UnitedHealth settles for $50M with N.Y., agrees to update databases
UnitedHealth Group, in a $50 million settlement with N.Y. Attorney General Andrew M. Cuomo, has been ordered to overhaul two of its databases used to determine out-of-network reimbursement amounts for certain health plan members.
Cuomo’s office said the industry had engaged in “a scheme to defraud consumers” by systematically underpaying patients by hundreds of millions of dollars over the last decade, according to the New York (NY) Times.
The settlement results from a year-long investigation by Cuomo’s office, which concluded that the data had understated the true market rates of medical care in the United States by up to 28 percent.
The NY Times reported that the settlement will have a nationwide impact because UnitedHealth 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.
UnitedHealth said it agreed to pay $50 million to fund a not-for-profit entity to develop and own a new, independent database to replace Ingenix’ Prevailing Health Charges System and Medical Data Research databases, which are used by health plans and employers to determine the reimburse rates to members who receive physician services outside their managed care networks. When the new database product is ready, the payor said that Ingenix will close the existing two databases.
Because payors 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. The patient might receive a doctor’s bill for $100, for example, and expect the insurer to pay at least $70. But if the insurance database says that doctor bill should have been only $72, based on local rates, the patient might get back less than $55, the NY Times said.
According to 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.”
UnitedHealth did not acknowledge any wrongdoing and said it stood by the quality of the information in its databases.
In September 2007, UnitedHealthcare, an insurance subsidiary of the Minneapolis-based UnitedHealth Group, agreed to pay New York state $3.7 million following a separate probe of the insurer’s claims processing system.
Cuomo’s office said the industry had engaged in “a scheme to defraud consumers” by systematically underpaying patients by hundreds of millions of dollars over the last decade, according to the New York (NY) Times.
The settlement results from a year-long investigation by Cuomo’s office, which concluded that the data had understated the true market rates of medical care in the United States by up to 28 percent.
The NY Times reported that the settlement will have a nationwide impact because UnitedHealth 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.
UnitedHealth said it agreed to pay $50 million to fund a not-for-profit entity to develop and own a new, independent database to replace Ingenix’ Prevailing Health Charges System and Medical Data Research databases, which are used by health plans and employers to determine the reimburse rates to members who receive physician services outside their managed care networks. When the new database product is ready, the payor said that Ingenix will close the existing two databases.
Because payors 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. The patient might receive a doctor’s bill for $100, for example, and expect the insurer to pay at least $70. But if the insurance database says that doctor bill should have been only $72, based on local rates, the patient might get back less than $55, the NY Times said.
According to 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.”
UnitedHealth did not acknowledge any wrongdoing and said it stood by the quality of the information in its databases.
In September 2007, UnitedHealthcare, an insurance subsidiary of the Minneapolis-based UnitedHealth Group, agreed to pay New York state $3.7 million following a separate probe of the insurer’s claims processing system.