New York State Health Insurance Program

 

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Office of the New York State Comptroller

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New York State Health Insurance Program
United HealthCare's Payments for Repackaged Drugs Dispensed Under the Empire Plan (Follow-Up)


Issued: August 13, 2012
Link to full audit report 2012-F-13
Link to the 30-day response

Purpose
To determine if the recommendations made in our initial audit report New York State Health Insurance Program - United HealthCare’s Payments for Repackaged Drugs Dispensed Under the Empire Plan (Report 2010-S-38) issued February 17, 2011, were implemented.

Background
The New York State Health Insurance Program (NYSHIP) administers health insurance programs for State, local government, and school district employees, retirees, and their families.  The Empire Plan (Plan) is the primary program for NYSHIP.  The Department of Civil Service (Department) contracts with United HealthCare (United) to provide prescription drug coverage under the Plan.  The Department reimburses United for claims paid.  Some claims are paid based on a prescribed discount from the manufacturer’s Average Wholesale Price (AWP).

To reduce medication errors, the pharmaceutical industry developed processes for placing drugs into single dose packaging.  This is commonly known as “repackaging,” which can increase AWPs and retail prices for a drug.  The medical necessity for dispensing repackaged drugs at retail pharmacies is limited.  Moreover, the contract requires United to have controls in place to protect the State from any inflated costs associated with claims for repackaged drugs.  Thus, for the purposes of the Plan, the charge for a repackaged drug should be relatively consistent with the charge for the same drug in its original form. 

We recommended United reimburse the State $996,751 for excessive costs for repackaged drugs, implement adequate controls, and investigate the two pharmacies.

Key Findings

  • United officials made some progress in addressing the matters in our initial report.  United’s actions included the recovery of $118,589 in improper payments that have been credited to the State. Additional actions, however, are still warranted. Of the initial report’s four recommendations, two were implemented, one was partially implemented, and one was not implemented.

Key Recommendations

  • Officials are given 30 days after the issuance of the follow-up review to provide information on any actions that are planned to address the unresolved issues discussed in this review..

Other Related Audits/Reports of Interest
New York State Health Insurance Program: Payments for Repackaged Brand Name Drugs Dispensed Under the Empire Plan Report 2010-S-38


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