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Ouch. This one has got to hurt the nation’s major healthcare insurers. The State of New York announced plans this week to build a new, independent database that will provide information for reimbursement fees owed to consumers for out-of-network healthcare costs.
Here’s the kicker. The project is being funded with $100 million in settlement money the State obtained as part of a fraud investigation against a number of major health insurers, including UnitedHealth Group, CIGNA, WellPoint and Aetna.
In announcing the initiative, New York Attorney General Andrew Cuomo said the new database will serve as an engine of healthcare reform. A new, not-for-profit company called FAIR Health has been created to run and develop the database in conjunction with a research network headquartered at Syracuse University.
The initiative is the result of an investigation conducted by Cuomo’s office into how the health insurance industry reimburses consumers for out-of-network healthcare charges. In particular, it focused on the Ingenix database, a subsidiary of UnitedHealth, which was used by insurers nationwide to set reimbursement rates when patients went out-of-network for health services.
According to a statement from the attorney general’s office: “The investigation uncovered a fraudulent and conflict-of-interest ridden reimbursement system affecting millions of patients and their families and costing Americans hundreds of millions of dollars in unexpected and unjust medical costs.”
The investigation determined that Ingenix had a vested interest in helping set rates low so companies could underpay patients for out-of-network services. It found the database intentionally skewed “usual and customary” rates downward through faulty data collection, the end result being that consumers were forced to pay more out of their own pockets than they should have.
Beginning in January of 2009, the State reached agreements with health insurers operating in New York to end their use of the Ingenix database and to financially commit to the creation of a new, independent database. UnitedHealth agreed to shut down Ingenix and contribute $50 million to the new database. Other insurers have agreed to provide close to $50 million in funds and penalties towards the database.
In addition to the new database, FAIR Health will design a new consumer Web site where patients across the county can find out in advance how much they are likely to be reimbursed for out-of-network services in their area.
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