MVP drops Ingenix database in AG reimbursement probe

CNY Business Journal (1996+), Feb 13, 2009 by Reinhardt, Eric

MVP Health Care has agreed to stop using a database the state attorney general's office calls "defective and conflict-of-interest ridden" to determine reimbursement rates for out-of-network services.

Attorney General (AG) Andrew Cuomo's office announced the agreement Feb. 5.

The Schenectady-based health insurer did not contribute data to the Ingenix database, but relied on the information to determine outof-network reimbursement rates, according to the AG's office.

Under its agreement with the attorney general, MVP will contribute $535,000 over a five-year period to help pay for a new, independent database.

MVP has more than 700,000 members in its health plans in upstate New York, according to the company.

Like many other health insurers, MVP used Ingenix data to establish "usual, customary, and reasonable" reimbursements for out-of-network providers because Ingenix was the industry standard, Denise Gonick, MVP Health Care's vice president and chief legal officer, said in a company statement.

"However, unlike many other insurers, MVP only used this database for a very small number of claims - less than 1 percent of the 12 million claims we process annually," she said.

In addition, Cuomo also filed on Feb. 4 a five-day notice to file a consumer-fraud suit against the Albany-based Capital District Physician's Health Plan (CDPHP) for its continued use of the Ingenix database.

But, in a company statement, Dr. John Bennett, president and CEO of CDPHP, said his company has little occasion to deal with out-of-network claims because it's a health plan conducting primarily health maintenance organization (HMO) business, meaning most clients get their services from a pre-approved list of doctors and hospitals.

"In fact fewer than 5 percent of the CDPHP commercially insured members are enrolled in a product with an. out-of-network benefit. Of that small percentage, very few access out-of-network providers because most providers in the region are CDPHP participating providers. Thus, we have had relatively little use of the Ingenix product, and do not share data with them, unlike other plans," Bennett said.

He also said CDPHP has cooperated fully with the investigation since Cuomo announced the probe in early 2008.

CDPHP, a nonprofit company, and its affiliates serve nearly 400,000 people in 29 counties throughout New York, including Broome, Chenango, Herkimer, Jefferson, Lewis, Madison, Oneida, St. Lawrence, and Tioga counties.

Minnetonka, Minn.-based UnitedHealth Group, Inc. (NYSE: UNH) owns the Ingenix database, and Cuomo has been investigating it. The inquiry concerns allegations that as a subsidiary of a major health insurer, Ingenix had a vested interest in setting reimbursement rates low, so companies could underpay for out-of-network services.

The investigation revealed the database intentionally skewed "usual and customary" rates downward through faulty data collection, poor pooling procedures, and a lack of audits.

The investigation also found that health insurers were underpaying at a rate of 10 percent to 28 percent for various medical services.

Cuomo found that having a health insurer determine the "usual and customary" rate - a large portion of which the insurer then reimburses - creates an incentive for the insurer to manipulate the rate downward.

In early January, Cuomo announced the first settlement in the investigation with UnitedHealth, under which the Ingenix database will close. UnitedHealth agreed to pay $50 million to a qualified, nonprofit organization that will establish and independently operate a new database.

Cuomo also reached an agreement with Hartford, Conn.-based Aetna, Inc. (NYSE: AET), which will pay $20 million toward the new database.

The attorney general also announced on Feb. 10 that he reached agreements with Independent Health and HealthNow New York, Inc., both of Buffalo, to end their relationships with the Ingenix database.