Albany Med seeking legal action against CDPHP for breaches

ALBANY, N.Y. (NEWS10)-- Albany Med Health System has filed legal action against the Capital Region Physicians Health Plan, Inc. (CDPHP) for refusing to give the hospital roughly $27 million for provided care. Hospital officials said the insurance company allegedly defrauded 16,225 claims since Aug. 8, and approximately $8 million of additional obligations have been held from the hospital since January.

Albany Medical Center notified the New York State Department of Financial Services on Monday, Sept. 16, of its belief that CDPHP was violating state insurance laws. On Tuesday, a pay complaint was filed for the insurance company that did not meet the hospital's contract terms.

Albany Med Health System President and CEO Dennis McKenna said the insurance company's decisions threaten local healthcare. "Patients should be able to trust that their insurance company is being managed in a fiscally responsible way, because it impacts access to the care they need," McKenna said.

Hospital officials said they project unpaid claims to reach $50 million by the end of the year and haven't experienced anything like this with other insurance companies. CDPHP officials told NEWS10 that the Medicare Wage Index changes resulted in an unfunded mandate for smaller regional health plans like theirs and $150 million in losses over the next two years.

CDPHP President and CEO Brian O'Grady said the insurance company decided to withhold new payments to Albany Med Health System and St. Peters Health Partners to protect benefits or out-of-pocket car costs from seniors on a fixed income. "We do, however, continue to pay our hospital partners at the rates agreed to prior to this unfunded mandate being imposed by the Centers for Medicare and Medicaid Services," O'Grady said.

Mckenna said CDPHP's withholdings impact the hospital's ability to maintain its healthcare services and broad scope of offerings. Last year's change in the Medicare Wage Index at a federal level helped, but it didn't solve all of the hospital's issues, as recovery from financial struggles is a long road.

"Over four decades, we were required to make necessary investments to care delivery, which included staff and technology, to ensure our commitment to quality," McKenna said. "Our financial margins remained slim, in large part due to our continuous reinvestment with the resources we had."

The health provider hasn't dropped the insurance provider but plans to hold off on negotiating a 2025 contract until CDPHP fulfills all outstanding contracted obligations. Insurance contracts must be completed by the open enrollment period, which begins on Tuesday, Oct. 15.