Cuomo said his year-long investigation is far from over. Ingenix “is only the first step,” he warned. “I’m putting all other health insurance companies on notice today.”
“AG Andrew Cuomo reins in health care giant United on price fixing; systemic overcharging revealed”, New York Daily News, January 13, 2009
The New York Attorney General today announced a settlement with United Healthcare Group over charges that its subsidiary, Ingenix, was instrumental in a pattern of underpayments to health care providers. The end result, according to the charges, was overstated patient responsibility for out of network providers’ bills.
From the Attorney General’s statement, the scenario is described as follows:
Seventy percent of insured working Americans pay higher premiums for insurance plans that allow them to use out-of-network doctors. In exchange, insurers often promise to cover up to eighty percent of the “usual and customary” rate of the out-of-network expenses, and consumers are responsible for paying the balance of the bill.
United and the largest health insurers in the country rely on the United-owned Ingenix database to determine their “usual and customary” rates. The Ingenix database uses the insurers’ billing information to calculate “usual and customary” rates for individual claims by assessing how much the same, or similar, medical services would typically cost, generally taking into account the type of service and geographical location. Under this system, insurers control reimbursement rates that are supposed to fairly reflect the market.
Attorney General Cuomo’s investigation concerned allegations that the Ingenix database intentionally skewed “usual and customary” rates downward through faulty data collection, poor pooling procedures, and the lack of audits.
Press Release By New York Attorney General’s Office (here)
When this story began to unfold early last year, it appeared that the managed care community might put up a fight over provider overbilling. The battle flag has been exchanged for a flag of surrender as the insurance giant UHC capitulates under pressure from Cuomo.
This retrenchment will undoubtedly lead to broader investigations and additional attention to reimbursement rates. The New York Attorney General has promised as much. What remains to be seen is whether there will be a ripple effect since many benefit administrators of self funded ERISA plans rely upon Ingenix data.
In this connection, see :: PHCS Provider Reimbursement Controversy Affects ERISA Self-Funded Health Plans:
Other managed care companies use the Ingenix database and, in fact, Cuomo has issued 16 subpoenas to other large insurers pertaining to this issue. Most self-funded health plans use the Ingenix data, so they also stand to be affected by any adverse determinations as to the accuracy of the data.
The political value of this settlement cannot be overlooked either. For those who may have forgotten, the New York Attorney General’s actions in this matter have sparked interest by those with prosecutorial discretion in other venues. See, e.g., :: Criminalizing Health Insurance Disputes – The Intersection Of Political Ambition And Public Discontent
In short, the health care insurance, and even ERISA plan industry, is “on notice” as Mr. Cuomo says. Notice of what exactly? Well, that remains to be seen.