A federal audit of Empire Blue Cross and Blue Shield records has identified an estimated $223 million in Medicare claims paid by HCFA that the New York-based insurer should have covered.
The report recommends that HCFA negotiate "a reasonable settlement" with Empire.
Empire serves some 10 million private customers and also contracts with the federal government to administer Medicare claims in New York State.
Under federal law, Medicare is the secondary payer for certain beneficiaries who have other private coverage through an employer or spouse who's employed. The report by HHS' inspector general's office said HCFA paid an estimated $85 million in Medicare claims for which Empire should have been the primary payer.
The audit identified another $118 million that potentially should have been Empire's responsibility. But the inspector general's office was unable to confirm this, saying that either Empire customers did not cooperate with the audit or auditors were unable to contact customers using the information provided by Empire.
In a written response, Empire said it has fully cooperated with the HHS since the department's first request for documents in March 1989. Empire said it has already paid back $10 million to Medicare and expects to pay more but believes the amount is "considerably less" than what the inspector general's report contends.
Empire said the issue of Medicare as secondary payer is extremely complicated and concerns legal questions regarding who has the primary responsibility of paying for Medicare beneficiaries who receive coverage through their employers.
In a separate action, Empire's former chief executive officer Albert A. Cardone, who was forced out of his job last year, reportedly filed suit against the insurer and its board of directors in federal court in New York. He is said to be seeking $120 million in damages for allegedly being shortchanged on his employee benefits package and for defamation of character.
Empire said it hasn't seen the suit and couldn't comment on the litigation.