New York BCBS plans allegedly overpaid hospitals by $85M

A whistleblower lawsuit filed by a former employee of HealthNow New York, the parent company of BlueCross BlueShield of Western New York and BlueShield of Northeastern New York, accuses the company of making "significant overpayments" to healthcare facilities across the state, according to Buffalo Business First.

HealthNow allegedly perpetrated a five-year scheme through 2013 that involved paying inflated reimbursements to hospitals and other healthcare providers and overcharging federal, state and local governments for Medicare Advantage and prepaid Medicaid health plans. The lawsuit, which was filed under seal in 2016 and unsealed Oct. 7, also accuses HealthNow of overcharging school districts and municipalities that self-insured their employee health insurance programs.  

HealthNow allegedly paid hospitals and other providers more than the amount provided for in contracts with those organizations. The lawsuit alleges HealthNow overpaid hospitals by $52 million in 2013 and overpaid the organizations by more than $33 million in 2014, after the problem was discovered. 

The overpayments allegedly caused the school districts and federal, state and local governments to pay inflated premiums and overcharges.

A HealthNow spokesperson told Buffalo Business First that the lawsuit oversimplifies complex issues.

"The facts underlying the complaint have been known to HealthNow for several years. Our attorneys continue to review the lengthy complaint, but our initial review suggests that it is full of oversimplifications and misstatements of a very complicated set of facts. The damages the plaintiff alleges, for example, are highly exaggerated," the spokesperson said. "HealthNow has at all times worked to resolve the billing errors identified by its auditors in the most fair and comprehensive way. Further, we fully cooperated with government authorities, and from our investigation, found no evidence of any significant cost to any state or federal health care program resulting from HealthNow policies."

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