Big Health Insurer Agrees to Update Its Fee Data
By Danny Hakim and Reed Abelson
The New York Times
January 13, 2009
In a settlement with one of the nation’s biggest insurers, New York’s attorney general, Andrew M. Cuomo, has ordered an overhaul of the databases the industry uses to determine how much of a medical bill is paid when a patient uses an out-of-network doctor.
A statement from Mr. Cuomo’s office said the industry had engaged in “a scheme to defraud consumers” by systematically underpaying the nation’s patients by hundreds of millions of dollars over the last decade.
The move, to be announced Tuesday, is part of a settlement with the insurance giant UnitedHealth Group, which operates the industry databases. It results from a yearlong investigation by Mr. Cuomo’s office that concluded the data had understated the true market rates of medical care by up to 28 percent.
The settlement will have a nationwide impact because UnitedHealth, the biggest health insurer in New York, operates the databases used by the entire industry, through its Ingenix business unit. The deal calls for creation of a new independent database, to be run by a university that is still to be selected.
Because insurers typically reimburse patients for only 70 to 80 percent of the “reasonable and customary” cost of medical services when they visit doctors outside the insurer’s designated network of physicians, the patient can get shortchanged if the insurer understates the prevailing local fees.
According to Mr. Cuomo, the databases consistently understated the local “reasonable and customary” rates, which Ingenix collects from insurers. The report of the investigation’s findings described the industry calculations as “created in a well of conflicts” that produced information that was “unreliable, inadequate and wrong.”
In an interview Monday, Mr. Cuomo said: “For years this database was treated as credible and authoritative, and consumers were left to accept its rates without question. 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.”
The inability to decipher the insurer’s calculations can be overwhelming to patients with serious medical conditions.
Mary Jerome, a professor at Columbia who was found to have ovarian cancer in 2006, said she had been left with unreimbursed medical bills amounting to tens thousands of dollars. Her complaints to the attorney general’s office helped spur the investigation.
Ms. Jerome, who said she had been treated at Memorial Sloan Kettering, in large part because her primary care physician recommended the hospital, expected she would have to pay no more than her $3,000 deductible for going out of network. But she said she had soon been swamped with bills that left her $70,000 to $80,000 in debt.
Karen Ignagni, the president and chief executive of the industry trade group America’s Health Insurance Plans, praised UnitedHealth for its “major leadership effort” in reaching the agreement.
http://www.nytimes.com/2009/01/13/health/policy/13care.html?ref=business&pagewanted=all
The administrative waste of private insurers along with the excessive administrative burden they place on the health care delivery system alone is more than enough to warrant dismissing them as stewards of our health care dollars. A more fundamental moral reason to dismiss them is that they place service to patients in a secondary position to their efforts to achieve business success, frequently using dishonest deception to do so.
A prime example is this instance in which they have engaged in “a scheme to defraud” their own beneficiaries by deliberately falsifying the “reasonable and customary” cost of medical services. This is not simply an accounting trick to keep more money. This is thievery which has a negative impact on their own clients’ financial and physical health.
The experience of Professor Mary Jerome of Columbia demonstrates how nefarious this industry is. She had a $3000 deductible policy and used it at Memorial Sloan Kettering. You would think that this policy would allow her to obtain the care she needed without having to face financial hardship. But, no. She has been “swamped with bills that left her $70,000 to $80,000 in debt.”
Although New York’s attorney general has removed control of this data base from these crooks, they will continue to introduce more innovations that will enhance their bottom lines at the expense of patients and their health care professionals. The explosion in medical debt experienced by insured patients is proof that their innovations have the nefarious intent of defrauding their own beneficiaries.
And what does Karen Ignagni of AHIP have to say about this fraud? She praises UnitedHealth for its “major leadership effort.” Worse yet, what does it say about those controlling our national dialogue on reform when Karen Ignagni is included in almost every major forum, and single payer advocates such as the leadership of PNHP are deliberately excluded?
Do we really value these dishonest businessmen more than we value the health and financial security of our people?
