Purpose

To determine if Empire BlueCross BlueShield's (Empire's) payments to State University of New York's Stony Brook University Hospital (Stony Brook) for special items were made according to the provisions of the agreement between Empire and Stony Brook.

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 administer the hospitalization portion of the Plan. Empire processes Plan claims for hospital services in accordance with agreements they negotiate with member hospitals, including Stony Brook. Empire's payments to Stony Brook are generally based on standard fee schedules. However, Stony Brook is entitled to additional payments for certain special items (such as implants, drugs, and blood) that are not covered by the standard fee schedules. Per Empire's agreement with Stony Brook, the amounts of claims for special items should be related to Stony Brook's costs to acquire them.

Key Finding

We reviewed six claim payments (totaling $227,787) to Stony Brook for special items and determined Empire overpaid them by $78,452.

Key Recommendations

• Recover the $78,452 from Stony Brook for the overpayments we identified in this audit.
• Develop and implement the controls necessary to ensure that payments for special items comply with the terms of Empire’s contract with Stony Brook.

Other Related Audits/Reports of Interest

New York State Health Insurance Program: Payments Made to Stony Brook University Medical Center (2009-S-27)
New York State Health Insurance Program/Department of Civil Service: Empire BlueCross BlueShield - Payments for Selected Items to Selected Hospitals (2010-S-74)