Objective

To determine whether CVS Caremark paid pharmacy claims under the appropriate plan for Medicare-qualified Empire Plan members. The audit covered the period from January 2022 through June 2025, and January 2019 through December 2025 for certain high-risk Medicare‑qualified members.

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 CaremarkPCS Health, L.L.C. (CVS Caremark) to administer the prescription drug program for the Empire Plan. This program includes the Empire Plan Medicare Rx drug plan (Medicare Rx Plan) for retired members who have Medicare (Medicare-qualified) and their dependents, and a Commercial Plan for non-Medicare-qualified members and their dependents. Claims paid under the Medicare Rx Plan are eligible for drug manufacturer discounts and federal subsidies that are not available for claims paid under the Commercial Plan. Accordingly, ensuring that claims are properly paid under the Medicare Rx Plan allows for significant cost avoidance for the State.

Accurate enrollment information is required to ensure a smooth transition from the Commercial Plan to the Medicare Rx Plan for Medicare-qualified members. CVS Caremark relies on enrollment information generated by the New York Benefits Eligibility and Accounting System (NYBEAS), the State’s health insurance enrollment system, to determine which plan should pay member claims. Health Benefits Administrators (HBAs) are responsible for updating employee and retiree eligibility and enrollment information in NYBEAS.

Key Findings

The audit determined that CVS Caremark paid prescription drug claims for Medicare-qualified Empire Plan members under the incorrect plan. As a result, we identified $19.3 million in claims for 338 Medicare-qualified members and their dependents that were incorrectly paid under the Commercial Plan instead of the Medicare Rx Plan. During the audit, we shared our findings with Civil Service and CVS Caremark officials, who began reviewing the claims.

Key Recommendations

To Civil Service and CVS Caremark:

• Continue reviewing the $19.3 million in incorrectly processed claims identified in this report, update member eligibility information as needed, and reprocess claims as warranted.
• Review controls and update them as needed to ensure that claims are paid under the correct plan.

To Civil Service:

• Continue to monitor HBAs’ activities to ensure accurate and timely updates of member enrollment data in NYBEAS.