Health Insurers to Pay Up

January 26, 2009
Special Feature

In response to an ongoing investigation into an allegedly flawed reimbursement calculation system, both UnitedHealth and Aetna have agreed to pay millions of dollars toward the development of a new reimbursement database.

In response to an ongoing investigation into an allegedly flawed reimbursement calculation system, both UnitedHealth and Aetna have agreed to pay millions of dollars toward the development of a new reimbursement database. Under a settlement with New York State Attorney General Anthony Cuomo, UnitedHealth will pay $50 million and Aetna $20 million to help defray the cost of a new system, which is expected to be up and running in 6 months. Cuomo has been looking into the reimbursement system, which calculates “usual and customary” fees for reimbursing providers, for almost a year.

UnitedHealth was a prominent target of the investigation because its unit, Ingenix, operates the database, which Cuomo has described as a “blatant fraud.” Cuomo claimed that the system deliberately distorted reimbursement levels, resulting in payments to consumers and out-of-network providers that were as much as 20% below the actual charges—leaving patients responsible for the difference. The agreements are expected to put some pressure on other health insurers that use the Ingenix database to reach similar settlements.

In a separate action, UnitedHealth also agreed to pay $350 million to settle class action suits brought more than 8 years ago on behalf of the American Medical Association, health plan members, healthcare providers, and state medical societies. Subject to court approval, the agreement will fund settlements with providers and health plan members in connection with procedures performed since 1994.