UnitedHealth Group settles insurance rate probe

One of the nation’s largest health insurers has agreed to pay $50 million following an investigation into its database provider that many insurance companies used to set payment rates for “out-of-network” care.

UnitedHealth Group, the second-largest health insurer in Colorado, agreed to the settlement after the New York attorney general’s office determined that the company’s database subsidiary Ingenix Inc. was providing skewed rates that allowed insurance companies to underpay policyholders by 10 percent to 28 percent for claims for out-of-network care in New York state.

Out-of-network care refers to services provided by medical professionals who are not part of a policyholder’s approved network.

New York Attorney General Andrew Cuomo said on Jan. 13 that having UnitedHealth-owned Ingenix provide payment rate information to itself and other insurers amounted to a conflict of interest that ultimately resulted in consumers paying more for their care. Cuomo said the investigation may be a “linchpin” for reforming the nation’s for-profit health-care system.

“I’m putting all the other health insurance companies on notice today,´ said Cuomo in announcing the settlement. “I believe (with) all the companies that have been involved with Ingenix there’s a very strong case that they were perpetrating consumer fraud and we are going to aggressively pursue those cases.”

In an interview with the New York Times, Cuomo said it was time to change the system. “For years this database was treated as credible and authoritative and consumers were left to accept its rates without question,” he said. “This is like pulling back the curtain on the Wizard of Oz. We have now shown that for years consumers were consistently low-balled to the tune of hundreds of millions of dollars.”

Neutral database

The $50 million settlement will fund the creation of a neutral, nonprofit organization that will determine reimbursement rates for patients. UnitedHealth did not acknowledge any wrongdoing on its part or by Ingenix but did applaud the creation of an independent rate provider.

“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 Strickland, executive vice president and chief legal officer for UnitedHealth Group, in a statement. “We are pleased that a not-for-profit entity will play this important role for the marketplace.”

The investigation was sparked by a 2000 lawsuit by the American Medical Association, which had complained that payment discrepancies were driving a wedge between doctors and patients. AMA President Nancy Nielsen said she was satisfied with the UnitedHealth settlement.

“Today, patients and physicians prevailed over health insurance giant UnitedHealth Group when New York Attorney General Andrew Cuomo stopped the insurer from using a rigged Ingenix database that increased insurer profits at the expense of patients and physicians,” Nielsen said in a statement.

Under the settlement, the nonprofit organization will develop a Web site where for the first time consumers across the nation will be able to find out in advance how much they may be reimbursed for common out-of-network medical services in their own geographic area.

Minneapolis-based UnitedHealth Group has six subsidiary businesses: UnitedHealthcare, Ovations, AmeriChoice, OptumHealth, Ingenix and Prescription Solutions.

Colorado gathers info

In Colorado, Marcy Morrison, the state’s insurance commissioner, said her department will be looking into whether any action might be taken against UnitedHealth through the Colorado attorney general’s office.

“We are gathering information from United and other sources, in a timely fashion, to determine how this affects Colorado consumers,” Morrision said in a statement issued Jan. 15. “We need to identify what the issues are before we decide whether to engage the attorney general’s office in any action.”

In addition to the $50 million settlement, UnitedHealth will also pay $350 million to settle class-action lawsuits filed against it by the AMA, state medical societies, doctors and patients.

Hartford, Conn.-based Aetna, another insurance company that was under investigation for using the Ingenix database, announced it will contribute $20 million in an out-of-court settlement to help fund the independent database organization and educate its members about reimbursement rates.

While all of this sounds like a good deal for the consumer, Jim Hertel, publisher of Colorado Managed Care Newsletter, said health insurance consumers will likely end up paying more anyway.

“Once a new database is created it will likely create higher fees and lower consumer costs but that will likely translate into higher premiums,” Hertel said. “The recalculation will have carriers paying a higher portion of the cost and that translates into higher rates for consumers.”

Steve Porter covers health care for the Northern Colorado Business Report. He can be reached at 970-221-5400, ext. 225, or at sporter@ncbr.com.

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