FOUL PLAY

Insurance company mistreatment

If Aetna enrollees wondered why their bills from out-of-network doctors were so high, here’s the answer: Aetna was underpaying providers and leaving patients to fork over the rest, according to New Jersey regulators, who in 2007 issued a fine against them of almost $9.5 million.

Aetna’s not alone. Now, New York Attorney General Andrew Cuomo is conducting an industry-wide investigation into a scheme by health insurers to defraud consumers by manipulating reimbursement rates. At the center of the investigation is Ingenix, Inc., the nation's largest provider of health-care billing information, which serves as a conduit for data to the largest insurers in the country, including Aetna, UnitedHealth and CIGNA.

Ingenix was found to operate a defective and manipulated database that most major health insurance companies use to set reimbursement rates for out-of-network medical expenses. It was also found that two subsidiaries of United dramatically under-reimbursed their members for out-of-network medical expenses by using data provided by Ingenix. By distorting the "reasonable and customary" rate, the United insurers were able to keep their reimbursements artificially low, forcing patients to absorb a higher share of the costs.

Mr. Cuomo called it “an industrywide scheme perpetuated by some of the nation’s largest health insurers to deceive and defraud consumers.”

Update: On January 13, 2009 UnitedHealth Group agreed to pay $50 million to settle the NY Attorney General's investigation. The money will be used to create a nonprofit organization that will determine reimbursement rates for patients.

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