UnitedHealth Group Reaches Settlement With New York Attorney General Over Fees For Out-of-Network Services

Main Category: Health Insurance / Medical Insurance
Article Date: 14 Jan 2009 - 4:00 PST

email to a friend   printer friendly   view / write opinions   rate article

UnitedHealth Group has agreed to revise the process that health insurers use to determine the portion of reimbursements for which they are responsible when members receive services from out-of-network providers as part of a settlement with New York state Attorney General Andrew Cuomo (D), the New York Times reports. The settlement, scheduled for announcement on Tuesday, will end an investigation conducted by Cuomo that found health insurers understated the portion of reimbursements for which they are responsible for such services by as much as 28% in some cases, or hundreds of millions of dollars over the last 10 years (Hakim/Abelson, New York Times, 1/13).

Health insurers pay for a certain percentage of the usual and customary rates for such services, based on an estimate of the cost for such procedures in the same geographic area. Ingenix, a subsidiary of UnitedHealth, operates the Prevailing Healthcare Charges System, a database used by most health insurers that determines the usual and customary rates. The database contains information on more than one billion claims from more than 100 health insurers. Health insurers compare out-of-network claims with those found in the database and reduce the claim to a "reasonable" amount before they reimburse providers or members (Kaiser Daily Health Policy Report, 2/14/08).

Under the settlement, UnitedHealth will pay $50 million to finance the development of a new database that an undetermined university will operate, although Ingenix can continue other operations. Other health insurers likely will contribute to the cost of the new database, according to Cuomo staff members. UnitedHealth will not admit any wrongdoing and will not have to pay restitution to consumers.

Comments
In an interview, Cuomo said, "For years this database was treated as credible and authoritative, and consumers were left to accept its rates without question," adding, "This is like pulling back the curtain on the Wizard of Oz. We have now shown that for years consumers were consistently low-balled to the tune of hundreds of millions of dollars."

UnitedHealth continued to maintain the quality of the information in the database. Mitchell Zamoff, a senior attorney for UnitedHealth, said, "While questions have been raised about the data itself, this agreement does not address those questions." He added, "We are pleased to have reached an agreement with the attorney general that addresses concerns about the independence of the database products and provides increased transparency that will help consumers make more informed decisions about their care."

America's Health Insurance Plans President and CEO Karen Ignagni praised the "major leadership effort" taken by UnitedHealth to reach the settlement.

Charles Bell, programs director for Consumers Union, said that the settlement would help consumers in the future but would not provide them with restitution. He said, "Insurers need to give the money they were contractually obligated to give. This is the most basic consumer protection I can think of -- you have to do what you're contractually obligated to do" (New York Times, 1/13).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation.

© 2008 Advisory Board Company and Kaiser Family Foundation. All rights reserved.