Objective

To assess the extent of implementation of the three recommendations included in our initial audit report, Incorrect Payments by CVS Caremark for Medicare Rx Drug Claims That Were Improperly Paid Under the Commercial Plan (Report 2022-S-24).

About the Program

The New York State Health Insurance Program (NYSHIP), administered by the Department of Civil Service (Civil Service), is one of the nation’s largest public sector health insurance programs. NYSHIP covers about 1.2 million active and retired State, participating local government, and school district employees, and their dependents. The Empire Plan is the primary health benefits plan for NYSHIP, covering over 1 million members.

Civil Service contracts with CVS Caremark to administer the prescription drug program for the Empire Plan. This program includes a Commercial Plan for members and their dependents who do not qualify for Medicare, and the Empire Plan Medicare Rx drug plan (Medicare Rx Plan) for retired members and their dependents who do qualify for Medicare. Claims paid under the Medicare Rx Plan are eligible for enhanced drug manufacturer discounts and federal subsidies that are not available for claims paid under the Commercial Plan. Therefore, ensuring that claims for Medicare-enrolled individuals are paid under the Medicare Rx Plan allows for significant cost avoidance for the State.

The objective of our initial audit, issued on September 13, 2023, was to determine whether CVS Caremark paid claims under the correct prescription drug plan. The audit covered the period January 2015 through March 2022. We identified claims totaling $12,358,531 that were incorrectly paid under the Commercial Plan instead of the Medicare Rx Plan.

Key Findings

Civil Service and CVS Caremark made some progress in addressing the issues identified in the initial audit, including reprocessing over $5 million in claims under the Medicare Rx Plan. While Civil Service and CVS Caremark continue to perform quarterly reconciliations of member eligibility data, no additional controls had been evaluated or put in place to prevent claims from being inappropriately paid under the Commercial Plan instead of the Medicare Rx Plan. Consequently, we identified $1.37 million in claims that were paid under the Commercial Plan for Medicare-eligible members since the initial audit (from April 2022 through December 2024). All three of the initial report’s audit recommendations were partially implemented.

Key Recommendation

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.