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Office of the New York State Comptroller

Taxpayers' Guide to State and Local Audits

New York State Health Insurance Program
Empire Blue Cross and Blue Shield: Payments for Selected Items to
Selected Hospitals (Issued 4/6/12)


Purpose
To determine if Empire Blue Cross and Blue Shield's (Empire's) payments to selected hospitals for special items were made according to the provisions of the agreements between Empire and the hospitals. The audit covers the period January 2006 through June 2010.

Background
The New York State Health Insurance Program (NYSHIP) provides health insurance coverage to active and retired State, participating local government and school district employees and their dependents. The Empire Plan (Plan) is the primary health benefits plan for NYSHIP. The Department of Civil Service contracts with Empire to provide hospitalization coverage under the Plan. Empire's hospital agreements provide for additional payments, above standard rate schedule amounts, for certain special items (e.g. implants, drugs, and blood). From January 1, 2006 through June 30, 2010, Empire paid 179 hospitals about $357 million for special items. Agreements with many of Empire's member hospitals often limit charges for special items.

Key Findings

  • There were errors in 111 (57 percent) of the 194 claims in our review sample. The errors resulted in a net overpayment of $387,772 for the sample. A projection of the net overpayment to the entire population, using valid statistical sampling methods, resulted in a total overpayment of $3.2 million.
  • Most of the overpayments occurred because Empire did not apply contractually- prescribed reimbursement limits to claims for special items.

Key Recommendations

  • Remit to New York State the projected overpayment of $3.2 million or remit the $387,772 of overpayments identified by this audit plus amounts determined from re-adjudication of all other claims pertaining to the audit period.
  • Develop and implement a system of internal controls to ensure that reimbursement for special items is reasonable.

Link to full audit report (2010-S-74)
Link to Table of Overpayments
Link to the 90-day response

Other Related Audits/Reports of Interest
New York State Health Insurance Program: Payments Made to Hudson Valley Hospital Center Report 2009-S-99
New York State Health Insurance Program: Payments Made to Stony Brook University Medical Center Report 2009-S-27


State Government Accountability Contact Information:
Audit Director: Brian Mason
Phone:(518) 474-3271; Email: StateGovernmentAccountability@osc.state.ny.us
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236