UnitedHealth Group Officials Testify About Use Of Ingenix Database At Senate Hearing

Main Category: Health Insurance / Medical Insurance
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Article Date: 02 Apr 2009 - 8:00 PDT

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Members of the Senate Commerce, Science and Transportation Committee in a Tuesday hearing expressed their disapproval of insurance industry practices that have resulted in patients paying more for out-of-network care, CQ HealthBeat reports. Committee Chair Jay Rockefeller (D-W.Va.) said he called the hearing to consider whether increased federal oversight of insurers is needed in light of recent investigations by the office of New York state Attorney General Andrew Cuomo (D) (Adams, CQ HealthBeat, 3/31).

Cuomo found that a database created by Ingenix, a subsidiary of UnitedHealth, that is used by insurers nationwide has been responsible for underpayments to physicians of as much as 28% below fair market rates in some cases (Abelson, New York Times, 4/1). When an insurer fails to pay the full amount charged by a doctor for treatment delivered, the balance is either absorbed by the physician or passed along to the patient (CQ HealthBeat, 3/31). The Ingenix database is intended to calculate market rates for out-of-network care. However, it had been accepting claims information from insurers, which it uses to identify average out-of-network rates, without verifying or questioning the data, according to lawmakers. Cuomo has conducted investigations and settled resulting lawsuits against 11 insurers operating in New York that had been using Ingenix (Kaiser Daily Health Policy Report, 3/30). In a January settlement reached with Cuomo, UnitedHealth agreed to pay $350 million to reimburse consumers and doctors affected by underpayments related to the database. The agreement also stated that insurers would fund the creation of a new, independent database (New York Times, 4/1).

UnitedHealth President and CEO Stephen Hemsley on Tuesday at the hearing "portrayed the settlements as a business decision aimed in part at restoring trust between insurers and physicians," CQ HealthBeat reports. He also said that he regretted that the firm did not realize the "appearance of a conflict of interest" in the industry using a database operated by an insurer to calculate payment rates. In addition, he said he regretted that the public's faith in the industry had been harmed by the "perception" that insurers were underpaying. Hemsley said that Ingenix was operated "in a consistent fashion, to high standards of performance," and that it was available for use by businesses other than insurers.

Under terms of the settlement, Ingenix will stop selling data to insurers and will turn over its data to the new database. Ingenix CEO Andy Slavitt also acknowledged that Ingenix did not conduct annual audits of data submitted to the database, which "might be a prudent step" for the new database. In response to a question from Sen. Tom Udall (D-N.M.) about whether U.S. patients would benefit from a national settlement, Hemsley said that he believes that "there will be an effort to distribute these funds to consumers and providers on a national basis." According to CQ HealthBeat, Hemsley's answer "did not satisfy" Udall, who said that the committee should continue to monitor developments related to the settlement.

Reaction, Action
CQ HealthBeat reports that many legislators on the committee were "frustrated" by Hemsley and Slavitt's "legalistic testimony." Rockefeller said that he found their testimony "profoundly troubling." He said to Hemsley and Slavitt, "I frankly don't know how you sleep at night," adding, "I'm very unhappy and we're going to continue this." Sen. Claire McCaskill (D-Mo.) said that she was not reassured by the executives' unwillingness to accept wrongdoings and express regret. She said, "As it is, I think we need to be vigilant and stay on you like white on rice."

Rockefeller has requested that the Office of Personnel Management's Office of Inspector General investigate the number of federal workers who potentially overpaid for out-of-network care. He also is sending letters to about 17 insurance companies not investigated by Cuomo to ask whether they use Ingenix and how they plan to calculate reimbursement rates in the future (CQ HealthBeat, 3/31).

Legislation
The House on Tuesday voted 422-3 to approve a bill (HR 1253) that would require insurers to provide potential customers with a written explanation of treatment limits and list conditions that are not covered along with other restrictions of the plan "in a form that is easily understandable," CQ HealthBeat reports. The bill, sponsored by Rep. Michael Burgess (R-Texas), would cover all group health plans and would require that the information be provided prior to customers signing up for coverage. Burgess said, "We are going to stand up and shine a light on these exclusions so Americans will not be caught off-guard by exclusions buried deep within an insurance plan" (Armstrong, CQ HealthBeat, 3/31).

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.

© 2009 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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