Major health insurer overspent health insurance funds

Topline: The company administering taxpayer-funded health insurance for New York State employees overpaid hospitals by $19.3 million, according to a new audit from the State Comptroller.

Key facts: New York's Department of Civil Service provides health insurance for over 1 million active and retired teachers, police officers and other government employees. Using taxpayer funding, New York pays Anthem Blue Cross to cover claims for employees' hospital visits.

From January 2019 to May 2024, Anthem mistakenly believed that it could not ask hospitals to return money that had accidentally been paid on behalf of the state.

Insurance companies only have a limited time frame to ask hospitals to refund overpayments — typically six years under the New York employee plan. Once that time expires, the money legally belongs to the hospital. However, Anthem employees tracked the deadlines incorrectly and thought they could not request refunds, even though the deadline had not actually passed.

"Officials admitted that if they had used the correct recovery time frames, the overpayments could have been recovered," the auditors wrote.

When Anthem did ask hospitals for refunds, not all of the money was actually returned — and Anthem never realized. Anthem employees closed out $1.8 million worth of refund requests that had not actually been recouped.

There was an additional $2.4 million that Anthem successfully recovered from hospitals, but then kept in its own bank account instead of returning it to New York State. Auditors blamed the error on Anthem's "weak recovery monitoring process."

Anthem paid $7.3 million to New York State following the audit. The insurance company has already agreed to pay some of the remaining $12 million, but are "currently evaluating the recoverability" of at least $2.8 million of it, according to the audit.

It's possible that even more money has been returned to New York. Anthem told Becker's Payer Issues on Jan. 8 that the amount recovered "exceeds what is reflected in the report."

Separately, the audit identified mistakes in "some" of $55.8 million paid to two hospitals. Anthem has contracts with the two hospitals that prevent Anthem from recovering the money. The audit offers few details because Anthem claims the information is "proprietary."

"Therefore, the total amount that could potentially be recovered remains unknown," the auditors claimed.

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Critical quote: "There's more money out there," New York Comptroller Thomas DiNapoli told Crain's New York Business. "We're facing federal cuts and economic uncertainty. We need every available dollar."

Summary: New York already has a dire fiscal situation, partially due to employee benefits and pensions. Wasting millions of dollars certainly does not help.

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This article was originally published by RealClearInvestigations and made available via RealClearWire.