NY AG Investigating Health Insurance Fraud
New York Attorney General announced plans to complete an industry-wide investigation of health insurance companies. The investigation will focus on a presumed activities by the insurers which defraud consumers through alteration of reimbursement rates. The investigation is focusing on Ingenix, Incorporated. News of the investigation was posted on the State Attorney General’s website.
Sixteen subpoenas have been delivered to the largest health insurance companies across the country, including CIGNA, Empire BlueCross BlueShield, and Aetna. Cuomo announced plans to file suit against UnitedHealth Group (the parent company of Ingenix), as well as Ingenix itself and three other UnitedHealth subsidiaries.
Information gleaned from the investigation thus far indicates that a manipulated, defective database has been utilized by Ingenix. This same database is purportedly used by most other major health insurers. That tool is used to set rates for healthcare expenses incurred out-of-network. Also noted were reimbursement rates to insured persons well below appropriate rates by two of the UnitedHealth subsidiaries.
This deceitful practice was achieved by altering the rates considered “reasonable and customary”, which guide reimbursement to patients when they seek care from practitioners out of their care network. The result was that patients paid a higher proportion of their healthcare costs than they should have under the terms of the agreement with the insurer.
The database operated by Ingenix is the source of rates that are deemed “reasonable and customary”. The investigation revealed that the rates populating the database were lower than the true costs of average medical expenses. Costs are generally determined by considering the type of service provided, the geographic location, and the clinician providing services.
One component of the deceit completed by UnitedHealth was the claim that reimbursement rates were determined by independent research; the company hid their relationship with Ingenix. Cuomo claims that the relationship between the two creates a definitive conflict of interest.
Special interest groups across the country, including the American Medical Association, Cancer Care, and the Consumers Union have lauded the Attorney General for completing the investigation and highlighting the conflict of interest overwhelming the current system.
February 27, 2008 Related topics: Ethics & Scandals