The Albany Med Health System is suing health insurer CDPHP.
The hospital says Capital Region Physicians Health Plan is withholding $27 million in payments for care it provided to CDPHP customers, which could escalate to $50 million by year-end.
Dr. Dennis McKenna, president and CEO of Albany Medical Center, tells WAMC the hospital has filed suit in New York State Supreme Court.
"Right now today, Albany Med is providing care to CDPHP members, both electively and emergently, and we're making that conscious decision to do that, knowing that there are services that we offer in this area that are unique and special," McKenna said. "We know that many people come to Albany Med specifically for our care, and we're doing that, even though we know, and as CDPHP has told us, that they're going to continue to withhold payments to us $2 million a week. Going forward, we're still going to provide that, that care to those, to those members in this community."
The hospital says it has not experienced similar practices with other insurance companies.
CDPHP President and CEO Brian O’Grady says the genesis of this was Medicare Advantage adjusting what hospitals are paid across all of upstate New York.
"And that wage index increase, for lack of a better term, happened after our bids have been signed, sealed and delivered with CMS," O'Grady said. "So we had no ability to change our benefits or change our premiums, and we've been messaging to our provider partners, especially Albany Medical Center, that we will pay the wage index, which resulted in about a 28 to 30% increase to the hospital starting last October, October 1st of 2023, but unless we get funding from CMS, the premium pass through, because in its simplest form, this is a pass through from CMS to the to the provider institutions. So unless we got the requisite premium to make those pass-through payments, it would become a point in time and we could no longer make those payments. And that is basically what has happened."
CMS is the federal agency that provides health coverage to millions through Medicare, Medicaid and the Children's Health Insurance Program.
O'Grady says CMS' failure to align private Medicare Advantage premiums with the adjustment effectively leaves the insurance provider with “a significant unfunded mandate that will result in nearly $150 million in losses over the next two years.”
"My message to the consumers is, I'm optimistic we'll come to resolution. I don't think there's any need to panic," said O'Grady.
Dr. McKenna said "The decision is in CDPHP’s hands, and we've made that very clear. We'd like this obviously to come to a resolution, and we'd like that to happen soon. Our contract to provide services to the CDPHP members ends at all the hospitals in the Albany Med Health System at the end of this year. Obviously, this would be the time of year where we would be sitting down with CDPHP and talking about contracts for next year. I'm still hopeful that both the regulatory and legal actions that we were forced to take will lead us to a situation now where we will be able to get this resolved, hopefully in the near future."
Reached for comment, Democratic Congressman Paul Tonko said “Unfortunately, due to antiquated reimbursement calculations from the Centers for Medicare and Medicaid services, local health plans, most notably nonprofit plans, have not yet received a commensurate reimbursement increase. That’s why I’m working with bipartisan colleagues across Upstate New York to fix this formula and finish the job.”
Albany Med says it has “not yet decided to drop CDPHP as an accepted insurance plan, but it will not negotiate next year’s contract until the insurance company fulfills its outstanding obligations.”
