New York State Health Insurance Program


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NYS Comptroller


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New York State Health Insurance Program
Empire BlueCross and BlueShield: Selected Payments for Special Items for the Period January 1, 2012 through June 30, 2012

Issued: December 13, 2013
Link to full audit report 2012-S-132
Link to the 90-day response

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. The audit covered the period from January through June 2012.

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 with 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 (such as implants, drugs, and blood) 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 January 1, 2012 to June 30, 2012 Empire paid over $71 million for 38,381 claims for special items.

Key Findings

  • Empire did not have adequate controls to ensure special items were paid according to contract provisions. As a result, Empire made a net overpayment of $391,894 on 81 of the 100 claims we tested.
  • Using statistically valid methods and an 80 percent confidence level, results in a projected overpayment of between $2.1 million and $3.3 million.

Key Recommendations

  • Recover the net overpayment of $391,894 for the improperly paid claims.
  • Develop and implement internal controls to ensure that payments for special items are made in accordance with hospital agreements and are supported by appropriate documentation.

Other Related Audits/Reports of Interest

Department of Health: Overpayments for Medicare Part C Coinsurance Charges (2011-S-33)

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