UnitedHealthcare has agreed to shut down the controversial system it uses to determine "usual, customary, and reasonable" (UCR) charges - a system the American Medical Association and New York State Attorney General Andrew Cuomo called a scheme to defraud patients and physicians on medical bills for out-of-network services. The company also agreed to pay to develop a new system to determine fair out-of-network reimbursement rates.
In a settlement with the attorney general's office, United said it will close the database of billing information used by Ingenix, a wholly-owned subsidiary of United. Ingenix is the nation's largest provider of health care billing information. United and the largest health insurers in the country rely on the Ingenix database to determine their UCR charges. The Ingenix database uses the insurers' billing information to calculate UCR rates for individual claims by assessing how much the same, or similar, medical services would typically cost, generally taking into account the type of service and geographical location. Under this system, insurers control reimbursement rates that are supposed to fairly reflect the market.
The settlement specifies that:
- The nonprofit organization will own and operate the new database and will be the sole arbiter and decision-maker on all data contribution protocols and all other methodologies used in connection with the database;
- The nonprofit organization will develop a Web site where, for the first time, consumers can find out in advance how much they may be reimbursed for common out-of-network medical services in their area;
- The nonprofit organization will make rate information from the database available to health insurers; and
- The nonprofit organization will use the new database to conduct academic research to help improve the health care system.
The settlement resulted from Mr. Cuomo's investigation of how reimbursement rates are determined . AMA says its complaints prompted the investigation that began in February 2008 when Mr. Cuomo announced he was looking into whether the Ingenix database intentionally skewed UCR charges downward through faulty data collection, poor pooling procedures, and the lack of audits. In announcing the settlement, he said he found that having a health insurer determine the UCR rate creates an incentive for the insurer to manipulate the rate downward. The creation of a new database, independently maintained by a nonprofit organization, is designed to remove this conflict of interest, he said.
Ensuring accountability for out-of-network services is one of the goals of Doctor's Orders , Texas Medical Association's 2009 legislative agenda. The document outlines problems that stem from inadequate physician networks and artificially low payments for out-of-network services. TMA is promoting state legislation that would:
- Oppose health plans' attempts to prohibit balance billing or to establish wholly inadequate payment rates for non-network physicians and hospitals; and
- Give TDI authority to require health plans to disclose the methods and data they used to set "maximum allowable" amounts.
Mr. Cuomo says his industry-wide investigation continues. He previously issued subpoenas to the nation's largest health insurance companies that use the Ingenix database, including Aetna, CIGNA , and WellPoint/Empire BlueCross BlueShield.
United denies any wrongdoing. "We are committed to increasing the amount of useful information available in the health care marketplace so that people can make informed decisions, and this agreement is consistent with that approach and philosophy," said Thomas L. Strickland, executive vice president and chief legal officer of UnitedHealth Group. "We are pleased that a not-for-profit entity will play this important role for the marketplace."
AMA President Nancy Nielsen, MD, said the AMA "fully supports" Attorney General Cuomo's actions "to have a nonprofit entity create a new, reliable database that is fair to patients and physicians."
She added that "Americans have been paying more to see the doctor of their choice, while insurers have been using a secret database to pay less than promised to increase their profits on the backs of patients. When insurers underpay medical bills, they drive a wedge between the doctor and the patient by creating the false perception that any unexpected balance on a patient's bill is the fault of the doctor."
Action , Jan. 16, 2009