State Attorney General Andrew Cuomo yesterday exposed a massive health-insurance scandal in which up to 100 million people paid hugely inflated charges for medical care.
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Cuomo said his yearlong investigation found that the giant UnitedHealth Group’s billing practices allowed the insurer to underpay by up to 28 percent on claims for medical expenses in New York – meaning that patients had to fork over way more than their fair share. Cuomo said he’ll seek restitution estimated at hundreds of millions of dollars.
Under an agreement with Cuomo, UnitedHealth, based in Minnetonka, Minn., will spend $50 million to establish a database that will be used to set fair rates to reimburse patients for “out of network” medical costs in the future.
“I’m putting all the other health-insurance companies on notice today,” Cuomo said at a press conference at St. Vincent’s Hospital.
He said there was a very strong case that all the companies involved with Ingenix, UnitedHealth’s system for setting rates, were perpetrating consumer fraud.
“We are going to aggressively pursue those cases,” Cuomo said.
The new database will be run by a nonprofit organization and will replace Ingenix – used by several major insurers, including Aetna and Cigna – which Cuomo’s office found was at fault in the billing practices.
The way the out-of-network payments usually work is that insurers pay up to 80 percent of the costs of claims from doctors outside their own health plan, Cuomo aides said.
But the probe found that insurers who used the Ingenix system low-balled their calculations for what are “usual and customary” rates for the medical services that it uses to figure their share of the reimbursement.
“We believe that Ingenix is essentially the black box for consumers,” Cuomo said.
He said he hoped the new system, which will allow consumers to gauge fair market rates before they see their doctors, would be up in about six months.
American Medical Association President Dr. Nancy Nielsen said, “Now the data will be reliable, people will know what they’re getting, and it will be clear and transparent.”
UnitedHealth did not acknowledge wrongdoing, but company General Counsel Mitchell Zamoff said, “We regret that conflicts of interest were inherent” in the system.
With Post Wire Services