New York Attorney General Andrew Cuomo has picked up a battle that the American Medical Association has waged for nearly eight years without success: taking down Ingenix, the UnitedHealth Group subsidiary that most insurers rely on to crunch reimbursement rates for out-of-network providers.
Last week Cuomo announced his intent to sue Ingenix and UnitedHealth in a news conference, alleging that the Ingenix database is both flawed and intentionally manipulated to yield low-ball estimates for whats usual, customary and reasonable, or UCR, to charge for any given service in a geographic area. The head of Cuomos healthcare team, Linda Lacewell, bluntly called Ingenix nothing more than a conduit for rigged information that is defrauding consumers of their right to fair payment.
Cuomo might succeed even though the AMA has gotten virtually nowhere with a lawsuit still pending in U.S. District Court in New York City, potentially ending the days when patients expect insurers to cover the bulk of an out-of-network bill only to find the reimbursement doesnt reflect what the providers really chargeand leaving the patient to pay the balance.
The American Hospital Association also is interested in what Cuomos investigation turns up. We hope the attorney general is looking into reimbursements to patients for out-of-network hospital care, spokeswoman Elizabeth Lietz said.
Edward Shaya partner at the law firm Post & Schell in Philadelphia who specializes in health IT and represents providers in their relationships with payerssaid Cuomo wont be mired in the same kind of preliminary skirmishing engaged in for so long by the AMA and its partner plaintiffs, which include the Medical Society of the State of New York, beneficiaries of various plans connected to UnitedHealth and physicians.
The seven years of dodge ball between the plaintiffs and the defense is no longer the name of the game, Shay said. Cuomos office can get things that private litigants couldnt get after seven years. They can find out whats in the charge database. How is it collected? When was it last updated?
Indeed, Cuomo just proved his strength against insurers with a victory regarding physician rankings that he complained were based more on cost than quality. UnitedHealth along with Aetna, Cigna Corp. and Empire Blue Cross and Blue Shield last year signed agreements with Cuomos office promising their rankings would be transparent and tied to nationally recognized quality benchmarks.
After Cuomo announced his Ingenix investigation Feb. 13, UnitedHealth issued a written statement saying the company is cooperating with his office and disputing his characterization of the database: The reference data is rigorously developed, geographically specific, comprehensive and organized using a transparent methodology that is very common in the healthcare industry.
David Balto, an independent antitrust lawyer who represents consumer groups fighting UnitedHealths purchase of Las Vegas-based Sierra Health Services, said he welcomes Cuomos continued interest and willingness to use the muscle that comes with his office to wade into thorny healthcare matters. We use all these healthcare intermediaries to do these essential functions for the delivery of healthcare, Balto said. Theyre much more efficient at gaming the system to create market imperfections they can exploit. Thats why what Cuomos doing is really important.
Cuomo made it clear hes gunning for more than Ingenix and UnitedHealth, saying we believe there was an industrywide scheme perpetrated by some of the nations largest health insurance companies to defraud consumers. His office has issued subpoenas to 16 other companies seeking member complaints, communications with Ingenix and explanations of how they calculate UCR rates. A spokesman for the attorney general said the investigation was triggered by consumer complaints.
Americas Health Insurance Plans responded that Cuomo, rather than exposing a conspiracy among payers, is revealing that providers are gouging their out-of-network patients. At a time when the costs of medical services soar above inflation every year, health insurance plans tools and techniques are mitigating the damage done to consumers and employers, AHIP President and Chief Executive Officer Karen Ignagni said in a written statement.
But AMA President-elect Nancy Nielsen countered in an interview, This is not about holding down costs; its about shifting costs to the consumer.
Nielsen said plan members and their employers pay for coverage that promises the insurer will pay the bulk of the charge if the patient agrees to pay more to see an out-of-network provider. When they exercise the choice, they get the rude surprise, Nielsen said. You have a bill that is not going to get paid, or not paid in full, or it will get paid only after a hateful letter.
The AMA had filed its civil lawsuit in 2000 in New York state court, attacking Ingenix under the Employee Retirement Income Security Act.
That was just a couple of years after Minnetonka, Minn.-based UnitedHealth acquired the Prevailing Healthcare Charges System from the Health Insurance Association of America, an insurers organization that merged with another group to form Americas Health Insurance Plans in 2003. UnitedHealth also purchased Medicode, gaining another database insurers used in calculating UCR rates. They were prescient in understanding the future of healthcare was really going to be bound up in health information and data and applying it, and thats what Ingenix is all about, Post & Schells Shay said.
The AMAs lawsuit was kicked over to federal court, where it has gone through four revisions and remains pending with new antitrust and racketeering claims. A judge in June 2007 threw out pieces of the previous iteration, noting for example that plaintiffs failed to show that patients they say were burned by the alleged conspiracy exhausted avenues of appeal through the plans or that such appeals are futile.