Objective

To determine the extent of implementation of the seven recommendations included in our initial audit report, Empire BlueCross – Overpayments for Physician-Administered Drugs (Report 2021-S-33).

About the Program

The New York State Health Insurance Program (NYSHIP), administered by the Department of Civil Service (Civil Service), provides health insurance coverage to about 1.2 million active and retired State, local government, and school district employees, and their dependents. The Empire Plan is the primary health insurance plan for NYSHIP, providing over 1 million members with four types of health insurance coverage: hospital, prescription drug, mental health and substance use, and medical/surgical coverage.

Civil Service contracts with Anthem Blue Cross (Anthem), formerly Empire BlueCross, to administer the Hospital Program of the Empire Plan and to process and pay claims for hospital services. Hospital benefits cover a range of services including physician-administered drugs, which are drugs administered by health care professionals in a hospital or facility setting. Physician-administered drugs are also covered under the Empire Plan’s separate Prescription Drug Program.

The objective of our initial audit, issued on September 27, 2023, was to determine whether Anthem appropriately reimbursed physician-administered drugs. The audit covered the period from January 2017 through December 2021. We identified over $2.7 million in actual and potential overpayments for physician-administered drugs: $1,690,853 was paid under both the Hospital Program and the Prescription Drug Program, and $45,546 in related payments were incorrectly processed when Anthem paid the full price even though facilities billed $0.01 (no-cost drugs); and $1,040,111 was paid for drugs that were billed out of compliance with guidelines (such as billing for more drug units than allowed and inadequate supporting documentation).

Key Findings

Anthem officials made progress in addressing the problems we identified in the initial audit. Anthem recovered over $600,000 of the overpaid claims and was taking steps to make more recoveries. Anthem officials stated they were working with Civil Service to develop a process to identify and recover overpayments on claims where both the Hospital and Prescription Drug Programs made payments. Anthem also made changes to claims processing-related controls to ensure claims for no-cost drugs that are billed in accordance with guidelines are correctly paid. Of the initial report’s seven audit recommendations, two were implemented, four were partially implemented, and one was not implemented.

Key Recommendation

Anthem officials are requested, but not required, to provide information about any actions planned to address the unresolved issues discussed in this follow-up within 30 days of the report’s issuance.