AG Andrew Cuomo reins in health care giant United on price fixing; systemic overcharging revealed

by Lesley Politi on January 19, 2009

In a landmark deal with state Attorney General Andrew Cuomo, one of the nation’s largest health insurers agreed Tuesday to spend $50 million to reform its billing practices.

In exchange for avoiding a lengthy and costly court fight, UnitedHealth Group Inc., said it will create a massive database – overseen by an outside nonprofit organization – to determine fair rates for reimbursements.

In addition, Cuomo said he would seek hundreds of millions of dollars in restitution for what he called a decade of “consumer fraud” affecting millions of out-of-network patients.

“It is not an overdramatization to say that it is a matter of life and death,” Cuomo told reporters Tuesday in a packed press conference at St. Vincent’s Hospital in Greenwich Village.

Cuomo outlined how the scheme works:

Ingenix – a UnitedHealth subsidiary and the country’s largest provider of health care billing information – sets “usual and customary” rates for medical procedures that are supposed to reflect market prices.

The problem is, Ingenix determined the rates by asking the insurance companies what to charge. Their estimates for reimbursement generally are much lower than what the patient paid.

“We believe this is a conflict of interest,” Cuomo said. “We have to replace Ingenix with a fair and independent entity.”

Insurers often promise to cover up to 80% of rates for claims from providers outside their network. Cuomo said probers found that insurers using the Ingenix databases underpaid anywhere from 10% to 28% for certain claims in New York.

UnitedHealth Group will post the new estimates on a Web site so patients will know what their procedures will cost.

“We are committed to increasing the amount of useful information available in the health care marketplace so that people can make informed decisions,” said Thomas Strickland, a lawyer for UnitedHealth Group.

Cuomo said he was “optimistic” he could get reimbursements to patients who overpaid with faulty Ingenix estimates within six months. The money would come from companies like UnitedHealth Group, Aetna, Cigna and WellPoint/Empire BlueCross BlueShield.

“We won’t stop until the consumer gets what they paid for,” he vowed.

American Medical Association President Dr. Nancy Nielsen said insurers can drive a wedge between doctors and patients when they underpay medical bills.

“Now the data will be reliable, people will know what they’re getting and it will be clear and transparent,” she said.

Barry Epstein, a lawyer involved in four court cases over the database said the agreement seems to be a “pretty clear admission of invalidity” of the Ingenix system.

“There’s no doubt that it needed replacement,” Epstein said.

Source: www.nydailynews.com

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