UnitedHealth Draws Criticism for Its Out-of-Network Reimbursement Policies

I have posted a number of previous notes about UnitedHealth, particularly with regard to its punitive policies toward physicians for out-of-network lab testing. The company now finds itself once more in the news (see: Health Plans Put Onus on Insured). The Attorney General of New York, Andrew Cuomo, is investigating the company's practices (Cuomo Announces Industry-Wide Investigation into Health Insurers' Fraudulent Reimbursement Scheme). Here's a quote from a recent  press release from Cuomo's office (boldface emphasis mine):

Attorney General Andrew M. Cuomo...announced that he is conducting an industry-wide investigation into a scheme by health insurers to defraud consumers by manipulating reimbursement rates.   At the center of the scheme is Ingenix...the nation’s largest provider of healthcare billing information, which serves as a conduit for rigged data to the largest insurers in the country.

When choosing health insurance plans, many of us elect a more expensive version that allows the use of "out of network" services. We elect this option obviously to broaden our care choices when we are not satisfied with those in the network. Such policies frequently stipulate that the policy holder will be reimbursed at 80% of the reasonable-and-customary charges for that service in the community. With increasing frequency, policy holders are now discovering that the reasonable-and-customary amount that is assigned to a particular service by the insurance company is very far below the amount actually billed. The 80% calculation then results in a very large out-of-pocket expenditure.

You have three guesses about who owns Ingenix, described in the quote above as the "nation’s largest provider of healthcare billing information" and as "a conduit for rigged data to the largest insurers in the country." Yes, you are correct. Ingenix is part of the UnitedHealth Group. I can't state my case regarding the impropriety of this situation more clearly than the New York Times in an editorial quoted below (A Rip-Off by Health Insurers?). Boldface emphasis is mine.

This system is an invitation for abuse. UnitedHealth owns the company whose database will affect its costs and profitability, so both have a strong financial interest in keeping reimbursement rates low. Even Ingenix seems unwilling to stand behind its numbers. In licensing its database to insurers, it stresses that the data is “for informational purposes only” and does not imply anything about “reasonable and customary” charges. Yet that is precisely what the health insurers use the data for, as Ingenix knows, according to investigators.

My question is: why is all of this only now coming to the attention of the public? Perhaps, though, it's a case of better late than never.

Comments

[jeffrey dach md]

A simple solution to end this health insurance abuse is have the states regulate the health insurance industry just like a public utility is regulated.

This will rein in the obscene profits made by the insurance industry taking advantage of the vulnerability of sick Americans.

How does one deal with an eight hundred pound Gorilla that misbehaves and denies coverage for your medical bills?

Patsy Bates found out when a California court awarded her 9 million dollars for damages.

Her insurance carrier, Health Net cancelled coverage just when she needed breast cancer treatment.

Her lawyer, William Shernoff, not only read the book, he wrote the book: "Fight Back and Win: How to Get HMOs and Health Insurance to Pay Up".

Bravo for LA City Attorney Delgadillo and New York City Attorney General Andrew Cuomo who are suing the health insurance industry for fraudulent practices such as cancellation for pre-existing conditions and underpayment for out-of-network doctor bills.

To read more:
http://jeffreydach.com/2008/02/24/fighting-the-abusive-practices-of-health-insurance-companies-by-jeffrey-dach-md.aspx

Making Your Health Insurance Company Pay Up by Jeffrey Dach MD

Jeffrey Dach MD
http://www.drdach.com