Insurance company squeezes doctors and patients
There is a NY Times article discussing the litigation against certain insurance companies for cheating patients and doctors from reasonable reimbursement based on an investigation of the industry’s arcane procedures for calculating “reasonable and customary” rates.
The investigation, by the New York State attorney general, Andrew Cuomo, indicates that procedures used by insurance companies to determine what they will pay when patients visit a doctor is rigged to shortchange the beneficiaries.
When patients get treated by certain doctors, insurers agree to pay 80 percent of the "reasonable and customary rate" in the same geographic area. The patient pays the difference. The rate always falls short of what their own doctor is charging. The numbers are compiled by an obscure company known as Ingenix, which is owned by UnitedHealth Group, one of the nation’s largest health insurers. This system is abused for profit.
UnitedHealth and subsidiary Ingenix both have a strong financial interest in cheating insured by keeping reimbursement rates low and making patients pay the difference. Ingenix is unwilling to stand behind its numbers. In licensing its database to insurers, it stresses that the data is “for informational purposes only” and does not imply anything about “reasonable and customary” charges. Yet that is precisely what the health insurers use the data for, as Ingenix knows.
The American Medical Association, which has a long-standing suit filed against Ingenix and various UnitedHealth companies, claim that the data is manipulated. They claim that health insurers and Ingenix disproportionately eliminate high charges, thus skewing the numbers for customary charges downward. Ingenix uses outdated information, which would guarantee that reimbursement rates will always lag behind medical inflation.
It is clear that the system for calculating “reasonable and customary” charges ought to be reformed by making it truly independent and objective. No consumer can reasonably trust numbers generated by a company whose loyalties and financial interests lie with the health insurers.
