New York Attorney General Andrew Cuomo has a flair for bravado. Doctors and hospitals hope he accomplished something as big as hes selling it.
The price is right now
UnitedHealth Group’s settlement on benchmarking databases could make out-of-network care costs more transparent, equal, some say
Last week, Cuomo unveiled an agreement with UnitedHealth Group that requires the insurance giant to pull the plug on two benchmarking databases administered by UnitedHealth subsidiary Ingenix. Those databases are used by its own plans and widely throughout the industry to determine how much insurers pay when beneficiaries get care outside their provider networks.
Once you change Ingenix, you will change the entire system, Cuomo said on Jan. 13. More than 100 million Americans have health plans that allow them to veer from provider networks and pay an agreed-upon share of the bill, he said. His deal with UnitedHealth calls for the company to pay $50 million to fund an independent, not-for-profit substitute for the Ingenix data sources it shuts down. Two days later, Aetna agreed to contribute $20 million toward the effort and use the resource when its available, and UnitedHealth said it would pay $350 million in a proposed settlement resolving a separate class-action lawsuit that the American Medical Association has been pursuing on similar grounds for eight years. Neither UnitedHealth nor Aetna admits any wrongdoing in any of the agreements.
Paul Ginsburg, president of the Center for Health System Change, said the demise of Ingenixs role in out-of-network rates and the transparency promised by Cuomos solution stands to inject a shot of trust into the provider-payer relationship. Moreover, Ginsburg said, consumers finally will have a realistic idea of the cost theyll bear if they choose out-of-network providers. I think its a very substantial benefit to consumers, he said. Everything in price transparency so far has really only applied to in-network providers.
The system at issue is one that doctors and hospitals have long complained leads patients to believe, falsely, that their insurance carriers will pay a certain percentage of their bill for out-of-network services. Instead, what insurers pay is a percentage of whats deemed the prevailing rate in a given geographic areaa figure providers and Cuomo allege has been rigged to be lowleaving patients to pay the balance and believing theyre being gouged by someone. That information, in most cases, has come from Ingenix for the past 10 years (Separately, UnitedHealth named an industry executive to its board, p. 32).
Cuomo made a splash in February 2008 when he announced his investigation into Ingenix, UnitedHealth and other insurers that based payments on Ingenix data, delivering subpoenas to 16 companies. No lawsuits or criminal charges have been filed as a result of the inquiry. Cuomo vowed, how-ever, to continue pursuing out-of-network payments by insurers, one by one.
You have these insurance companies going to Ingenix to determine the usual and customary rates, and Ingenix is getting the input from those very same companies, Cuomo said last week. He described it as a closed loop that encouraged insurers to report data to Ingenix that would support low payments to doctors.
William Van Slyke, spokesman for the Healthcare Association of New York State, praised Cuomo for throwing his heft into the matter. Its hard to explain why its gone on so long without this kind of attention, Van Slyke said. It puts the hospital in this terrible position of eating the cost themselves or going after the patient, who in our estimation is being poorly treated by the payer.
The health insurance industrys trade group agrees patients have been poorly treated, but by providers who hit them with outrageously high and divergent fees. What is the objective here without a measured discussion about why in some cases billings so exceed reimbursement? said Karen Ignagni, president and chief executive officer of Americas Health Insurance Plans. If the message is that whatevers being charged should be reimbursed, thats an anti-consumer message.
During its investigation Cuomos office used its subpoena power to analyze millions of healthcare bills for doctors visits in seven New York counties and create a model database that could be compared with Ingenix data. The exercise, according to the offices report, showed insurers systematically underreimburse New Yorkers by as much as 28%. The tables provided in the report also show that most doctors in Manhattan charge $125 for a visit that would cost $45 in upstate Erie County.
I think consumers are going to be shocked to see the wide variation in bill charges, Ignagni said. I think policymakers are going to find it very revealing.
AMA President Nancy Nielsen wasnt having Ignagnis arguments. Spare me, Nielsen said. This is an attempt to divert attention from what was clearly a rigged scheme to not pay the obligations that they had promised to pay, Nielsen said. Everything else is a smoke screen.
While they disagreed on the messagea word Ignagni returned to several times in response to the harsh rhetoric from Cuomo and the AMAa consensus emerged that a move toward an independent data source thats transparent could be good for everyone involved. So far, the scope of the change counts on other companies using the new resource, and Ignagni could not say whether the industry would move to it en masse. But the fact there will be an entity performing the function is a validation of the importance of this work, she said.
Appearing at Cuomos news conference at 440-bed St. Vincents Hospital in New York, UnitedHealth General Counsel Mitchell Zamoff said the new database will give people more information they can use to make decisions for themselves and their families, and he added: We regret conflicts of interest were inherent in these Ingenix database products.
Ingenix bought the Prevailing Healthcare Charges System in 1998 from the Health Insurance Association of America, or HIAA, a predecessor to industry trade group AHIP. A year earlier, Ingenix had bought a company whose trademarked MDR price-benchmarking system was the dominant alternative to HIAA data. According to Cuomos report, some insurers masked the conflict of interest by indicating in their plan documentation that out-of-network rates were based on data provided by the HIAA, though it was in fact provided by Ingenix, and the HIAA hasnt existed since the group merged with another to form AHIP in 2004.
UnitedHealth said the products account for just 2% of revenue generated by Ingenix, on track to be about $1.5 billion this year based on the companys third-quarter earnings report.
Cuomo intends for his independent data source to become a national, industrywide replacement for the discontinued Ingenix products. Under his agreement with UnitedHealth, Ingenix is compelled to turn over all of the data, computer programs and methodologies to a New York university to be selected by Cuomos office. When the alternative resource is up and running, UnitedHealth and Aetna are obligated to use it to calculate out-of-network payments and supply it with claims data for at least five years.
The new data administrator, under the agreement, will make rate information available to academic researchers and insurers and create a Web site that allows consumers to search prevailing fees for medical services by ZIP code. The information will have a caveat that the plans sponsor may apply various reimbursement policies, co-insurance, and deductibles or may determine reimbursement amounts using a mechanism other than the new database or other databases of provider charges.
Aetna praised the solution in a written statement. In this economy, it is more important than ever that consumers understand how much their out-of-pocket costs can increase when they go outside their insurers network. Aetna looks forward to cooperating with the new database administrator to help generate better information about out-of-network costs for care.
Two other companies Cuomo singled out by name in his public comments documents related to the investigation, WellPoint and Cigna Corp., declined to say whether they were headed toward similar agreements but that they continue to cooperate with his office.
WellPoint, while saying the company is committed to fairly reimbursing healthcare providers, points out in its statement that the benchmarking method protects group customers from being overcharged by providers that dont participate in its networks.
Cigna said that less than 10% of its claims are for out-of-network care and emphasized the importance of provider networks in ensuring its members have high-quality care thats accessible and affordable.
The fact is that through negotiations with providers we are able to bring market power to individuals who would otherwise not have this strength, the company said in a statement. True cost transparency for out-of-network services can only be achieved if both insurers and doctors provide individuals with access to posted rates and reimbursements prior to service.
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