Department of Civil Service

New York State Health Insurance Program: Cost of Out-of-Network Benefits

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 more than $5 billion a year. If an Empire Plan member is treated by a medical service provider that does not participate in the Empire Plan (an out-of-network provider), the Empire Plan will reimburse the member for only a portion of the amount charged by the provider. However, these out-of network reimbursements are still generally higher, and often significantly higher, than the Empire Planís reimbursements for the same services provided in-network.

We examined the out-of-network reimbursements paid by one of the Empire Planís insurance carriers for elective non-emergency services, and found that significant reductions could be made in the Empire Planís costs if more of these services were provided in-network, rather than out-of-network. Specifically, we determined that annual savings of $124 million could be realized if the percentage of the services provided by out-of-network providers was reduced from its current level of 7.7 percent to 3.2 percent (the level found for certain other types of medical services). We recommended actions that could be taken to help increase the use of in-network providers for elective non-emergency services.

For a complete copy of Report 2009-S-34 click here.