AMA sues WellPoint to recoup pay for doctors

The country's largest private-pay insurer and other plans are hearing calls from doctors and legislators to be accountable for using the controversial Ingenix database.

By Emily Berry — Posted April 6, 2009

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Like Aetna, Cigna and UnitedHealth Group, WellPoint is learning that just promising to fund a new, independent database isn't enough to wash off the stink of resentment about the old one.

The AMA and four other medical societies on March 25 filed a class-action lawsuit in U.S. District Court in Los Angeles against WellPoint, the nation's largest private-pay insurer, to seek back payment for out-of-network services provided while the company used the Ingenix database. The plaintiffs say WellPoint conspired with Ingenix on a price-fixing scheme to set artificially low payment rates for doctors. WellPoint denies the lawsuit's claims.

"The problem was all the insurers, big and little, used this flawed database," said AMA President Nancy H. Nielsen, MD, PhD. "They settled with the attorney general, so the database will be cured going forward. What they haven't done is make reparation for the underpayment. That's the nature of the lawsuit -- it's the other half of turning the page and going forward in a new, collaborative way."

WellPoint is among 10 plans that settled with New York Attorney General Andrew Cuomo over the use of Ingenix, owned by UnitedHealth Group. The plans have committed $92.8 million toward a new database to replace Ingenix. Cuomo, the AMA and others in organized medicine said the database contained flawed information that plans used to reduce what they should have paid doctors who provided services out of network. The plans admitted no wrongdoing.

Organized medicine applauded the plans for starting the new database. But it has gone after plans who used the old one. The lawsuit against WellPoint is the third filed by the AMA and other medical societies, following separate federal cases against Aetna and Cigna filed in New Jersey.

The Litigation Center of the AMA and State Medical Societies filed the WellPoint lawsuit, along with the California Medical Assn., Connecticut State Medical Society, Medical Assn. of Georgia and North Carolina Medical Society. Like Aetna and Cigna, WellPoint says it intends to fight the organized medicine lawsuit.

WellPoint signed an agreement Feb. 18 with Cuomo's office agreeing to stop using Ingenix data to set out-of-network reimbursement rates and to contribute $10 million to establish the new database. A statement from Ken Goulet, executive vice president and CEO for commercial business, said WellPoint "acknowledges the conflicts of interest in the Ingenix database which the attorney general's investigation brought to light, and we support his efforts to increase the transparency of health care costs."

UnitedHealth Group brought a similar message to Capitol Hill on March 31, when Stephen Hemsley, CEO and president of United, and Ingenix CEO Andy Slavitt spoke before the Senate Committee on Commerce, Science & Transportation. United was the first to settle, in January. It also paid $350 million to settle a 2000 back-payment lawsuit by the AMA and state societies in New York and Missouri regarding Ingenix.

Hemsley defended the firm's use of Ingenix, and noted that the agreement with Cuomo "did not relate to the manipulation of data or other similar misconduct." But he said United was happy to turn over Ingenix data for the new database, which he hoped would increase "information transparency and public confidence in the quality of and access to the data that would be used to set future out-of-network reimbursement rates."

Hemsley added that "at UnitedHealth Group, we are eager to be part of the discussion to modernize our national health care system."

Hemsley's positive demeanor and his firm's agreement to settle a back-pay case did not automatically endear him to all members of the committee. In fact, before Hemsley got there, committee Chair Sen. Jay Rockefeller (D, W.Va.) already was lambasting insurers for their past actions.

"The health insurance industry has been promising to pay a certain share of consumers' medical bills, but then they have been rigging health charge data to avoid paying their fair share," Rockefeller said at a March 25 hearing on Ingenix, which featured testimony from Dr. Nielsen and others in medicine. "The result is that billions of dollars in health care costs have been unfairly shifted to millions of American consumers."

In opening remarks before Hemsley spoke March 31, Rockefeller said: "I am pleased that as a result of Attorney General Cuomo's investigation, Ingenix and UnitedHealth have agreed to close down their database. But I also think accountability is important. I think people deserve to know how these practices harmed them and who was responsible."

Two New York health plans that settled with Cuomo agreed to make retroactive payments to compensate for years of miscalculated out-of-network pay. But those two firms, Excellus Health Plan and Capital District Physicians' Health Plan, will pay patients who had to pay too much for out-of-network care, rather than physicians who delivered the care.

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Case at a glance

Should plans pay for out-of-network care that was underpaid?

The AMA and state societies have sued WellPoint for its use of a database maintained by UnitedHealth Group subsidiary Ingenix. An investigation by the New York attorney general's office found the data were skewed to keep usual, customary and reasonable rates low.

Impact: If resolved in physicians' favor, doctors who were paid for out-of-network care from September 2006 through the present could receive compensation for alleged underpayments. WellPoint released a statement saying that the allegations were without merit and vowed to fight the lawsuit. The company has 20 days from the date it was served with the lawsuit to file a response in court.

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