AUSWR
The Association of U S West Retirees
 

 

 

UnitedHealth Settles Probe Over Fee Database
By Vanessa Fuhrmans and Chad Bray
The Wall Street Journal
Wednesday, January 14, 2009

In a settlement that could have far-reaching implications for consumers, UnitedHealth Group Inc. reached an agreement with New York's attorney general to pay $50 million toward a new, independent database that will determine how much insurers pay for doctors and hospitals outside of the insurers' networks.

The settlement stems from an investigation New York Attorney General Andrew Cuomo launched nearly a year ago into a common health-insurance practice. Insurers typically pay hospitals and physicians in their networks a negotiated fee for claims. But out-of-network doctors and hospitals are reimbursed "usual and customary" charges, which are determined by what insurers have calculated is the going rate in a given area. Patients are often billed the difference.

Though the attorney general subpoenaed 16 health insurers, UnitedHealth's unit, Ingenix, was at the center of the probe because it owns the database that contains and provides the price information that insurers use to set out-of-network rates.

Mr. Cuomo alleged that health insurers understated the usual and customary rates through faulty data collection, poor pooling procedures and a lack of audits. That, in turn, forced patients to pay more out of their own pockets.

The investigation found the rate of underpayment by insurers ranged from 10% to 28% for various medical services across New York state. The attorney general said that having a health insurer determine the usual-and-customary rate -- a large portion of which the insurer reimburses -- creates an incentive for the insurer to manipulate the rate downward.

"For the past ten years, American patients have suffered from unfair reimbursements for critical medical services due to a conflict-ridden system," the attorney general said in a prepared statement.

As part of the deal, UnitedHealth will pay $50 million toward establishing the new database, which will be run by a university or nonprofit group. The company then will shut down the Ingenix database. Mr. Cuomo estimated that more than 100 million consumers could be affected by the deal.

UnitedHealth didn't acknowledge wrongdoing and said it hoped the new agreement would improve the transparency of medical-price information.

America's Health Insurance Plans, a national health insurers' lobby, hailed the settlement as a way to shed light on doctors' and hospitals' fees.

Write to Vanessa Fuhrmans at vanessa.fuhrmans@wsj.com and Chad Bray at chad.bray@dowjones.com

http://online.wsj.com/article/SB123189750362779829.html