New York State Attorney General Andrew Cuomo announced today that he will investigate health insurance companies in what could amount to a very fraudulent scheme:
Attorney General Andrew M. Cuomo today announced that he is conducting an industry-wide investigation into a scheme by health insurers to defraud consumers by manipulating reimbursement rates. At the center of the scheme is Ingenix, Inc., the nation's largest provider of healthcare billing information, which serves as a conduit for rigged data to the largest insurers in the country.
Cuomo also announced that he has issued 16 subpoenas to the nation's largest health insurance companies including Aetna (NYSE: AET), CIGNA (NYSE: CI), and Empire BlueCross BlueShield (NYSE: WLP), and that he intends to file suit against Ingenix, Inc, its parent UnitedHealth Group (NYSE: UNH), and three additional subsidiaries.
The six-month investigation found that Ingenix operates a defective and manipulated database that most major health insurance companies use to set reimbursement rates for out-of-network medical expenses. Further, the investigation found that two subsidiaries of United (the "United insurers") dramatically under-reimbursed their members for out-of-network medical expenses by using data provided by Ingenix.
Under the United insurers' health plans, members pay a higher premium for the right to use out-of-network doctors. In exchange, the insurers promise to cover up to 80% of either the doctor's full bill or of the "reasonable and customary" rate depending upon which is cheaper.
The Attorney General's investigation found that by distorting the "reasonable and customary" rate, the United insurers were able to keep their reimbursements artificially low and force patients to absorb a higher share of the costs.
This is huge and very important. It's also very coincidental for a situation with my family. My mother was admitted to the hospital a few months ago for an issue with her stomach. She ended up getting a bill from Blue Cross & Blue Shield that didn't add up. My father, being a former insurance man himself, smelled a rat. He has submitted the information to, among other agencies, the AG's office. Sounds like it's in good hands. REAL good hands.
The Times-Union also has the scoop:
"I believe it involves a fraud in the hundreds of millions of dollars and affects thousands and thousands of families," Cuomo said. "That's what this investigation is about today." He said the practice and what he called conflicts of interest have gone on for nearly a decade.
"We will continue to cooperate fully," stated UnitedHealth Group in a statement about Cuomo's investigation.
Cuomo's investigation focused on the "reasonable and customary" rate that UnitedHealth used, but which investigators claim was kept artificially low, resulting in profit for the company and unnecessary cost for consumers.
"When insurers like United create convoluted and dishonest systems for determining the rate of reimbursement, real people get stuck with excessive bills and are less likely to seek the care they need," Cuomo said.
His investigators claim UnitedHealth manipulated data and even lied that its reimbursement rates were based on national research.
This is good news. Health insurance companies are a part of the problem, not the solution. Practices like this must stop. |
