The Herald, Sharon, Pa.

Business

January 14, 2009

‘Out-of-network’ health insurance costs are out of whack

UnitedHealth Group Inc. will close much-criticized databases health insurers use to set payment rates and help launch a new one to settle a fraud investigation, which could help millions of patients pay less for “out-of-network” care.

The Minnetonka, Minn.-based health insurer has agreed to pay $50 million to establish the new database, which will be run by a nonprofit organization like a university, according to a deal ironed out with the New York attorney general’s office.

The new database will replace two run by UnitedHealth’s Ingenix Inc. subsidiary that are used to determine “usual and customary” payment rates for care patients seek outside their insurance network.

Insurers often promise to cover as much as 80 percent of these rates for claims from providers outside their network, according to the attorney general’s office.

But an investigation found that insurers using the Ingenix databases underpaid anywhere from 10 percent to 28 percent for certain claims in New York state. Consumers often saw the difference in their bills.

“We believe that Ingenix is essentially the black box for consumers,” Attorney General Andrew Cuomo said Tuesday during a New York City press conference.

He said the databases were riddled with conflicts of interest. He noted that many health plans across the country use Ingenix data to determine usual and customary rates.

Ingenix, in turn, received its data from those insurers. He called that system a “closed loop” that left out consumers.

UnitedHealth regrets that conflicts of interest “were inherent” in the databases, said Mitch Zamoff, general counsel for its subsidiary UnitedHealthcare. He said the agreement will “finally and decisively” resolve questions about independence.

The new database will include a Web site that allows consumers to learn in advance how much they may be reimbursed for common out-of-network services in their area.

Cuomo said he hopes to have the new database running in six months, but he concedes that may be an optimistic time frame. Until then, insurers will continue to use Ingenix.

The attorney general said the new database will affect everyone who uses an out-of-network care provider.

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