Objectives

To determine whether UnitedHealthcare (United) paid claims using reasonable and customary (R&C) reimbursement rate schedules that did not correlate with the date of the service on the claims, and to calculate the corresponding financial impact. The audit covered the period January 1, 2017 through December 31, 2018.

About the Program

The New York State Health Insurance Program (NYSHIP), administered by the Department of Civil Service (Civil Service), provides health insurance coverage to over 1.2 million active and retired State, local government and school district employees, and their dependents. The Empire Plan is the primary health benefits plan for NYSHIP, covering nearly 1.1 million members. Civil Service contracts with United to administer the medical/surgical benefits portion of the Empire Plan. United contracts with in-network providers to deliver services to Empire Plan members. Members may also choose to receive services from out-of-network providers. United’s reimbursement for certain out-of-network claims is 80 percent of the R&C rate for the service. R&C rates are updated every six months. From January 1, 2017 through December 31, 2018, United paid over $416 million for 255,807 out-of-network claims based on R&C rates.

Key Findings

• United's automated claims processing system uses only the two most recent R&C rate periods (i.e., reimbursement rates from the prior 12 months) to process all R&C claims – even claims for services that occurred before those rates took effect.
• From a sample of 100 claims, we calculated a potential cost savings of $214,008 for 84 claims that were paid using an R&C rate period that was not in effect on the date of the service.

Key Recommendations

• Evaluate the feasibility of processing R&C claims based on their date of service (thereby using the R&C rate in effect on the date of the service).
• Review the claims identified in this audit and assess whether recoveries are warranted.