New York Gov. Kathy Hochul’s administration is being accused in a lawsuit of secretly slashing access to specialty doctors — and potentially life-saving medical treatment — for 1.2 million government workers and retirees, The Post has learned.
The explosive claims, laid out in a suit filed in Albany Supreme Court, accuse Hochul officials of illegally ignoring state law when making changes to the Empire Health Plan, which serves state and local government employees.
The suit says Acting Commissioner Rebecca Corso and the state Department of Civil Service, who oversee the health insurance program, have dramatically slashed the reimbursement rates that “out of network” doctors can receive for providing services to plan members.
“Some of my members, their families and millions of Empire Plan enrollees may be prevented from seeing physicians that they have treated with for years,” said Bridge and Tunnel Officers’ Benevolent Association President Wayne Joseph in an affidavit filed in the case.
Joseph, one of the plaintiffs — along with another Empire Health Plan beneficiary and 18 out-of-network doctors and medical practices — charged that the allegedly illegal “unilateral action” and “life changing event” was “never communicated” to the 1.2 million enrollees.
The suit accuses Hochul officials of relying on a federal law, over state legislation, in order to set lower reimbursement rates for out-of-network doctors.
But state officials counter that they’re complying with the law and are imposing cost controls to protect taxpayers and plan premiums and to prevent doctors from gouging the program.
The explosive claims come as Hochul is locked in a tight election battle with Republican rival Rep. Lee Zeldin.
The incumbent Democrat in June announced a five-year labor deal with the Civil Services Employees Association of New York representing more than 52,000 state workers that includes raises of 2% each for the first two years and 3% each for the remaining three years — plus a one-time lump bonus of $3,000 — in exchange for the union agreeing to encourage in-network employee utilization to help control health insurance costs.
“The Empire Plan unilaterally determined itself no longer subject to New York insurance law or Department of Financial Services’ regulation. Consequently, the Empire Plan considers itself no longer obligated to reimburse out-of-network physicians at the long-standing UCR [Usual, Customary and Reasonable] rates used in New York,” the suit initially filed by plaintiffs’ lawyer Roy Breitenbach of Harris Beach said.
“As a result, starting in 2022, Empire Plan unilaterally cut reimbursement to out-of-network physicians by more than 80%,” it states.
The suit says doctors can no longer file a payment dispute complaint or an appeal with state regulators.
“If these actions do not immediately cease, thousands of high-quality, well-respected out of network physician practices that provide medically necessary surgical and specialty medical services to Plan enrollees will go out of business or drastically curtail their services,” the suit said.
“The current accessibility of quality medical care available to Empire Plan’s 1.2 million enrollees will be severely impacted, and irreparably so for those patients that require such care now.”
The slash in payments will impact emergency care at hospitals and “will cause Plan enrollees, and patients in this state as a whole, to lose access to life-saving emergency treatment,” the suit alleges.
Patients recently informed of the payment dispute by their doctors were horrified about losing access to specialty and life-saving care.
“This will have a huge impact on me. I had spinal cord surgery twice,” said Empire Health Plan member Kathleen Makridakis, 56 of Rockville Centre, whose husband works for the Town of Hempstead.
“They were only doctors out of network who could do the surgery. If I have to worry about these doctors getting paid, that screws me up. I can’t afford owing a doctor a $100,000.”
Loretta Post, whose husband works for the Long Beach Transportation Department and is an Empire Plan member and plaintiff in the case, said in an affidavit, “The net effect of this pronouncement is that my long standing physicians have advised that they may not be able to provide critical services that I have grown accustomed to for years.”
But state officials, in response briefs, defended their actions as legal and reasonable.
Daniel Yanulavich, of the Department of Civil Services’ Employee Benefits Division, said the Empire Plan provides adequate patient protections and claims the real spat is about out-of-network doctors wanting more money.
In a June 3 affidavit, he complained that many of the out-of-network doctors “willingly refuse to negotiate with the Empire Plan” regarding payments, adding, “This is not a coincidence given the Empire Plan’s generous out-of-network reimbursement formula.”
Yanulavich said the Empire Plan pays network doctors a range of 120 percent to 300 percent of what Medicare, the federally-run health care insurance program for senior citizens, pays medical providers.
He said out-of-network providers were getting an average of 540% of what Medicare pays doctors and anesthesiologists were changing up to 3,000% of what Medicare pays — and it’s time for the state to rein in those costs.
The state, Yanulavich said, has a responsibility to manage the Empire Plan “in a fiscally responsible manner” and “not be be made to continue to subsidize these physician practices,” adding, “As a self-funded health plan, it is within the right of the Empire Plan to determine a reasonable reimbursement rate to out-of-network providers in the case of surprise bills.”
The state Department of Financial Services and its Superintendent Adrienne Harris, who regulates health insurance plans, are also listed as defendants, along with United HealthCare Insurance Co., which helps administer the program.
Attorney General Letitia James’ office, which is defending the Hochul administration in the case, also said the plaintiffs are misreading the law and claim that a self-funded Empire Plan is not covered by the Surprise Bill Law that is used to regulate other health plans.
William Scott, the AG’s lawyer, suggested doctors were engaging in unwarranted alarmism and hadn’t even tested how much they will get paid under the new reimbursement system and therefore couldn’t prove any harm to their practices or patients. Neither could other plaintiffs who are plan members.
Hochul’s office had no further comment.
A CSEA spokesperson had no immediate comment on the lawsuit, but said the negotiated changes in heath care savings in the labor contract don’t go into effect until 2023, “so we haven’t received any feedback yet.”
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