Cuomo to Sue Biggest Health Insurer

N.Y. Attorney General Andrew Cuomo says he will sue UnitedHealth over setting artificially low limits on how much patients are reimbursed for medical-care claims.
N.Y. Attorney General Andrew Cuomo says he will sue UnitedHealth over setting artificially low limits on how much patients are reimbursed for medical-care claims. (By Robert Caplin -- Bloomberg News)
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By Karen Freifeld
Bloomberg News
Thursday, February 14, 2008

New York Attorney General Andrew M. Cuomo will sue UnitedHealth Group and subpoena 16 other insurers to investigate reimbursement practices that allegedly cheated customers out of hundreds of millions of dollars.

Cuomo said he would sue Minnetonka, Minn.-based UnitedHealth, the largest U.S. health insurer, over practices that limit payments to customers by claiming their medical charges were unreasonably high. Cuomo accused UnitedHealth of a conflict of interest in how it set limits on repayments.

"When insurers like United create convoluted and dishonest systems for determining the rate of reimbursement, real people get stuck with excessive bills and are less likely to seek the care they need," Cuomo said in a written statement.

The investigation of reimbursement practices is part of a probe of the industry by Cuomo. Last year he pressured health insurers to tighten standards on how they rate doctors recommended to customers. Cuomo had accused the industry of steering customers to the cheapest doctors.

Among the companies Cuomo said he will subpoena over reimbursement practices are: Aetna, Cigna, Empire Blue Cross & Blue Shield and Humana.

UnitedHealth's Ingenix unit provides data for the industry that set "reasonable and customary" rates, which are used to put a ceiling on reimbursement to patients, Cuomo said. When patients go to out-of-network medical providers, health insurance companies generally cover 80 percent of reasonable and customary charges.

Cuomo said a six-month investigation showed Ingenix, which has the five largest health insurers as clients, has a "defective and manipulated" database that most health insurance companies use to set reimbursement rates for out-of-network expenses. The probe found that two subsidiaries of United "dramatically under-reimbursed" patients for out-of-network expenses using information from Ingenix.

"This is an industry-wide investigation because we believe there was an industry-wide scheme to deceive and defraud consumers," Cuomo said. "There was one company that basically determined what the fair rate to consumers was."

United said it was cooperating with Cuomo's office in the probe.

"UnitedHealth Group recognizes the excellent health care delivered to patients by the physicians of New York and is committed to fair and appropriate payment for physicians, the state's other health care providers and consumers," the company said in the statement.

Reimbursement data "is rigorously developed, geographically specific, comprehensive and organized using a transparent methodology that is very common in the health industry," the company said.


© 2008 The Washington Post Company

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