Department of Civil Service

New York State Health Insurance Program: Overpayments for Services at the Center for Specialty Care, Inc.

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 billion a year.

The Center for Specialty Care is an surgical facility located in New York City. The Center does not participate in the Empire Plan. Accordingly, if an Empire Plan member is treated by the Center, the Empire Plan will not reimburse the Center for its full charges. Rather, it will only reimburse a portion of these charges (generally 80 percent), and the member will have to pay the balance. However, we found that the Center was frequently waiving Empire Plan membersí out-of-pocket expenses. Such a practice may constitute billing fraud, as the Empire Plan was reimbursing 80 percent of what it understood to be the Centerís actual charges. We recommended the Empire Plan recover the inflated portion of the Centerís bills, an amount we calculated to be $48,213 for the seven-year period we audited (about 6 percent of the total $802,578 that the Center billed to the Empire Plan during this period). We also referred the matter to the Department of Civil Service for appropriate follow-up action, because this billing practice results in other additional costs to the Empire Plan beyond the inflated portion of the bills, and should be actively discouraged.

For a complete copy of Report 2008-S-37 click here.