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

The independent project claims it's fairer than the previous system, run by a UnitedHealth Group-owned company. But the effect on physician payments remains unknown.

By Emily Berry — Posted Nov. 9, 2009

Print  |   Email  |   Respond  |   Reprints  |   Like Facebook  |   Share Twitter  |   Tweet Linkedin

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.

Back to top


FAIR's way to set out-of-network pay

The FAIR Health database is a nonprofit entity funded by insurers who settled with New York Attorney General Andrew Cuomo over their use of Ingenix to set out-of-network payment rates for physicians. The new database could be ready to launch in fall 2010.

To illustrate how FAIR would be used, this scenario involves a patient seeing an out-of-network physician, with the health insurer both a contributor to and user of the database:

  • The patient's plan allows her to see out-of-network physicians, who will be paid at a percentage of usual, customary and reasonable rates. She and the physician each could look on the FAIR public Web site to determine the UCR rate for the specific service and ZIP code.
  • Either the patient pays the physician and sends a claim to her insurance company for reimbursement, or the physician bills the insurer.
  • The health insurance company consults the FAIR Health database, then pays the contracted percentage of the UCR.
  • The insurer submits information about the claim to the FAIR Health database research network, which analyzes the data along with other claims information submitted from this and other contributing health plans. Researchers compile the information and update the database twice annually.

Back to top



Read story

Confronting bias against obese patients

Medical educators are starting to raise awareness about how weight-related stigma can impair patient-physician communication and the treatment of obesity. Read story

Read story


American Medical News is ceasing publication after 55 years of serving physicians by keeping them informed of their rapidly changing profession. Read story

Read story

Policing medical practice employees after work

Doctors can try to regulate staff actions outside the office, but they must watch what they try to stamp out and how they do it. Read story

Read story

Diabetes prevention: Set on a course for lifestyle change

The YMCA's evidence-based program is helping prediabetic patients eat right, get active and lose weight. Read story

Read story

Medicaid's muddled preventive care picture

The health system reform law promises no-cost coverage of a lengthy list of screenings and other prevention services, but some beneficiaries still might miss out. Read story

Read story

How to get tax breaks for your medical practice

Federal, state and local governments offer doctors incentives because practices are recognized as economic engines. But physicians must know how and where to find them. Read story

Read story

Advance pay ACOs: A down payment on Medicare's future

Accountable care organizations that pay doctors up-front bring practice improvements, but it's unclear yet if program actuaries will see a return on investment. Read story

Read story

Physician liability: Your team, your legal risk

When health care team members drop the ball, it's often doctors who end up in court. How can physicians improve such care and avoid risks? Read story

  • Stay informed
  • Twitter
  • Facebook
  • RSS
  • LinkedIn