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N.Y. Official To Sue Health Insurers

By Staff Writer

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New York State Attorney General Andrew Cuomo says he is investigating allegations that some health insurers have tried to defraud consumers by manipulating reimbursement rates.

Cuomo charged that Ingenix Inc., Eden Prairie, Minn., a health care billing company, is at the center of a plan to manipulate the data that most major health insurers use to set reimbursement rates for out-of-network medical expenses.

Cuomo said he has issued 16 subpoenas to health insurers.

Cuomo said he also plans to file suit against Ingenix; the corporate parent of Ingenix, UnitedHealth Group Inc., Minnetonka, Minn.; and 3 of Ingenix’s sister companies — United HealthCare Insurance Company of New York Inc., United Healthcare of New York, Inc. and United Healthcare Services Inc.

A 6-month investigation by Cuomo’s office found that some UnitedHealth units using Ingenix data significantly underpaid members for out-of-network medical expenses, Cuomo said.

Many health plan contracts permit members to receive some reimbursement from the plans for out-of-network care.

Plans typically say the out-of-network reimbursement amount will be a set percentage, such as 80%, of the “reasonable and customary” fee for the care provided.

By distorting the “reasonable and customary” fee rate, health insurers were able to keep reimbursements artificially low and force patients to absorb more of the costs, Cuomo alleged.

“Getting insurance companies to keep their promises and cover medical costs can be hard enough as it is,” Cuomo said. “But when insurers like United create convoluted and dishonest systems for determining the rate of reimbursement, real people get stuck with excessive bills and are less likely to seek the care they need.”

In one case, Cuomo said, UnitedHealth claimed the typical doctor visit cost only $77 but knew that the typical cost was really $200.

Health insurance companies that relied on the Ingenix data paid rates that “were remarkably lower than the actual cost of typical medical expenses,” Cuomo charged.

Nancy Nielsen, president-elect of the American Medical Association, Chicago, said the investigation “calls into question the validity of a system that health insurers have used for years to reimburse physicians and their enrolled members.”

UnitedHealth says in its own response that it is in the middle of discussions with Cuomo’s office and intends to cooperate fully with the investigation.

“UnitedHealth Group recognizes the excellent health care delivered to patients by the physicians of New York and is committed to fair and appropriate payment for physicians, the state’s other health care providers and consumers,” the company says in a statement. The company also says it “believes in delivering high quality and dependable database tools.”

“The reference data is rigorously developed, geographically specific, comprehensive and organized using a transparent methodology that is very common in the health care industry,” UnitedHealth says. “We believe these reference tools add substantial value to the health care system by providing all participants–providers, payers and consumers–with a long-standing transparent, consistent and neutral line of sight into the health care market, its costs and performance.”

Aetna Inc., Hartford, one of the insurers on the Cuomo subpoena list, says it will cooperate fully in the investigation.

“Aetna is committed to transparency so that consumers can make more informed decisions, and has been a leader in the industry in helping our members better understand the costs of physician and other provider services,” the company says in a statement.

Karen Ignagni, president of America’s Health Insurance Plans, Washington, says the root of the U.S. health care finance problem is the cost of medical care, not the Ingenix database.

“At a time when the costs of medical services soar above inflation every year, health insurance plans’ tools and techniques are mitigating the damage done to consumers and employers,” Ignagni says in a statement issued by AHIP. “Last year, health insurance premiums grew at the lowest rate in a decade due to health plans’ cost-containment and quality-improvement strategies. It’s unfortunate that today’s media event ignored these facts and failed to address the appropriateness of charging out-of-network patients $200 for ‘simple doctor visits’ lasting ’15 minutes’ — which equates to a billing rate of at least $800 an hour.”