Albany Med is suing Capital District Physicians Health Plan

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

Since New York State requires insurers to fully reimburse health care providers within 30 to 45 days of submitting a claim or issue an official explanation for any delay, Albany Med says it has not received an official response from CDPHP regarding its incomplete payments since in early August.

According to Albany Med, the outstanding amount was $27 million as of October 1, and another $8 million has not been paid since the beginning of the year. The hospital estimates that by the end of 2024, unpaid CDPHP claims will total $50 million.

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

“As a non-profit organization, we have a responsibility to use all of our funds for the benefit of our community,” added McKenna. “With a total of $50 million likely to disappear this year and an unknown amount in the future, we may have no choice but to reduce the amount of services we offer.”

In its response to the actions, CDPHP attributed its financial difficulties to changes in the Medicare Wage Index (MWI). Following the state's adjustment to MWI, hospitals in the Capital Region, including Albany Med, began receiving more accurate reimbursement rates that better reflect 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 non-profit health system, argues that the federal adjustment has led to a large financial loss, estimated at about $ 150 million in the next two years. The insurer, which serves 65,000 seniors through its Medicare Advantage plan, insists it does not have the financial resources of large, for-profit insurers to absorb these costs and has called on Congress to pass legislation to address the issue.

CDPHP also expressed disappointment with Albany Med's decision to pursue litigation, saying they hoped for a cooperative settlement of the payment dispute.

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