Albany Med: CDPHP owes $50 million for unpaid claims
Albany Medical Center has taken legal action against CDPHP because the hospital says the insurance provider owes them $50 million for care provided to members.
The hospital said that since Aug. 8, CDPHP has failed to pay 16,225 claims in violation of state law that requires that insurers fully reimburse health care providers within 30 to 45 days of submission, according to a statement from Albany Medical Center.
The withheld payments average $2 million per week, according to Albany Medical Center. There has been about $8 million in additional payments owed since January. Albany Medical Center anticipates that CDPHP will fail to cover around $50 million in total payments by the end of the year.
Albany Medical Center informed state officials last week regarding the failure to reimburse and filed a lawsuit Tuesday against CDPHP.
“As a nonprofit organization, we are obligated to use all of our funds to the benefit of our community,” said Dr. Dennis McKenna, president and CEO of Albany Med Health System, in a statement. “With $50 million in funds potentially vanished this year and an untold amount in the future, we may have no choice but to reduce the number of services only we offer.”
Albany Medical Center said that insurance companies have said that changes in the Medicare Wage Index have resulted in a decrease in their financial health. However, McKenna said for nearly 40 years, the MWI favored insurance companies.
Until it changed last year, hospitals like Albany Medical Center were reimbursed at a rate that was around 28% below actual labor costs. Now, those costs are more closely aligned.
Albany Medical Center said about two-thirds of Albany Medical Center patients are on Medicare or Medicaid.
The hospital has not decided to drop CDPHP from its accepted insurance plans, but will not negotiate a new contract until this issue is resolved.
CDPHP said in a statement that the company and its competitors face significant financial losses due to the “financial windfall” that Upstate New York hospitals received due to changes in the Medicare Wage Index. That resulted in an influx of $1 billion.
The Centers for Medicare and Medicaid Services approved significant payment increases for hospitals across upstate ranging from 20% to 43%, according to CDPHP. However, the CMS did not adjust Medicare Advantage premiums to bring it in line with the higher payments. This will result in a loss of $150 million over the next two years,
“In order to protect the benefits and out-of-pocket health care costs paid by local seniors living on fixed incomes, the CDPHP board of directors – which is made of up local, practicing doctors – made the difficult decision to withhold these new payments to Albany Med Health System and St. Peter’s Health Partners. We do, however, continue to pay our hospital partners at the rates agreed to prior to this unfunded mandate being imposed by CMS,” said CDPHP president and CEO, Brian O’Grady, in a statement.
CDPHP is asking Congress to approve bipartisan legislation to protect benefits and access to care for hundreds of thousands of seniors enrolled in Medicare Advantage plans.