Andrew Cuomo Takes On Insurers

For example, Cuomo’s investigation found that in New York City, where a physician might bill $200 for a typical office visit, the amount the insurer would reimburse based on reasonable and customary rates was just $77. So a consumer who expects to pay 20 percent, or $40, for this hypothetical visit would actually get stuck with a bill for $138, because the insurer would only pay 80 percent of the $77 reasonable and customary rate—or $62. “I don’t think most people understand this,” says Ron Pollack, executive director of Families USA, a healthcare consumer advocacy group.

The practice isn’t new; insurers have been incorporating reasonable and customary rates into their payment formulas for decades. Before managed care created the distinction between “in network” and “out of network” providers, they relied on a database of provider charges compiled by an insurance industry trade group to help determine what to pay on every claim. These days, the database of 1.3 billion records of provider charges used to set those out-of-network reimbursements is maintained by a company called Ingenix, which is owned by UnitedHealth Group, one of the country’s largest insurers.

Cuomo argues that the Ingenix database used by UnitedHealth and other insurers is “defective” and “manipulated,” according to the press release announcing the investigation earlier this month. He says the company deletes a disproportionate number of high fees from the database, for example, so that customary rates appear lower than they really are. “By distorting the ’reasonable and customary’ rate, the United insurers were able to keep their reimbursements artificially low and force patients to absorb a higher share of the costs.” Cuomo announced that he intends to sue Ingenix, UnitedHealth Group, and three other subsidiaries and has issued subpoenas to other major health insurers that use the Ingenix data, including Aetna, Cigna, and Humana.

Click on the links and then tell me why anyone should take their management seriously.