Senator Puts UnitedHealth Execs on Payments Hot Seat

March 31, 2009

Among health insurance CEOs, Stephen Hemsley of UnitedHealth is known for shying from the limelight and rarely submits to press interviews, let alone cross-examination at a congressional committee hearing.

So it was something of a star turn when he testified today before the Senate Commerce Committee over whether UnitedHealth and other insurers have systematically underpaid consumers for out-of-network care. Sen. John D. Rockefeller, the committee’s chairman, is delving into the industry’s controversial payment-setting practices more than two months after New York Attorney General Andrew Cuomo began reaching settlements with the industry’s biggest players over the issue.

But the hearing marks the first time top industry executives have been called to publicly defend the practices. The senator from West Virginia has said he wants to determine whether federal legislation is needed to ensure changes to out-of-network payment practices happen in every state, not just New York.

Joining Hemsley at the witness table was Andy Slavitt, head of UnitedHealth’s Ingenix unit, which runs the database that aggregates and supplies the data on “usual and customary” medical charges that insurers use to set out-of-network payments. Like Cuomo (see more on his more recent efforts here), Rockefeller charges that the numbers in the database are skewed, sticking “consumers with billions of dollars that the insurance industry should have been paying.”

However uncomfortable the questioning got — at one point the West Virginia Democrat asked the two executives how they slept at night — Hemsley denied the price data was skewed. He also argued that the database helped set standards for the price of medical care. “The committee knows better than most that physician reimbursement based on nothing but the doctor’s bill is simply not economically tenable for consumers nor our health care system,” he said. UnitedHealth’s agreement with the New York AG’s office to transfer the databases to an independent, non-profit operator isn’t to acknowledge wrongdoing, but to make such medical price information more transparent, he added.

That didn’t appear to satisfy the committee chairman. Calling the UnitedHealth executives’ testimony “profoundly troubling,” Rockefeller said he plans to ask government officials to look into how many federal employees may have been shortchanged for out-of-network care over the years. He’s also sending requests to nearly 20 insurers to explain how they used the Ingenix database.

This article was written by Vanessa Fuhrmans and published on April 1, 2009 in the Wall Street Journal.