A managed care company should return $3.9 million of the $71.6 million that New York state paid the company for administering a state employee health plan from 2004 to 2007, state officials say.
The health insurance unit of UnitedHealth Group Inc., Minnetonka, Minn., collected more than it should have collected if the charges were based on actual costs at the New York State Health Insurance Program, according to New York state auditors.
New York state Comptroller Thomas DiNapoli has presented the auditors’ findings in an audit report.
The New York State Civil Service Commission, which oversees the NYSHIP plan, is negotiating with UnitedHealth to change the way the company charges for its services, officials say.
The NYSHIP plan covers active and retired state, local government and school district employees.
UnitedHealth is responsible for administering the medical-surgical and major medical portion of the Empire Plan, NYSHIP’s primary health plan.
Officials say a UnitedHealth unit improperly calculated the amount it charged the state for insuring the risk of administering the Empire Plan.
UnitedHealth has overvalued the gross premium payments the state must pay to cover expected costs and has previously had to return an unspecified amount of money to the state, officials say.
The company calculated its risk charge using gross premium costs rather than net, or actual, premium costs, while the insurers that administer the hospitalization and behavioral health components of the Empire Plan use actual costs to calculate the state’s risk charge, officials say.
A UnitedHealth unit runs the prescription drug component of the NYSHIP plan, and that unit is calculating the risk charges associated with prescription drug benefits correctly, officials say.
UnitedHealth “has been helping the state of New York for decades manage a cost-effective health care program for its employees,” the company says in a statement.
UnitedHealth says it disclosed the formula it used to calculate the risk charge to state officials, that the formula was “mutually understood” and that it has not overcharged the state.
“UnitedHealth Care has agreed to work with the [Civil Service Commission] to establish a new method of calculating the risk charge for the Empire Plan moving forward,” the company says.