claims from being processed. Improved controls implemented in May 2019 have significantly reduced these types of improper payments.
• 42,397 claims, totaling $12,514,818, were paid on behalf of ineligible members who were retroactively disenrolled (i.e., when a disenrollment is entered in NYBEAS after the date the change in eligibility became effective). In many cases, members were retroactively disenrolled after extended delays, taking an average of 227 days – and in one case 10 years – to cancel coverage. Civil Service relies heavily on HBAs and members to ensure their personnel records are up to date and that changes to members’ eligibility status are processed timely to avoid paying claims for ineligible members. Therefore, it is important that Civil Service take steps to ensure HBAs are aware of their responsibilities for the timeliness and accuracy of updates to members’ eligibility status in NYBEAS.

Key Recommendations

To Civil Service and CVS Health:

• Review the $30,695,221 in improper payments to determine the cause of the error, identify responsibility, and recover payments as warranted.
• Continue to perform periodic reconciliations, and establish or strengthen additional controls as needed, to prevent payment of ineligible claims.

To Civil Service:

• Continue to take steps to ensure HBAs are properly informed of their responsibilities (including the importance of timely and accurate coverage updates) and monitor whether HBAs are up to date on relevant training.