Following a 20 million dollar agreement with America’s third largest insurer Aetna, US Attorney General Andrew M Cuomo announced today that his office will continue to pursue aggressively the investigation into unfair reimbursement rates charged to consumers who used doctors not on their insurance company’s networks. Cuomo said “insurers nationwide should be on notice” and they will “no longer be able to distort their data, leaving patients with unfair bills”, reported a Media-Newswire.com press release.

Under the agreement, Aetna will pay 20 million dollars to a qualified non-profit organization who will set up and run an independent and transparent database of nationwide charges as a basis for insurers to work out how much consumers should pay toward those bills without being unfairly over-charged.

Cuomo told the press that the agreement with Aetna shows that:

“The tide is turning against the corrupted reimbursement system that took hundreds of millions of dollars from the pockets of patients nationwide.”

The settlement follows Cuomo’s announcement a few days ago that the current system used by many insurers to work out how much to charge consumers who use healthcare services “out-of-network” will be overhauled, following the discovery that Ingenix Inc, the country’s largest provider of health care billing information, was relying too much on the insurers themselves to decide what was a fair and customary rate for out-of-network services, thus creating a conflict of interest.

The Attorney General investigated allegations that Ingenix intentionally skewed their billing estimates downwards, mostly through poor data gathering and unaudited procedures, resulting in reimbursement figures that were lower than they should be and therefore leaving more of the bill to be paid for by the consumer and a less than fair reimbursement for the doctor.

Earlier this week, Cuomo reached a settlement with the company that owns Ingenix, the UnitedHealth Group Inc, the second largest insurer in the US. Under this settlement, United will pay 50 million dollars to a qualified nonprofit organization that will set up and run the new transparent and independent database that will decide and publish the reimbursement rates for out-of-network healthcare use by consumers.

Since then, United has announced that it has reached a 350 million dollar deal to settle class-action lawsuits from doctors and patients claiming they had been under-reimbursed.

However, the New York Times reported earlier today that one of the lawyers for the plaintiffs said that was not enough money and has filed an objection with one of the judges on the case.

Cuomo said that with the Aetna and United agreements, “we are one step closer to freeing patients from the conflict-ridden Ingenix system”. The two insurers between them will also be providing seventy per cent of the billing information that the new database organization will need.

Under the agreements, the new non-profit organization that will run the database will:

  • Own and operate the database.

  • Be the sole arbiter and decision maker about how the database gets and processes information.

  • Run a website where for the first time American consumers can see in advance how much they are likely to be reimbursed for common out-of-network healthcare services in their area.

  • Make rate information available to insurers.

  • Carry out research using the database information to improve the health care system.

The Attorney General was joined by representatives of Aetna and leading medical and consumer groups when he made the announcement earlier today. He also thanked the various medical and consumer groups, such as the American Medical Association, the Medical Society of the State of New York and the Consumer’s Union.

Nancy Nielsen, president of the American Medical Association said a nationwide commitment was needed to bring transparency, accuracy and integrity to the corrupt system for paying out-of-network medical bills that has caused insurers to cheat patients and doctors.

“The AMA calls on all insurers to immediately reject the rigged Ingenix database and agree to the solution proposed by Attorney General Cuomo,” she added.

Aetna’s Senior Regional Medical Director Dr Donald Liss, said:

“Aetna shares and welcomes Attorney General Cuomo’s interest in transparency, and we commend the Attorney General and his staff for establishing an independent process that is transparent and helps consumers make more informed health care purchasing decisions.”

Aetna has 16 million members and United has 33 million members across the US.

Sources: Media-Newswire.com, New York Times.

Written by: Catharine Paddock, PhD