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UnitedHealth To Divest Pricing Arm

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A managed care company has agreed to turn a business that publishes medical procedure cost estimates widely used in out-of-network billing over to a university or other nonprofit organization.

UnitedHealth Group Inc., Minnetonka, Minn., will be divesting Ingenix Inc. in connection with efforts to settle an investigation launched by New York Attorney General Andrew Cuomo in February 2008.

Many health insurers use the Ingenix medical services price database to decide how much they should pay out-of-network doctors for medical care.

Cuomo says some have alleged that Ingenix staffers intentionally used faulty data collection and pooling procedures to depress the “usual and customary” rates stored in the database.

The Cuomo agreement calls for UnitedHealth to pay $50 million to a “qualified nonprofit organization that will establish a new, independent database to help determine fair out-of-network reimbursement rates for consumers throughout the United States,” according to officials in Cuomo’s office.

The new nonprofit price database organization will post price information on a free Web site, officials say.

“For the past 10 years, American patients have suffered from unfair reimbursements for critical medical services due to a conflict-ridden system that has been owned, operated, and manipulated by the health insurance industry,” Cuomo says in a statement. “This agreement marks the end of that flawed system.”

Cuomo issued subpoenas to several insurers when he started the Ingenix investigation.

That investigation “is ongoing,” Cuomo says.

UnitedHealth says it believes the agreement will enhance the transparency of information related to physician fees for out-of-network services.

“We are committed to increasing the amount of useful information available in the health care marketplace so that people can make informed decisions, and this agreement is consistent with that approach and philosophy,” says Thomas Strickland, UnitedHealth’s chief legal officer. “We are pleased that an independent not-for-profit entity will play this important role for the marketplace.”

But America’s Health Insurance Plans, Washington, says the real villain is not the Ingenix database but shocking variations in billed rates for out-of-network care.

“As policymakers pursue health care reform, they should look carefully at the dramatic differences in billed charges for out-of-network services, especially as experts report that there is no correlation between the level of charges and the quality of care provided,” AHIP President Karen Ignagni says.