I have posted a number of previous notes about the various shenanigans of UnitedHealth, one of the largest healthcare insurance companies in the U.S. The company has now agreed to settle a suit brought by Andrew Cuomo, the attorney general of New York. The company is described by Cuomo's office as having engaged in "a scheme to defraud consumers" of hundreds of millions of dollars over the last decade (see: Big Health Insurer Agrees to Update Its Fee Data). I covered the specific issue to which this article alludes in a previous note (see: UnitedHealth Draws Criticism for Its Out-of-Network Reimbursement Policies). As part of the settlement, United has agreed to pay $50 million to fund a nonprofit to create a new, independent database to replace Ingenix’s and “educate health care consumers more directly about market prices for health care services.” Below is an excerpt from the New York Times article about the latest news with boldface emphasis mine:
So here's the angle that UnitedHealth was working if you skipped the small print above. As a health insurance company, it was required to reimburse its policy holders about 70-80% of the local "usual and customary" costs of out-of-network medical services. However, it turned out that UnitedHealth also owned the database company, Ingenix, that was developing and maintaining the databases that were used across the health insurance industry to determine the level of these usual and customary costs. And guess what? It was setting those levels inappropriately low in order to reduce the amount of money required to reimburse claimants.
Everyone in the industry has long known that UnitedHealth owned Ingenix and this fact was plainly stated on the UnitedHealth web site. Foe me, this simple fact provides prima facie evidence of a serious conflict of interest. One has to wonder why no one else but the attorney general of New York was able to "diagnose" and take some action on problem. It's important to understand that all of the other insurance companies were reaping the financial benefits of having Ingenix "cook the books." How about the hospital executives? They were probably anxious not to offend United Health which could have made life difficult for them. As a result of this mess, at least one columnist is calling for database auditors to provide some type of governmental regulatory oversight over the various companies that provide reference databases in various industries in addition to the health insurance field (see: Ingenix scandal points to need for database auditors).