Irate Lawmakers Vow To Press Health Insurers On Reimbursement

March 31, 2009

WASHINGTON -(Dow Jones)- U.S. insurers who reached a multimillion-dollar settlement with New York Attorney General Andrew Cuomo regarding out-of-network reimbursement rates still have to contend with irate U.S. lawmakers who vowed to continue pressing the matter.

Senate Commerce Committee Chairman John D. Rockefeller IV, D-W.Va., criticized the chief executives of UnitedHealth Group (UHG) and its Ingenix Inc. subsidiary at a hearing Tuesday, saying they offered glib testimony that glossed over the firms' role in the rate-setting case.

"I don't know, frankly, how you sleep at night," Rockefeller said.

Ingenix sold data showing doctors' charges for services, which UnitedHealth and other insurers used to set reimbursement rates. Critics say the data was manipulated to produce low-ball results and cheat patients, charges that the Minnesota-based Ingenix and its corporate parent reject.

"We stand behind the database," said UnitedHealth Chief Executive Stephen Hemsley. "We believe that database is valid."

Rockefeller promised to continue pressing the matter by asking the 25 largest U.S. companies about their reliance on Ingenix data to set reimbursement rates for employee health plans. He said he also will query a federal inspector general about the number of federal employees who might have paid too much for out-of-network health care because of Ingenix's practices.

Other Senate Commerce Committee members expressed disappointed with the health industry CEOs.

"I think we need to be vigilant and stay on you like white on rice," said Sen. Claire McCaskill, D-Mo.

Ingenix denies it sought to defraud patients, noting that the settlement earlier this year with Cuomo is limited to allegations of potential conflict of interest in having a UnitedHealth unit provide data that its parent used to set reimbursements.

"We did not sign an agreement that had fraud in it," and the company rejects any suggestion to that effect, said Ingenix CEO Andy Slavitt.

Slavitt said Ingenix worked hard to ensure the information it received was accurate and complete, and didn't hesitate to exclude data that seemed suspicious. About 5% of prices were tossed out because they seemed too high or low, with low prices rejected more often than high ones, according to Slavitt, who agreed to turn over documents to the Senate panel to back up that claim.

Rockefeller took issue with that, saying Ingenix's database generated reimbursement rates that were nowhere near reality. He cited the case of a patient who received a $65 reimbursement of a $140 periodontist bill, even though the patient's own research showed rates ranged from $110 to $163.

Under a settlement with the New York attorney general, UnitedHealth Group agreed to pay $50 million to develop a new non-profit that will provide billing data that can be used to set out-of-network reimbursement rates.

A handful of other insurers, including Aetna Inc. (AET) and WellPoint Inc. ( WLP), also reached settlements with Cuomo in which they agreed to stop doing business with Ingenix and help fund an independent database provider.

A separate agreement between UnitedHealth and the American Medical Association settled a long-running dispute over the database and requires UnitedHealth to pay $350 million to reimburse patients and medical providers. UnitedHealth spokesman John Parker told Dow Jones that the agreement with the AMA includes federal employees whose health benefits are provided by UnitedHealth.

This article was written by Judith Burns of Dow Jones Newswires, and published on on March 31, 2009.