Health Insurers revealed to be grossly underestimating Reasonable and Customary rates by study

[Guest guest]

This looks as if it might effect a lot of people here who want to see

doctors who know about mold who are not " in network " with their health

plans.

Turns out those insurnace companies have been fraudulently

underestimating what reasonable and customary rates are.

http://www.nytimes.com/2008/02/18/opinion/18mon1.html

Editorial

A Rip-Off by Health Insurers?

Have health insurers been systematically cheating patients and doctors

of fair reimbursement for medical services? That is the disturbing

possibility raised by an investigation of the industry's arcane

procedures for calculating " reasonable and customary " rates.

The investigation, by the New York State attorney general,

Cuomo, and his staff, suggests that these procedures — used by major

insurance companies to determine what they will pay when patients

visit a doctor who is not in the company's network — may be rigged to

shortchange the beneficiaries.

When patients visit an out-of-network doctor, insurers typically agree

to pay 80 percent of the reasonable and customary rate charged by

doctors in the same geographic area. The patient is stuck with the

rest, and as any patient knows, that rate always seems to fall short

of what their own doctor is charging. If the attorney general's

investigators are right, we can understand why.

The numbers are mainly compiled by an obscure company known as

Ingenix, which — as it turns out — is owned by UnitedHealth Group, one

of the nation's largest health insurers. Ingenix collects billing

information from UnitedHealth and other health care payers to compile

a database that is then used by the insurers to determine

out-of-network reimbursement rates.

This system is an invitation for abuse. UnitedHealth owns the company

whose database will affect its costs and profitability, so both have a

strong financial interest in keeping reimbursement rates low. Even

Ingenix seems unwilling to stand behind its numbers. In licensing its

database to insurers, it stresses that the data is " for informational

purposes only " and does not imply anything about " reasonable and

customary " charges. Yet that is precisely what the health insurers use

the data for, as Ingenix knows, according to investigators.

Mr. Cuomo and the American Medical Association, which has a

long-standing suit filed against Ingenix and various UnitedHealth

companies, claim that the data is manipulated. They claim that health

insurers and Ingenix disproportionately eliminate high charges, thus

skewing the numbers for customary charges downward.

Mr. Cuomo also says that Ingenix pools the charges for services

performed by low-paid nurses and physician assistants with those

performed by high-paid doctors. And he says the company fails to

account for the patient's condition and type of facility where the

service was provided — factors that can drive up costs. He also

contends that Ingenix uses outdated information, which would guarantee

that reimbursement rates will always lag behind medical inflation.

The A.M.A.'s more detailed legal complaint also charges that the

database dilutes prices in high-cost locations by combining them with

low-cost areas, and includes prices that reflect in-network discounts.

The attorney general's investigators did their own survey and

concluded that $200 is the fair market rate in New York City and

Nassau County for a 15-minute consultation with a doctor for an

illness of low to moderate severity. Ingenix, the investigators said,

calculated the rate as $77, of which United would pay $62, leaving the

patient to pay $138. UnitedHealth disputes those numbers, so the

attorney general will need to offer a fuller explanation of how they

were derived.

Mr. Cuomo has announced his intention to sue UnitedHealth, Ingenix and

three other subsidiaries, and has subpoenaed data from 16 other health

insurers. Whatever that investigation unearths, it is already clear

that the system for calculating " reasonable and customary " charges

ought to be reformed by making it truly independent and objective. No

consumer can reasonably trust numbers generated by a company whose

loyalties and financial interests lie with the health insurers.