Department of Civil Service

New York State Health Insurance Program: Payments Made to Hudson Valley Hospital Center

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 more than $5 billion a year.

The hospitalization portion of the Empire Plan is administered by an insurance carrier (Empire BlueCross BlueShield) that is overseen by the Department. Generally, the carrierís costs are fully reimbursed by the Department. The carrier has agreements with various hospitals that govern its reimbursement payments to the hospitals for services provided to Empire Plan members. We examined the reimbursement payments that were made to one of these hospitals, Hudson Valley Hospital Center, over the three years ended December 31, 2009.

We found that, because of weaknesses in the agreement between the carrier and the hospitalís parent organization, the carrier paid the hospital excessive amounts for certain services. Specifically, the carrier paid the hospital a total of $1.1 million for the services, even though the services cost the hospital only $228,153 to provide. According to carrier officials, the reimbursements for these services were expected to be close to the hospitalís costs for the services. Under the agreement, the excessive payments could not be recovered. However, we recommended that the carrier modify the agreement to prevent such excessive payments in the future.

For a complete copy of Report 2009-S-99 click here.
For a copy of the 90-day response click here.