United database settlement checks almost in the mail

Physicians and patients will split money from a case the American Medical Association filed over the company's out-of-network payments.

By Emily Berry — Posted Feb. 16, 2012

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Twelve years after the original AMA v. UnitedHealth Group litigation was filed, and three years after the class-action settlement was announced, physicians and patients can expect to see checks in the mail soon, representing their part of the $350 million settlement.

U.S. District Court Judge Lawrence McKenna signed an order Feb. 2 allowing for the settlement disbursement. The money is meant to compensate millions of doctors and patients for payments lost as part of a system under which United and other insurers underestimated the "usual, customary and reasonable" charges for certain services.

Some insurers base what they pay out-of-network physicians on UCR. Physicians had argued for years that the UCR payments bore little relation to typical charges, and that the methodology behind them was hidden in what they called a "black box."

The Litigation Center of the American Medical Association and the State Medical Societies, the Medical Society of the State of New York and the Missouri State Medical Assn. filed the lawsuit against United in 2000 in the U.S. District Court for the Southern District of New York.

The plaintiffs said insurers contributed to and used artificially low UCR numbers from databases operated by the United subsidiary Ingenix. That meant physicians had to collect more money from patients directly, and patients were forced in many cases to pay more out of pocket than they expected.

Neither United nor any of the health plans that used its Ingenix databases admitted to any wrongdoing, but they did reach a settlement in the federal lawsuit in 2009, agreeing to pay physicians and patients $350 million.

United and other insurers also reached an agreement with the New York State Attorney General's Office, which had investigated the use of UCR to set payment rates and concluded that the system cheated patients and their physicians. The insurers agreed to change the way they set out-of-network payment rates and pay to establish a new database.

"While the monetary settlement is important, far more important is the fact that under the settlement agreement, United and other health insurers will no longer be able to use the flawed Ingenix database to determine out-of-network payment rates," Rick Abrams, executive vice president of the Medical Society of State of New York, said in a statement.

Now that the litigation has been wrapped up, the $350 million -- plus interest, and minus attorneys' fees and the cost of sending the settlement notices and checks -- is on its way to doctors and patients. Checks were expected to be in the mail beginning in February.

Attorneys will receive $87.5 million in fees and $1.5 million reimbursement for costs. The named individual plaintiff physicians and patients each will get $25,000. Berdon Claims Administration, the agency that is processing claims and mailing checks, will get about $13.8 million. An additional $8.1 million went toward the cost of the initial settlement notices. Physicians will receive about $200 million in all. Patients will get about $50 million.

Those are estimates by the AMA and the plaintiff's co-counsel firm, Pomerantz, Haudek, Grossman & Gross.

"The truly lasting legacy of this landmark settlement will continue long after the last physician has received a share of the $200 million in awards. UnitedHealth and other insurers will no longer be able to pull the wool over doctors' and patients' eyes when determining payment rates for out-of-network care," AMA President Peter W. Carmel, MD, a pediatric neurosurgeon in Newark, N.J., said in a statement.

Physicians and other clinicians who were eligible for part of the settlement money had to have cared for a member of a defendant insurer between March 15, 1994, and Nov. 18, 2009, resulting in a claim for payment processed or reimbursed by an insurer using the Ingenix databases.

The exact amount paid to each physician and patient included in the settlement will depend on several variables, including how detailed a record the physician or patient has of any claims that went unpaid or underpaid.

Those eligible for payment should have received a settlement notice in the mail. They were required to fill in a claim form that detailed the visits and services that allegedly were underpaid. The deadline to mail that form was Oct. 5, 2010.

The AMA's online practice management center has more information about the settlement (link).

The new medical charge database, known as FAIR Health, is up and running, and offers not only a new database for insurers and physicians, but also a new online tool for consumers to see typical charges for medical services in their area.

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