New York State Attorney General Andrew Cuomo has announced the creation of a new not-for-profit company to reform the determination of out-of-network health care charges. The company FAIR Health, Inc. and an upstate research network headquartered at Syracuse University will both develop an independent database for consumer reimbursement and feature a website where consumers can compare prices before they choose their doctors.

The announcement follows an intense investigation by the Attorney General's office of Ingenix, a subsidiary of UnitedHealth. The AG's investigation found that Ingenix's database was "defective and conflict-ridden." The Ingenix database was used by insurers nationwide to set reimbursement rates when patients went out of network for health services. (See our prior coverage by entering these numbers into any DOTmed.com search box: DM 7958, DM 8297, DM 8578). The AG said as a subsidiary of the second-largest insurer in the U.S. "Ingenix had a vested interest in helping set rates low, so companies could underpay patients for out-of-network services."

The AG's office had investigated allegations that the Ingenix database deliberately skewed "usual and customary" rates downward through faulty data collection, poor pooling procedures, and lack of audits. Consumers were then forced to pay more. The rate of underpayment by insurers ranged from ten to 28 percent for different medical services across the state. This year AG Cuomo had secured agreements with 12 health insurers to end their relationship with Ingenix.

According to the AG's website, approximately 70 percent of insured working families have out-of-network plans that allow choice of their own doctors, therefore the system impacts over 110 million people nationwide.

Dr. Deborah A. Freund, Distinguished Professor of Public Administration at Syracuse University, will lead the research project, which will be centered at Syracuse University's Maxwell School, a public affairs school, and the School of Information Studies. In addition, the upstate research network will consist of the State University of New York (SUNY) at Buffalo, Cornell University, University of Rochester, and SUNY Upstate Medical University. About $100 million in settlement money will fund the new reimbursement system, with an expectation of creating jobs and making FAIR Health a center for health care research.

"FAIR Health and the upstate research network headquartered at Syracuse University will bring much-needed transparency, accountability and fairness to a broken consumer reimbursement system we have called Code Blue," Attorney General Cuomo said. "By transforming this system for consumers nationwide, New York proves its reputation as a reform leader for the nation. By spending almost $100 million in settlement proceeds from health insurers, this initiative will also create new jobs and contribute the development of the upstate economy which is vital to New York. Today is truly a triple win for consumers, New York and the nation."

Attorney General Cuomo has also been working with the New York State Department of Insurance to establish a new insurance regulation in hopes of becoming industry standard. The new Insurance regulation requires health and accident insurers as well as health maintenance organizations to use an independent source for establishing usual and customary rates, and to disclose to their members how and by whom the rates were established.

Adapted in part from the Attorney General's press release.
Link: http://www.oag.state.ny.us/media_center/2009/oct/oct27a_09.html

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