North Pocono overbilled $4.7 million for healthcare, seeks new insurance administrator

Sarah Hofius Hall, The Times-Tribune, Scranton, Pa.
·2 min read

Sep. 13—A health insurance administrator overcharged the North Pocono School District by $4.7 million, the district found.

As officials pursue full reimbursement, North Pocono will seek another third-party administrator to handle health insurance claims. Performance Health has reimbursed North Pocono for about $4 million so far, according to a statement from the district.

"Our expectation is ... we'll get the balance back," solicitor Joseph O'Brien said.

The Scranton School District also uses Performance Health, with about 240 employees enrolled since 2021. Millennium Administrators, which serves as Scranton's health care consultant, performs regular audits since becoming aware of the issue with North Pocono, acting Superintendent Patrick Laffey said. The audits have resulted in $230,000 of credits back to the district, he said.

In North Pocono, district Business Manager Tom McIntyre discovered the overcharges in 2022, shortly after he started in the district, O'Brien said.

Like Scranton, North Pocono is self-insured and uses a referenced-based pricing model for at least some of its health plans. The third-party administrator, Performance Health, negotiates pricing with health care facilities.

Performance Health specifically negotiates with any Commonwealth Health facilities, and another contractor, ELAP, negotiates fees with other facilities, such as Geisinger.

North Pocono first entered a contract with Performance Health in 2019 and the board has renewed it yearly. The contract calls for Performance Health to charge the district 10% of "billed charges" from Commonwealth Health facilities. Billed charges from other medical facilities, such as Geisinger, should result in fees from ELAP, but not Performance Health.

McIntyre discovered that Performance Health billed the district 10% not only on charges from Commonwealth Health facilities but from all medical facilities, according to the district.

Performance Health initially reimbursed the district $2.3 million, and an independent audit discovered an additional $2.4 million owed to the district.

The company agreed to reimburse the district for the total $4.7 million in overcharges, with the balance due in June. The deadline passed with the district still owed $850,295, so North Pocono has withheld payments to Performance Health to reduce the balance owed.

At a school board meeting last week, the district disclosed the issue publicly for the first time. The district felt that confidentiality during the negotiation process with Performance Health was the best method to maximize recovery of the overpayments, according to the statement from the district.

Efforts to reach Performance Health were unsuccessful Wednesday.

Contact the writer: shofius@timesshamrock.com; 570-348-9133; @hofiushallTT on Twitter.