February 17, 2009
New York Attorney General Andrew M. Cuomo's drive to clean up healthcare reimbursement has added CIGNA to its arsenal.
Cuomo said CIGNA, one of the nations ten largest health insurers, will end its relationship with the defective Ingenix database, as well as pay $10 million to a qualified nonprofit organization that will establish a new, independent database to help determine fair out-of-network reimbursement rates for consumers.
The agreement today with CIGNA brings the total dollar amount secured by Cuomo for the new database to over $80 million.
Cuomo also announced that his office has served a five-day notice of intent to sue Excellus Health Plan for defrauding consumers and patients across Upstate New York by manipulating reimbursement rates for out-of-network services. Rochester-based Excellus is the largest not-for-profit insurer in New York State, and is the largest insurer in the Rochester and Syracuse areas.
Todays agreement with CIGNA is the latest domino to fall in our industry-wide sweep of the healthcare reimbursement system and brings us another step closer to complete reform, said Cuomo. Unfortunately, on the same day, we have another company that has continued to stand squarely in the way of our efforts.
"The bottom line is that Excellus failed to satisfy promises made to its members to deliver fair rates and give patients what they paid for," he said.
Patient expense
Earlier this month, Cuomo announced reforms to end the manipulation of reimbursement rates at the expense of patients across the country.
After a year-long investigation revealed that the health insurance industry relied on a defective database to set rates, Cuomo reached groundbreaking agreements with UnitedHealth Group Inc., the owner of the Ingenix database and the second-largest insurer in the country, along with Aetna (NYSE: AET), the nations third-largest health insurer.
After those initial agreements, Cuomo brought his reform efforts to Upstate New York, securing agreements with the Schenectady-based MVP Health Care/Preferred Care as well as Independent Health and HealthNow, both Buffalo-based insurers.
Ingenix
Cuomos investigation concerned allegations that as a subsidiary of UnitedHealth, Ingenix had a vested interest in helping set rates low, so companies could underpay patients for out-of-network services.
The investigation revealed that the database intentionally skewed usual and customary rates downward through faulty data collection, poor pooling procedures, and the lack of audits, meaning consumers were forced to pay more than they should have.
The investigation found the rate of underpayment by insurers ranged from ten to twenty-eight percent for various medical services across the state. The Attorney General found that having a health insurer determine the usual and customary rate — a large portion of which the insurer then reimburses — creates an incentive for the insurer to manipulate the rate downward.
The establishment of a new database, independently owned and operated by a nonprofit organization, is designed to remove this conflict of interest.
Under the agreement secured with UnitedHealth, the database of billing information operated by Ingenix will close. UnitedHealth also agreed to pay $50 million to a qualified nonprofit organization that will establish a new, independent database to help determine fair out-of-network reimbursement rates for consumers throughout the United States. Cuomos agreement with Aetna, which will also end their relationship with Ingenix, secured another $20 million for the database.
