Department of Civil Service

New York State Health Insurance Program: Waiving Out-of-Pocket Expenses

In the New York State Health Insurance Program, the Department of Civil Service administers health insurance programs for active and retired State, local government and school district employees and their dependents. The primary such program is the Empire Plan, which provides services costing about $4.0 billion a year.

To help prevent insurance fraud, health care providers are not supposed to routinely waive the out-of-pocket expenses of Empire Plan members (these expenses represent the difference between the providerís billed amount and the amount that is reimbursed by the Empire Plan). To discourage this practice, the Empire Planís health insurance carrier for medical and surgical services (United HealthCare) is supposed to reduce its reimbursements by 20 percent when it has reason to believe that a provider is routinely waiving the out-of-pocket expenses of Empire Plan members. However, we found the insurer was not always making these reductions in these circumstances. As a result, the risk of insurance fraud was increased. We recommended that the insurer improve its practices in this area.

For a complete copy of Report 2006-S-60 click here.