Department of Civil Service

New York State Health Insurance Program: Inappropriate Reimbursement Claims From Island Medical Associates

In the New York State Health Insurance Program, the Department of Civil Service administers health insurance programs for active and retired State, local government and school district employees and their dependents. The primary such program is the Empire Plan, which provides services costing about $4 billion a year. Island Medical Associates operates a clinic where most of the physicians participate in the Empire Plan. When these physicians provide services to Empire Plan members, the services should be reimbursed at the agreed upon rates for participating providers.

However, we found the services were inappropriately reimbursed at the higher (five times higher) non-participating rates. The higher rates were paid because Island Medical Associates submitted the payment claims as a non-participating provider. Island Medical Associates then shared the proceeds with the physicians, which it claimed were its employees. However, we determined that an employer-employee relationship did not appear to exist between Island Medical Associates and the physicians; rather Island Medical Associates appeared to be inserting itself as an unnecessary intermediary between the physicians and the Empire Plan in order to charge the Plan the higher non-participating rates. During the six years we examined, the Empire Plan paid Island Medical Associates $3.9 million. We recommended these payments be recovered and all further payments suspended until questions about Island Medical Associatesí legitimacy as a medical service provider were resolved.

For a complete copy of Report 2007-S-54 click here.
For a copy of the 90-day response click here.
For a copy of the associated follow-up report click here.