Albany Med sues Capital Area Physicians Health Plan | Insurance Business America Legal Insights Albany Med sues Capital Area Physicians Health Plan
Initiation of legal and regulatory action
legal insight
Written by Terry Ganquanco
Albany Med Health System has initiated legal and regulatory action against Capital District Physicians Health Plan (CDPHP), alleging that the insurer improperly altered claims and forfeited $50 million for services provided to CDPHP members. He accused the company of withholding more payments.
New York state requires insurance companies to fully reimburse health care providers within 30 to 45 days of filing a claim or provide a formal explanation of any delay, but Albany Med claims it has yet to receive a formal response from CDPHP regarding the incomplete payments since early August.
By Oct. 1, the total amount owed had reached $27 million, with an additional $8 million owed since the beginning of the year, according to Albany Med. The hospital estimates that by the end of 2024, CDPHP’s unpaid claims will total approximately $50 million.
Albany Med notified the New York State Department of Financial Services that CDPHP violated state insurance law by failing to make timely payments. The hospital also filed suit against CDPHP for breach of contractual obligations.
“As a nonprofit organization, we have an obligation to use all funds for the benefit of the community,” McKenna added. “With $50 million in funding disappearing this year and potentially untold amounts of money disappearing in the future, we may have no choice but to reduce the number of services we provide exclusively.”
In response to this measure, CDPHP blamed changes in the Medicare Wage Index (MWI) for its financial difficulties. After federal adjustments to MWI, hospitals in the Capital Region, including Albany Med, now receive more accurate reimbursement rates that better reflect labor costs.
However, CDPHP and other insurers have not recognized a corresponding increase in Medicare Advantage premiums, creating what CDPHP describes as an “unfunded mandate.”
CDPHP, a nonprofit health plan, claims the federal adjustment will result in significant financial losses, with losses of nearly $150 million over the next two years. The insurer, which serves 65,000 seniors through Medicare Advantage plans, has filed this move, arguing that it lacks the financial resources of large commercial insurers to absorb these costs. They are asking Congress to enact legislation to address the problem.
CDPHP also expressed disappointment with Albany Med’s decision to file suit and said it had hoped for a cooperative resolution to the payment dispute.
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