New York State Attorney General Andrew M. Cuomo said he is investigating an alleged plan by some health insurers “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 also said he has issued 16 subpoenas to a number of large health insurers, including Aetna Inc., Hartford; CIGNA Corp., Philadelphia; and Empire BlueCross BlueShield, New York to uncover facts about the alleged fraud. He also said he plans to file suit against Ingenix, its parent UnitedHealth Group and 3 other UnitedHealth subsidiaries.
The attorney general said a 6-month investigation by his office found that some UnitedHealth units significantly underpaid members for out-of-network medical expenses by using data Ingenix provided.
Under the insurers’ health plans, members pay a higher premium for the right to use out-of-network doctors. In exchange, the insurers promise to cover up to 80% of bill. By distorting the “reasonable and customary” fee rate, the insurers were able to keep their reimbursements artificially low and force patients to absorb more of the costs, Cuomo claimed.
“Getting insurance companies to keep their promises and cover medical costs can be hard enough as it is,” said Cuomo. “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.”
For instance, UnitedHealth claimed the typical New York City office visit cost only $77 when it knew it the cost was $200, Cuomo charged. Using the contractual repayment rate of 80% of the $77, just $62 of the $200 bill would be reimbursed, leaving the patient to cover the balance he said.
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.
His notice to sue named UnitedHealth Group and its subsidiaries, United HealthCare Insurance Company of New York Inc., United Healthcare of New York, Inc., United Healthcare Services Inc. and Ingenix.
In response, UnitedHealth noted it was in the middle of discussions with Cuomo’s office and intended to cooperate fully with its 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 said in a statement. The company also said 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,” the company’s statement continued. “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.”
Ellen Coleman, associate director of Cancer Care Inc., New York, was one of several health care advocates backing Cuomo’s suit. “Cancer patients and others faced with life-threatening illnesses need to know that a fair portion of the often overwhelming medical expenses will be covered by their insurance company,” she said.
The American Medical Association’s President-elect Nancy Nielsen 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.”
In Washington, Karen Ignagni, President and CEO of America’s Health Insurance Plans, issued a statement, saying, “Today’s announcement presents an opportunity to shed light on one of the root causes of rising health care costs in America.
“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 said. “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. As medical costs continue to soar, this is the discussion that public policy leaders need to have,” Ignagni’s statement concluded.