UnitedHealth agrees to close ingenix database

Skin & Allergy News, Feb, 2009 by Mary Ellen Schneider

As part of an agreement with New York Attorney General Andrew Cuomo, UnitedHealth Group has agreed to shut down a national billing database used by health plans to determine reimbursements to members who use out-of-network physician services.

The billing database, which is operated by the UnitedHealth Group (UHG) subsidiary Ingenix Inc., will be replaced with a new, independent database run by a qualified nonprofit organization. Under the terms of the agreement, UHG will pay $50 million to help establish the new database. In addition, the nonprofit organization will develop a public Web site where consumers can research--before seeking services--how much they may be reimbursed for common out-of-network medical services in their area.

Aetna, the nation's third largest insurer, also has entered into an agreement with the New York attorney general to abandon its use of the Ingenix database in favor of the new one. Aetna also will contribute $20 million over 5 years for the creation of the new database.

The agreements follow an investigation by Mr. Cuomo's office into allegations that insurers were systematically underpaying consumers for their out-of-network expenses by saying that physician charges were higher than the "usual, customary, and reasonable" rates as calculated by the Ingenix database. As a result, insurers would only pay a percentage of the lower "usual, customary, and reasonable" rate, leaving consumers to pay their own portion plus the balance of the bill.

The investigation found that insurers were underpaying consumers for out-of-network expenses by 10%-28% for medical services across the state.

"For the past 10 years, American patients have suffered from unfair reimbursements for critical medical services due to a conflict-ridden system that has been owned, operated, and manipulated by the health insurance industry," Mr. Cuomo said in a statement.

According to UHG officials, the agreement with the New York attorney general will help increase the transparency of information related to physician fees for out-of-network services.

"We are committed to increasing the amount of useful information available in the health care marketplace so that people can make informed decisions, and this agreement is consistent with that approach and philosophy," Thomas L. Strickland, executive vice president and chief legal officer for UnitedHealth Group, said in a statement.

Just days after reaching an agreement with Mr. Cuomo's office, UHG also settled a lawsuit with the American Medical Association and two state medical associations over the use of the Ingenix database. The $350 million settlement is the largest settlement of a class action lawsuit against a health insurer in the United States, according to the AMA.

The suit, which has been pending since 2000, alleged that UHG had been understating the "usual, customary, and reasonable" charges in payments to physicians and in reimbursing patients for out-of-network expenses. Under the class action settlement, UHG subscribers who submitted a claim for out-of-network services and were not properly reimbursed are eligible to receive part of the settlement.

Physicians also could be eligible to receive payment under the settlement if they were underpaid by UHG and did not receive the balance from the patient.

But not everyone sees these agreements as a victory for physicians and patients. Robert Laszewski, president of Health Policy and Strategy Associates LLC, a Washington-based consulting firm, said he doesn't expect to see significant changes in the "usual, customary, and reasonable" rates based on the creation of an independent database.

The problem for physicians is that, regardless of who calculates the usual rates, there is still a wide discrepancy between the in-network rates available to most patients and the out-of-network rates paid by some, said Mr. Laszewski. Increased transparency could end up benefiting the insurance industry if it shows physicians charging significantly more when patients are out-of-network.

BY MARY ELLEN SCHNEIDER

New York Bureau