New York State Health Insurance Program


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NYS Comptroller


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New York State Health Insurance Program
Empire BlueCross BlueShield Selected Payments for Special Items for the Period April 1 Through June 30, 2011

Issued: December 7, 2012
Link to full audit report 2011-S-42

To determine whether Empire BlueCross BlueShield (Empire) paid claims for special items according to the provisions of the agreements between Empire and its member hospitals. We also sought to determine if payments for certain special items, in relation to the hospitals' actual purchase and acquisition costs, were reasonable. The audit covered the period from April through June 2011.

The New York State Health Insurance Program (NYSHIP) provides health coverage to active and retired State, participating local government and school district employees and their dependents. The Department of Civil Service (Department) contracts with Empire to administer the hospitalization portion of the Empire Plan (Plan), which includes coverage for inpatient and outpatient hospital services.

Empire processes Plan claims for hospital services in accordance to agreements they negotiate with member hospitals. Payments for hospital services are generally based on standard fee schedules. However, hospitals may be entitled to additional payments for special items that are not covered by the standard fee schedules. Many of Empire's agreements with member hospitals limit charges for special items, while agreements with other hospitals do not have such limitations. From April 1, 2011 to June 30, 2011, Empire paid over $31 million for 19,032 claims for special items.

Key Findings

  • We found Empire did not have adequate controls to ensure special items were paid according to contract limitations. As a result, Empire made a net overpayment of $119,141 on 33 claims.
  • Empire made an excessive payment to a hospital that did not have formal contract provisions limiting reimbursements for special items. On one claim we reviewed, Empire paid about $52,755 (or 444 percent) more than the costs of the three special items in question.

Key Recommendations

  • Recover the net overpayment of $119,141 for the claims that were paid improperly.
  • Ensure that all agreements with hospitals contain language which specifies the basis of reimbursement for special items.
  • Develop and implement a system of internal controls to ensure that payments for special items are made according to agreements and are supported by appropriate documentation.

Other Related Audits/Reports of Interest

New York State Health Insurance Program: Payments Made to Hudson Valley Hospital Center (2009-S-99)
New York State Health Insurance Program: Payments Made to Stony Brook University Medical Center (2009-S-27)

State Government Accountability Contact Information:
Audit Director: Brian Mason
Phone: (518) 474-3271; Email:
Address: Office of the State Comptroller; Division of State Government Accountability; 110 State Street, 11th Floor; Albany, NY 12236