United agreement a victory for fair pay for physicians

By now I'm sure you've heard the groundbreaking news that as a result of an industrywide investigation by New York Attorney General Andrew Cuomo, UnitedHealth Group and Aetna will pay a combined $70 million to settle accusations that they used a rigged database to manipulate out-of-network reimbursement rates, overcharge millions of people and increase their own profits at the expense of patients and physicians. I'm hopeful that more insurers will sign onto the settlement in the weeks and months to come.

Through the investigation, which is ongoing, Cuomo alleged that the database had been channeling manipulated data to health insurers, which used this information to reimburse patients at less than the "usual, customary and reasonable" rates for physician services.

The database is operated by Ingenix Inc., a subsidiary of United, and is the nation's largest provider of health care billing information.

Under the agreements, United will close Ingenix's database and the $70 million will go to a qualified nonprofit organization, to be selected by Cuomo's office, that will establish an independent database to help determine fair out-of-network reimbursement rates.

These agreements about the database helped resolve a long-standing lawsuit against United by the American Medical Association and others that challenged the validity of the Ingenix database.

Through the lawsuit, which had been pending since 2000, the Litigation Center of the American Medical Association and State Medical Societies, the Medical Society of the State of New York, the Missouri State Medical Assn., a number of individual physicians and patients, and several New York unions, alleged that Ingenix's database to determine usual, customary and reasonable charges used unreliable or insufficient data. The suit further alleged that the UCR charges for certain procedures are substantially higher than the insurance companies used.

The $350 million settlement of the lawsuit (which at AMNews press time was subject to preliminary approval by a federal district court in New York) marks the largest monetary settlement of a class-action lawsuit against a single health insurer in the United States. And it supports the separate agreements between the New York attorney general's office, United and Aetna.

All this combines to be a monumental victory for patients and physicians. Cuomo's investigation -- which the AMA had urged -- discovered and confirmed what we've been saying for years: Ingenix has been operating a defective database that corrupted the system for paying out-of-network medical bills.

Ingenix's reimbursement method worked like this: Customers of a health insurer would pay a higher premium for the right to use out-of-network physicians, and in exchange, the insurer would promise to cover up to 80% of either the physician's full bill or the UCR rate, whichever was less. Cuomo's investigation found that by distorting the UCR rate, United and other insurers using the Ingenix database kept their reimbursements artificially low and forced patients to take on a higher share of the costs.

In some cases, this ploy has instigated acrimony between physicians and their patients, creating a false perception that any unexpected balance on a patient's bill is the fault of the doctor.

When a low payment rate is reimbursed to a patient, a physician simply trying to collect payment for the cost of delivering care sometimes gets accused by the patient of overcharging -- a scenario that can impair or even destroy a patient-physician relationship.

This scheme has touched every state, many doctors and many millions of patients -- and it has gone on for far too long. In the wake of these agreements with United and Aetna, the AMA calls on all health insurers to act immediately to create an industrywide commitment to the New York attorney general's health insurance payment reform effort. An independent and transparent database will keep private interests from tarnishing the data used to set reimbursement rates for out-of-network care.

As I noted, Cuomo will select the nonprofit academic organization that will own and operate the new database. The AMA fully supports his efforts in choosing such an organization to create a new, reliable database that is fair to patients and physicians.

According to the settlements between the attorney general's office, United and Aetna, the nonprofit organization will be the sole arbiter and decision-maker with respect to all data contribution protocols and all other methodologies used in connection with the database. It will use a Web site to inform consumers in advance how much they may be reimbursed for common out-of-network medical services in their area. And it will make rate information from the database available to health insurers and use that to conduct academic research to help improve the nation's health care system.

In addition, United has agreed to fund a new institute that will focus not on fees but on ways insurers and physicians can constructively engage for the benefit of patients. We hope this will be a turning of the page by this health plan behemoth and the beginning of building bridges between insurers and the clinicians who provide care for their members.

I applaud Cuomo for his leadership in reforming the nation's health care reimbursement system, but this isn't the first time his office's health care industry task force has made positive news for physicians.

You might remember that in 2007, with significant input from the AMA and the MSSNY, Cuomo announced groundbreaking agreements with several large health insurers regarding physician profiling (or "economic credentialing") programs.

Patients and physicians have a right to expect fair and accurate payment for services promised to them by health insurers. The events of the past week have brought us one step closer -- a colossal one at that -- to ensuring transparency, accuracy and integrity in the way health insurers determine out-of-network reimbursement rates, which will make certain that patients' and physicians' expectations are realized.

It was a long time in coming, but our work has resulted in a huge victory for doctors and patients.