New York Attorney General Andrew Cuomo has busted open the insurance industrys principal system for determining how much to pay when patients choose to go outside their provider networks for care, a system physicians have long criticized as secretive, flawed and unfair.
Its not as if a new day has dawned, but on the other hand youre looking at a sense of empowerment for the physician community, says Michael Rosenberg, M.D., a plastic surgeon practicing in Mount Kisco, N.Y., and president of the Medical Society of the State of New York. For nine years weve been saying this is a dishonest practice.
Cuomo this month 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.
The deal 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 after Cuomo announced the UnitedHealth agreement, 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 since 2000. Neither UnitedHealth nor Aetna admits any wrongdoing in any of the agreements.
The system, providers have 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 area. That information, in most cases, has come from Ingenix for the past 10 years, and providers and Cuomo allege it has been rigged to be lowleaving patients to pay the balance and believing theyre being gouged by someone.
Not only were they treated unfairly because they got reimbursed a lower number, but theres also the transparency issue, Rosenberg says. Its almost like theyre writing a check with a question mark in the amount box. He adds, We dont even know what our reasonable and customary charge was because you would ask and it was proprietary information.