Department of Civil Service

New York State Health Insurance Program: Generic Pricing for Drugs from Out-of-State Pharmacies

In the New York State Health Insurance Program, the Department of Civil Service administers health insurance programs for active and retired State and local government employees and their dependents. The primary such program is the Empire Plan, which provides services costing more than $2.5 billion a year. We examined selected claims paid by the Empire Plan over a 27-month period for prescription drugs provided by pharmacies outside New York State. The objective of our examination was to determine whether the appropriate reimbursement rate was applied to drugs with generic equivalents. We identified a number of claims that were overpaid, because the higher brand-name reimbursement rate was applied to the claims when the lower generic rate should have been applied. We determined that the overpayments totaled $613,900. We recommended that the overpayments be recovered, and improvements be made in the insurance carrier’s procedures for identifying reimbursement rates.

For a complete copy of Report 2001-S-52 click here.
For a copy of the 90-day response click here.