Department of Civil Service

New York State Health Insurance Program: Overpayments for Services Provided by HealthMark Medical, Inc.

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.

HealthMark Medical, Inc. is a mobile surgical facility whose main offices are located in Missouri. HealthMark does not participate in the Empire Plan. Accordingly, if an Empire Plan member is treated by HealthMark, the Empire Plan will not reimburse HealthMark for its full charges. Rather, it will only reimburse a portion of these charges (generally 80 percent), and the member will have to pay the balance. However, we found that HealthMark was routinely waiving Empire Plan members’ out-of-pocket expenses. Such a practice may constitute billing fraud, as the Empire Plan was reimbursing 80 percent of what it understood to be HealthMark’s actual charges. We recommended the Empire Plan recover the inflated portion of HealthMark’s bills, an amount we calculated to be $117,451 for the seven-year period we audited (about 29 percent of the total $398,377 that HealthMark billed to the Empire Plan during this period). We also referred the matter to the Department of Civil Service for appropriate follow-up action, because this billing practice results in other additional costs to the Empire Plan beyond the inflated portion of the bills, and should be actively discouraged.

For a complete copy of Report 2008-S-39 click here.