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Improve health insurance Attorney general forces revision of way reimbursement rates are set

Never get in a game of dominoes with New York State Attorney General Andrew M. Cuomo.

Cuomo has mastered that art, when it comes to bringing companies in line with reforms that end what he has determined -- based on the volume of complaints received by his office -- are questionable, if not illegal, practices. He did that, successfully, with student loan practices. His current target is an aspect of health insurance, and his push to end practices that result in questionable reimbursements for care provided by "out-of-network" doctors and others should result in lower costs for consumers.

Using sunshine as a disinfectant and the threat of fraud charges as a hammer, the attorney general's office has targeted health insurance companies that continue to use a database that also leaves consumers with no idea what they will be charged for an out-of-network physician's services -- until they get the bill.

This is not the fault of the physician. The targeted system relies on databases operated by Ingenix, a subsidiary of UnitedHealth Group of Minneapolis, one of the insurers. The company has been the industry's go-to database for figuring prevailing care charges for the past 10 years. It basically boils down to a circular, enclosed system in which conflicts of interest abound.

UnitedHealth's Ingenix has provided the basis for determining rates that are supposed to reflect local markets. The system uses data provided by insurers and compiled by an insurer-established company to set the rates insurers pay.

And consumers have no idea what they will be reimbursed until after they receive the bill. In other words, the average person was forced to write a blank check to his doctor, if like most consumers he chose a plan that let him use his own doctor whether or not that provider was listed in the insurer's "network," and then often was under-reimbursed by the insurer. Cuomo aptly called this "a classic rate-setting scheme."

The solution is the creation of a new provider, a nonprofit entity such as the one Cuomo hopes to establish. He has been reaching agreements with health insurance companies, who have signed on to his program singly or in small groups, in a "domino effect" that builds compliance pressure -- a pressure that only is felt if the prevailing system is indefensible. Independent Health, HealthNow (the parent company of Blue Cross Blue Shield of Western New York), United Health and Cigna have agreed to pay into a fund to establish the independent nonprofit database firm and to use it, and Excellus/Univera, threatened with a lawsuit, is saying it has been cooperating.

The new entity would also set up a Web site that will give consumers a look at the reimbursement rates, allowing them to "shop" doctors in a more competitive environment.

The New York Health Plan Association, representing managed health care plans, has agreed with the idea of an independent database, but with the caveat that greater transparency is needed in what doctors and hospitals charged for services. That's a fair assessment. As the president of the association told a reporter, there are two sides to the coin. However, it's also worth noting that the American Medical Association praised the investigation and settlements. This action should change and publicize reimbursement rates so people will be more able to select the insurance plan that fits their needs.

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