Albany Med sues Capital District Physicians Health Plan

Albany Med sues Capital District Physicians Health Plan | Insurance Business America

Legal Insights

Albany Med sues Capital District Physicians Health Plan

Legal and regulatory actions launched

Legal Insights

By
Terry Gangcuangco

Albany Med Health System has launched legal and regulatory actions against Capital District Physicians Health Plan (CDPHP), accusing the insurer of shortchanging claims and withholding over $50 million in payments for services provided to CDPHP members.

With New York State mandating insurers to fully reimburse healthcare providers within 30 to 45 days of a claim submission or issue a formal explanation for any delays, Albany Med claims it has yet to receive any official response from CDPHP regarding its incomplete payments since early August.

According to Albany Med, the unpaid total amounted to $27 million by October 1, while an additional $8 million has gone unpaid since the start of the year. The hospital estimates that by the end of 2024, CDPHP’s unpaid claims will total around $50 million.

Albany Med has notified the New York State Department of Financial Services, alleging that CDPHP violated state insurance law by failing to make timely payments. The hospital also filed a lawsuit against CDPHP for breaching its contractual obligations.

“As a nonprofit organization, we are obligated to use all of our funds to the benefit of our community,” McKenna added. “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.”

In its response to the actions, CDPHP attributed its financial difficulties to changes in the Medicare Wage Index (MWI). Following federal adjustments to the MWI, hospitals in the Capital Region, including Albany Med, began receiving more accurate reimbursement rates that better reflected labor costs.

However, CDPHP and other insurers did not see a corresponding increase in Medicare Advantage premiums, creating what CDPHP described as an “unfunded mandate.”

CDPHP, a not-for-profit health plan, argues that the federal adjustments have led to significant financial losses, estimating nearly $150 million over the next two years. The insurer, which serves 65,000 seniors through its Medicare Advantage plan, insists that it lacks the financial resources of larger, for-profit insurers to absorb these costs and has called on Congress to enact legislation to address the issue.

CDPHP also expressed disappointment over Albany Med’s decision to pursue litigation, stating that they had hoped for a collaborative resolution to the payment dispute.

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