Health Insurer Settles with NY, Will Fund "Independent" Rate Calculator

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Last year attorney general Andrew Cuomo brought suit against health care information company Ingenix and its parent company UnitedHealth Group, claiming Ingenix's method of determinng reimbursement rates for out-of-network claims by insurance customers was rigged.

At a press conference today Cuomo announced that the state has settled with Ingenix and UHG, which will pay $50 million* to set up a "fair independent entity" to determine such costs, and then withdraw its own database service.

Cuomo said he expects this to happen within six months. It's an "optimistic" timetable, he admitted, "but I'm an optimistic kind of attorney general."

The new entity will also set up a free website that will inform consumers "what these services will cost" before they order them so they can "determine their reimbursement rate" before they "shop" for medical services.

Because of its large market share, "once you change Ingenix, you change the entire system" of health care reimbursement around the country, said Cuomo, though he hinted that his office would continue to keep an eye on the industry.

Cuomo explained that usually, when customers avail out-of-network services, insurers agree to pay providers the "usual and customary rate (UCR)," beyond which the insured party is responsible. In many cases that rate is determined by findings by Ingenix -- who, Cuomo said, gets its data from the health insurers.

This made Ingenix a "black box" and its arrangement with insurers a "closed system," Cuomo said, producing suspiciously identical (and low) UCRs among insurers, thus cheating consumers of fair reimbursement for out-of-network services. The new system will deliver "the bargain and sale that [consumers] purchased" and "determine the rates fairly," he said.

No criminal charges have been brought against Ingenix, which denies any wrongdoing.

(*Update: We earlier reported that the database settlement was for $350 million; that's actually the amount UnitedHealth has agreed to pay to settle class-action lawsuits from doctors and patients who say they had been under-reimbursed. $50 million separately goes to the database.)

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