:: PHCS Rate Schedule Challenged In New Managed Care Litigation

Chaffin v. Humana (S.D. Tex.)  challenges Humana’s alleged use of the “Prevailing Healthcare Charges System” to establish rates of reimbursement for out of network providers.  The case is brought by members of Humana’s “National Point of Service” insurance plan, according to the complaint.

The complaint alleges that Ingenix, a subsidiary of United Healthcare Group, operates a proprietary database system known as the “Prevailing Healthcare Charges System.” PHCS purportedly derives a percentile -segmented survey of “usual and customary” charges by factoring in insurers’ billing information for similar types of medical services.

The use of the PHCS was investigated by the New York Attorney General last year. (See,:: New York Attorney General To Sue Ingenix & United Health Care Over “Rigged Data”) The validity of the data and parameters employed by the system is now at the center of the controversy in the Chaffin v. Humana case.

These issues were raised in the Health Net litigation. :: Health Net Settlement At $215 Million May Set Class Action Record.

As I noted in :: PHCS Provider Reimbursement Controversy Affects ERISA Self-Funded Health Plans, the PHCS issue could have broader implications for the self-funded health plan community. This is because self-funded claims administrators also use the PHCS to establish reimbursement rates for out of network providers.

Note:   See also, American Medical Ass’n v. United Healthcare Corp. Slip Copy, 2006 WL 3833440 S.D.N.Y. 2006 (December 29, 2006)  and :: Court Permits Antitrust and RICO Claims To Go Forward Based Upon UCR Database Allegations.  (I attached the Chaffin v. Humana complaint to a cross post on erisaboard.com.)