New database for out-of-network pay set to replace disputed Ingenix system

Health insurers' method for determining physicians' out-of-network payment rates is expected to change as early as fall 2010 with the introduction of a new, independent database to replace one run by the UnitedHealth Group subsidiary Ingenix.

After an investigation by New York Attorney General Andrew Cuomo concluded that rates had been set unfairly under Ingenix, many major insurers agreed to stop using it as soon as a new database was up and running. The insurers committed nearly $100 million for the nonprofit database, drawn from settlements they made with Cuomo's office regarding Ingenix.

Cuomo announced at an Oct. 27 news conference that work on the database, called FAIR (Fair and Independent Research), was beginning, a development the American Medical Association welcomed.

"Attorney General Cuomo's vision for replacing the Ingenix database promises to help patients and physicians hold insurers accountable to their obligations by bringing transparency, accuracy and integrity to the system for determining out-of-network reimbursement rates," William A. Dolan, MD, a member of the AMA Board of Trustees and an orthopedic surgeon from Rochester, N.Y., said at the news conference. The AMA appeared at past news conferences at which Cuomo announced actions against insurers for their use of the Ingenix database.

So far, it's unclear whether physicians can expect an increase in pay for treating out-of-network patients.

"I'm a scholar, and the data will tell me, but right now, I don't know," said Deborah Freund, PhD, distinguished professor of public administration and economics at Syracuse University in New York. She has been selected as director of the research network that will produce the new database.

Robert Zirkelbach, spokesman for America's Health Insurance Plans, which represents the insurers who funded the new database, said his organization has an idea in which direction payments might go. "We hope this database will help shed light on the exorbitant fees that some out-of-network providers are charging patients for health care services."

New data approach

Whatever the out-of-network rates, backers of the new database said, they will be based on the best available data, analyzed and organized by experts in the field. The Ingenix database, according to Cuomo, was filled with flawed data and was a "black box," offering no chance for patients or physicians to see how rates were determined.

A simplified version of information from the FAIR database will be posted online so doctors and patients can see the so-called usual, customary and reasonable rates. "Every consumer will know before they go to the doctor, and every doctor will know, what the reimbursement will be," Cuomo said. "There will be no surprises."

Cuomo announced Jan. 13 that United had agreed to shut down the Ingenix database and pay $50 million toward developing an independent system. The company never officially admitted wrongdoing, although earlier this year one attorney for United expressed regret that "conflicts of interest were inherent" in the system.

Separately, two days after its settlement with Cuomo's office, United settled a class-action lawsuit filed in 2000 by the Litigation Center of the American Medical Association and State Medical Societies, the Medical Society of the State of New York and the Missouri State Medical Assn.

United agreed to pay $350 million to settle the lawsuit, but that agreement has not yet been approved by a judge. AMA lawsuits filed in February against Cigna and Aetna over those plans' use of the Ingenix databases are still pending.

None of the plans that reached agreements with Cuomo's office, including WellPoint, Aetna and Cigna, admitted wrongdoing, but they are barred for five years from creating their own competing database or system for setting out-of-network fees.

Separate administration

The FAIR database will be marketed and administered by the nonprofit group FAIR Health. A network of researchers based at Syracuse and other universities in upstate New York will crunch the numbers and create the product.

FAIR Health also will create and publish a public Web site that will have less detailed information than database insurers see, but will allow patients and physicians to search for usual, customary and reasonable rates for a given service in a certain ZIP code, Dr. Freund said.

She said researchers plan to start work in January and release the first version of the database six months later, then get the Web site up and running about three months after that.

FAIR Health will be governed by a board of directors that will include a medical representative. AMA Immediate Past President Nancy H. Nielsen, MD, PhD, an internist from Buffalo, N.Y., will be the first to serve in that position.

Insurers who have not reached agreements with Cuomo's office can use the new database but are not required to do so. That group includes Humana and all BlueCross BlueShield-affiliated plans outside of New York and not owned by WellPoint.

It's difficult to predict how payments and negotiations between insurers and physicians will change once health plans, physicians and patients all have better payment rate information from FAIR Health, experts said.

"I don't know if this will help doctors," said Harry Blair, vice chair at Creative Group, a health care consulting firm based in New York that works with insurers, hospitals and physicians. "Maybe pay will be a little more, so insurers will pay a little more."

But Blair said the public information also could force some doctors to lower fees if patients choose physicians who charge the listed UCR rate or less.