NY attorney general opens investigation 
of alleged insurance billing gap

New York Attorney General Andrew Cuomo announced Feb. 13 his intent to investigate an alleged scheme health insurance providers established to defraud consumers through the unfair assessment of reasonable and customary rates reimbursed to out-of-network providers. At the forefront of the New York investigation is Ingenix, a health care research and information group owned by UnitedHealth Group.

“We believe Ingenix systematically reduced the amount of money that consumers should have been reimbursed,” Cuomo said during a February press conference in New York City outlining the investigation. “We believe health care companies were part of it.”

The New York investigation alleges that, where insurance companies should be paying 80% of a patient’s out-of-network costs, they are instead using “rigged data” from Ingenix that falls far below that target percentage.

“To date we have found that health insurers consistently underpay consumers for their out of network medical expenses,” said Linda Lacewell, counsel for Economic and Social Justice, who appeared with Cuomo. “And they do it through deception, manipulation of data and outright fraud.”

An example supplied by the attorney general, a citizen in New York City’s average expense for a 15-minute doctor visit is $200. However, Ingenix calculates the reasonable rate within that region at $77. An insurance provider reimbursing 80% of the reasonable and customary rate is then responsible for only $62 of the original $200.

UnitedHealth stated through its Web site Feb. 13 that it is “in the midst of on-going discussions with the Attorney General’s office,” and pledges ongoing cooperation. UnitedHealth points out that it and other health care providers use reference data to independently negotiate repayment schedules and fees.

“The reference data is rigorously developed, geographically specific, comprehensive and organized using a transparent methodology that is very common in the health care industry,” the statement reads. “We believe these reference tools add substantial value to the health care system by providing all participants – providers, payers and consumers – with a long-standing transparent, consistent, and neutral line of sight into the health care market, its costs and performance.”

UnitedHealth Group, a public company, is the nation’s second largest insurance provider in terms of membership, and the largest in the state of New York.

The state’s investigation of insurance payment practices began six months ago. Cuomo announced that he intends to subpoena 16 of the country’s largest health insurers, including UnitedHealth, Aetna, Cigna and BlueCross BlueShield.

Karen Ignagni, president and CEO of America’s Health Insurance Plans – the national association representing insurance providers – responded to the allegations through her association’s Web site. She turned the tables somewhat, saying the investigation should focus on medical care providers’ high costs rather than the insurance companies paying them.

“It’s unfortunate that the [Feb. 13] media event ignored these facts and failed to address the appropriateness of charging out-of-network patients $200 for ‘simple doctor visits’ lasting ‘15 minutes’ — which equates to a billing rate of at least $800 an hour,” Ignagni said. “As medical costs continue to soar, this is the discussion that public policy leaders need to have.”

Listen to the New York Attorney General’s entire Feb. 13 press conference.

A look at how this potentially impacts Ambulatory Surgical Centers.

Contact Matt Gunn.