State Comptroller's auditors alledge that NYSHIP provider Empire Bluecross Blueshield paid excessive amounts for special medical items

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State Comptroller's auditors alledge that NYSHIP provider Empire Bluecross Blueshield paid excessive amounts forspecial medical items
Source: Office of the State Comptroller

New York State Health Insurance Program(NYSHIP) provider Empire BlueCross BlueShield [Empire] has routinely allowedhospitals to charge excessive amounts for special medical items such asimplants, drugs and blood because they did not sign agreements to limitreimbursement for those items according to an audit of the NYSHIP released on February 1, 2013 by New York StateComptroller Thomas P. DiNapoli.  

The Comptroller's Office said:
 
"DiNapoli’s auditors reviewed claims fora series of special items, finding Empire paid hospitals on average 344 percentmore than the costs of the items in question. While the details of the specialitems cannot be disclosed due to proprietary concerns, examples of Empire’sexcessive payments include:

Claim Example	Amount Empire Paid Hospital for Special Items	Hospitals’ Purchase / Acquisition Cost	Excess to Hospital
A	$82,407	$18,000	$64,407	358%
B	$94,656	$25,000	$69,656	279%
C	$102,877	$24,780	$78,097	315%
D	$80,307	$13,399	$66,908	499%
Totals	$360,247	$81,179	$279,068	344%

"DiNapoli’s auditors were unable toobtain supporting documentation from 13 hospitals for 44 selected claims forspecial items because Empire cannot compel the hospitals to submit thatinformation. If Empire paid these hospitals 344 percent more than the costs ofthe items, the hospitals could have generated profits of nearly $1.6 million onthese claims, auditors estimated.

"NYSHIP provides health insurancecoverage to active and retired state, participating local government and schooldistrict employees and their dependents.

"The Department of Civil Servicecontracts with Empire Blue Cross and Blue Shield (Empire) to provide hospitalizationcoverage under the Empire Plan, the largest insurance option provided byNYSHIP. Empire processes Plan claims for hospital services and medical items inaccordance with agreements it negotiates with participating hospitals.

"Empire’shospital agreements provide for additional payments for certain special items.Agreements with many member hospitals often limit payments for special items,but others do not. For the period January 1, 2011 through March 31, 2011,Empire paid 246,870 claims totaling over $529 million for services provided toplan members. This included payments totaling $24 million for 12,990 claims forspecial items submitted by hospitals whose agreements did not limit Empire’sreimbursements for such items.

"DiNapoli’s auditors recommended Empire:

·        Ensurethat future agreements with hospitals contain language that specifies the basisof reimbursement for the purchase and acquisition of special items; and requirehospitals to provide appropriate support documentation (including invoices forspecial items) upon request; and

·        Developand implement internal controls to ensure that payments for special items aremade in accordance with hospital agreements.

"For a copy of the roll-up reportdocumenting the findings on 15 hospitals visit: http://osc.state.ny.us/audits/allaudits/093013/11s17.pdf

"The audits of 11 other individualhospitals with special item payment agreements can be found under the NYSHIPsection at: http://www.osc.state.ny.us/audits/index.htm "