Senator John D. Rockefeller IV, the West Virginia Democrat who is chairman of the committee on commerce, is holding hearings on whether health insurers have systematically short-changed patients when they use doctors outside of their health plan’s network. As a result of understating the fees charged by out-of-network doctors, the companies are accused of underpaying consumers by hundreds of millions of dollars over the last decade.
“This is about outright fraud,” Senator Rockefeller said in an interview.
The practice came to light in January after an investigation by the New York attorney general, Andrew M. Cuomo, of the databases insurers use to determine the out-of-network payments. The databases are owned by the UnitedHealth Group, one of the nation’s biggest insurers.
Mr. Cuomo reached a settlement in which UnitedHealth agreed to stop operating the databases, run by the company’s Ingenix unit, and replace them with a new, independent source of rate information.
“Insurance companies are part of everybody’s frustration in terms of health care,” said Senator Rockefeller, who will hold the second of two hearings on Tuesday. At the first, last week, testimony was given by a member of Mr. Cuomo’s task force, the American Medical Association and a consumer group.
On Tuesday, Mr. Rockefeller plans to question the chief executives of UnitedHealth and Ingenix on what he describes as “data laundering” — the selective use of doctors’ bills to determine out-of-network payments.
“We did not commit fraud,” UnitedHealth said in a statement. The company, which did not acknowledge any wrongdoing when it reached its settlement with Mr. Cuomo, said it had addressed concerns about the database’s independence by agreeing to spin it off. “The key features of the settlement are strengthening public trust in the data, increasing transparency for health care consumers and obtaining nationwide closure on this dispute,” the company said.
But Senator Rockefeller says his goal is to ensure that the practice of underpaying for out-of-network doctor visits is ended in every state, not just New York.
Arguing that many states do not have New York’s resources or interest in these issues, Senator Rockefeller said he was considering the need for some sort of federal legislation to make sure consumers were treated fairly nationwide.
Insurers typically reimburse patients for only 70 to 80 percent of the “reasonable and customary” cost of medical services when they go to out-of-network doctors. So if the insurer understates the prevailing market rate for those services, the patient is shortchanged. In New York, Mr. Cuomo contended that the industry’s data had underestimated those rates by as much as 28 percent.
“This was a big national problem, and it wasn’t attacked by anyone,” said Charles Bell, the programs director for Consumers Union, who testified during the hearing last week. Because the practice had gone on for years before it was eventually addressed, he said, the uniformity and adequacy of state oversight were open to question.
The concern raised in last week’s hearing was whether all insurers would use the new independent database or would devise some other way to calculate the local “reasonable and customary” rates of medical care — a move skeptics say could let them continue to underpay patients and doctors.
UnitedHealth and other insurers take the position that the creation of a new database will address those concerns. “Once the new database is operational, the Ingenix databases will be closed and not available to any health insurer,” UnitedHealth said its statement.
Although UnitedHealth and other insurers are eager to declare the matter resolved, the industry still faces numerous private lawsuits contending that doctors and patients were underpaid as a result of the Ingenix database.
Earlier this year, UnitedHealth announced that it had reached a $350 million deal to settle class-action lawsuits over the issue. But that settlement is still subject to approval of the federal judge in New York who is overseeing the cases. It has been challenged by some of the lawyers in the case as being inadequate. “It’s still being very vigorously contested,” said Barbara G. Quackenbos, a lawyer whose firm is one of several handling the plaintiff cases.
In recent months, the American Medical Association, which is one of the plaintiffs involved in the UnitedHealth case, has brought similar lawsuits against Aetna, Cigna and WellPoint for their use of the Ingenix database.
Those companies deny the accusations and say they will defend themselves. The companies have also said they planned to use the new independent database.
Article by Reed Abelson and printed on March 31, 2009 in the New York Times.