State of NY prepares to sue United Healthcare

by Kathleen Kerr 

State Attorney General Andrew Cuomo said Wednesday he plans to sue UnitedHealth Group — the country’s largest health insurer — and its subsidiary, Ingenix, after the company allegedly manipulated data to cheat consumers out of adequate reimbursements for medical care.

Cuomo said he has launched an industrywide investigation into health care reimbursements and estimated that some companies have been lowballing payments to customers for a decade. A six-month probe found two United subsidiaries — United HealthCare Insurance Co. of New York Inc. and United Healthcare of New York Inc. — used Ingenix data to severely under-reimburse customers and cheat them out of millions of dollars, he added.

Cuomo has not charged the companies with wrongdoing but he said investigators found United lied about data and manipulated numbers to keep its reimbursements low. The probe is ongoing.

The attorney general said he would file a civil lawsuit that would include three other subsidiaries of United and will seek restitution for consumers.

Additionally, Cuomo has subpoenaed 16 of the country’s largest insurers, including Aetna, CIGNA and Empire BlueCross BlueShield.

The subpoenas request the companies provide documents that show how they computed reimbursement rates, copies of member complaints and appeals, and communications between members and Ingenix and the insurers.

Cuomo’s office said the probe found that the Ingenix reimbursement database — owned by United but used by most major health insurers — used data that resulted in smaller payments to consumers.

Dr. Nancy Nielsen, president-elect of the American Medical Association, who attended the Manhattan news conference at which Cuomo announced the investigation, indicated the fraudulent reimbursement system was widespread, noting: “United has a track record that stretches from Monterey to Montauk.”

Those potentially affected were people with “out-of-network” insurance that allows them to seek care from any doctors they choose. About 28,000 Long Island residents have out-of-network policies with United, a Cuomo spokesman said. “When insurers like United receive convoluted and dishonest systems for determining the rate or reimbursement, real people get stuck with excessive bills and are less likely to seek the care they need,” Cuomo said.

In a statement, Minneapolis-based United said it is in discussions with Cuomo and that: “The reference data is rigorously developed, geographically specific, comprehensive and organized using a transparent methodology that is very common in the healthcare industry.”

And Empire Blue Cross Blue Shield president Mark Wagar said the company would continue to work with Cuomo’s office to determine whether any of the information used was inaccurate. “If that is found to be the case,” Wagar said, “Empire would consider any and all remedies available to protect the interests of our members, their families, our group customers and providers in the New York marketplace and to maintain our company’s historic commitment to fair and reasonable coverage.”

Consumers have become accustomed to receiving reimbursements based on what insurance companies call “reasonable and customary” prices for the area where they live.

But Cuomo said that while the United companies that used the database knew customary charges for a doctor’s visit might average about $200, the reimbursement was based on a charge of $77 per visit. Using those numbers, customers who receive 80 percent reimbursements would receive only about $61 for a visit that cost them $200.

“Based on the findings in this investigation,” Consumers Union program director Chuck Bell said, “it appears that United Health failed to fulfill the promises it made to cover a fair portion of medical expenses and consumers were stuck with the bill.”

Dr. Nielsen said, “The investigation launched today by New York Attorney General Andrew Cuomo calls into question the validity of a system that health insurers have used for years to reimburse physicians and their enrolled members.”

And Dr. Robert Goldberg, president of the Medical Society of the State of New York, indicated support for the probe, saying there will be “long-term benefits to health care in New York” as a result of cracking down on reimbursement pricing.

This entry was posted on 15. February 2008 at 11:01 and is filed under health insurance reform, insurance companys, medical. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response or trackback from your own site.