State Comptroller's Audit Shows Mather Overcharged Insurance Company

in Port Jefferson came under fire from the New York State Comptroller’s Office when a routine audit of Empire BlueCross and BlueShield showed that the hospital overcharged the insurance agency by more than 300 percent for some “special items.”

According to a statement released by the Comptroller’s Office, Mather is one of ten hospitals in the Long Island Health Network, an affiliation that allows Empire to be reimbursed for items that are not included on its standard rate schedules.

Active and retired employees of New York State, participating local governments and school districts are covered under the New York State Health Insurance Program. The Empire Plan is the primary health benefits plan for the program, which processes claims for hospital services under a prearranged agreement with member hospitals.

“Although the base hospital stay and related procedures covered under the agreement are reimbursed at rates prescribed in fee schedules, Mather can submit claims for certain items (not on fee schedules) separately as ‘special items,’” the audit statement said.

The Comptroller’s Office discovered that the insurance agency did not have controls in place to prevent this type of overbilling.

Auditors found that Mather charged Empire a total of $64,550 for 11 items even though price data they obtained showed them to cost $10,517. Empire only paid out $29,047 (296 percent of actual costs) giving the hospital a profit of $18,530. If Mather overcharged the same percentage on all 138 items audited, then the Comptroller’s Office estimates that the hospital profited as much as $707,351.

Over a three-year period between 2007 and 2010, Empire paid $74.8 million for 50,591 claims submitted by Mather for services provided to members of its plan, including 44,863 special items totaling $9.5 million.

In a statement to Patch, Mather Hospital said it complied with New York State auditors and that it charged for the special items according to its agreement with the insurance company.

It also said that the hospital routinely gives Empire discounts on other services.

“Although the Empire contract allowed for the submission of ‘special items’ not included on Empire’s standard rate schedules, these amounts were more than offset by significant discounts given to Empire on all other services provided and covered under the standard rate schedules,” the hospital said in the statement.

Other area hospital have come under the same scrutiy. In 2009, the Comptroller's Office found that Empire also overpaid almost $360,000 for certain special items on 61 claims because the hospital marked-up items significantly over the allowed amounts, according to an earlier audit.

Mark Johnson, a representative of the New York State Comptroller’s Office said that the actual individual items can’t be disclosed. He also would not comment on whether there was fraud in the case or if it was an oversight by the hospital.

“All we can say for sure is that there were overcharges by Mather,” Johnson told Patch in a phone interview on Thursday.

He said that Empire did not challenge the claims for the special items.

Mather stated that the written contract was fair to both Empire Blue Cross and the New York State Health Insurance Program. It also said in response to questions from Patch that the audit didn’t find anything wrong with Mather’s payment procedures.

“The audit did not contain any findings that any Rate Exception Item was paid when it should have been denied or bundled, or that it was paid at the wrong percentage of charges,” the hospital said. “All claims were paid correctly in accordance with the terms of the Agreement.”

Empire BlueCross and BlueShield has not responded to a request for further comment from Patch at the time of the writing of this article.

The ball is now in the insurance agency’s court to adjust its procedures.

“It’s up to Empire to straighten out its billing system to make sure it doesn’t happen again,” said Johnson.

The agreement between Empire and the Health Network limits the look-back period on these items preventing the insurance company from demanding supporting documentation on payments made before a certain point in time.

The audit reccomends that Empire change its agreement with Mather to require it provide supporting documentation like invoices for special items upon request with no time limit.

We will update this story as more information becomes available.