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Advocate: Probe insurers’ payments

By Carol Gentry
7/30/2009 © Health News Florida
Insurance Consumer Advocate Sean Shaw is calling on state regulators to find out which health plans operating in Florida have been using a pay scale that tricks patients into paying more than their share of the bill when they get treatment outside their plan's network. Shaw cites a Senate study saying millions of Americans were cheated.

Shaw made the request in a July 28 letter to Insurance Commissioner Kevin McCarty, whose actuaries and attorneys in the Office of Insurance Regulation have the authority to demand that companies reveal the information – a power the consumer advocate lacks.

What he wants to know is which companies got their data on “usual and customary charges” from Ingenix Inc., which until recently was a subsidiary of UnitedHealth Group. Companies usually don't reveal which vendors they use, and it's not a question that regulators typically ask. 

“While I am confident that you are investigating this problem,” Shaw’s letter to McCarty says, “I want to be on record as encouraging you to investigate the nature and extent of the use of the Ingenix databases by health insurance companies in Florida. 

“If an investigation reveals that Ingenix has been used by insurers in Florida," the letter says, "I encourage you to not only recommend solutions for halting this practice but also to work toward securing restitution for Florida consumers who were underpaid by their health insurers.”

McCarty’s press office did not respond to a question about the letter. But in earlier questions about the payment problem, spokesman Tom Zutell said OIR could not discuss anything regarding investigations – including whether one was taking place.

The Senate report, Underpayments to Consumers by the Health Insurance Industry, leaves no doubt that many Floridians were cheated by practices that date back to 1994; the questions are which ones and by how much?

More than 100 million Americans have the type of health insurance coverage that allows them to receive care outside the insurer’s network of health providers. These include preferred-provider organizations (PPOs) and point-of-service (POS) plans for both public and private-sector workers, members of the military and their dependents, and those in many self-funded employer plans handled by major insurers. 

Senate hearings this spring and information turned up by investigators in New York indicates that until January of this year, Ingenix supplied the data to most major national insurers, including UnitedHealthcare, Humana, Aetna, WellPoint and Cigna. The Federal Employees Health Benefits Program relied on Ingenix for many years.

A footnote in the Senate report indicates that Blue Cross and Blue Shield of Florida also used the Ingenix database, but Blues officials say they used it only for some dental claims. 

Ingenix supplied these plans with the database they used to calculate “usual and customary charges” by health-care providers in a given region. Plans are supposed to pay a certain percentage of that – say, 70 or 80 percent – leaving the patient to pay the balance.

According to the Senate report, Ingenix fudged the numbers to make them appear lower than they really were. To make matters worse, according to the report, Ingenix got the raw numbers for its calculations from insurers, some of whom were also low-balling. 

As Shaw put it in his letter, "serious problems with the Ingenix database appear to have consistently led to patients paying more and insurers paying less."

An investigation by New York Attorney General Andrew Cuomo, which prompted the Senate hearings, found that patients were overcharged anywhere from 2 to 28 percent in that state. Under pressure from Cuomo, UnitedHealth agreed to pay $50 million to set up Ingenix as an independent non-profit based in New York.

Separately, the company agreed to pay $350 million to settle class-action lawsuits from health plan members and out-of-network providers who said they were harmed by the underpayments. The agreement contained no admission of wrongdoing. 

--Carol Gentry can be reached at 727-410-3266 or by e-mail.