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New York Offers Consumers A Closer Look At Health Insurance

New system designed to promote transparency

October 27, 2009

• New York Offers Consumers A Closer Look At Health Insurance • Do Americans Have Too Much Health Insurance? • Rising Cost of Health Insurance at Center of Debate • Health-Related Bankruptcies Up 50 Percent • House Panel Hears From Consumers Who Lost Insurance • Harvard Study: 60% of Bankruptcies Caused by Health Problems • Hospital Stays Increase for Uninsured Americans • Keeping Your Health Insurance When You're Unemployed • Hospitals Score Low in Patient Survey • Lack of Children's Health Insurance Increasing Across the Board • Uninsured Aren't Primary Cause of Crowds in Emergency Rooms • Census Report Shows Increase In Uninsured • Hospital, Health Insurance Costs Skyrocket • Medical Bills Leading Cause of Bankruptcy, Harvard Study Finds • U.S. Health Care Most Expensive & Most Error Prone • Retirees Underestimate Health Care Costs • Per Capita U.S. Health Care Costs Triple Canada's --- • More Health News ...

Confused by your health insurance company's explanation of benefits? A new initiative in New York seeks to give consumers a way to see how the reimbursement policies of their health insurance company compares to others.

At the instigation of New York Attorney General Andrew Cuomo, the state has established a new not-for-profit company, FAIR Health, Inc., and an upstate research network headquartered at Syracuse University. Together, they will develop a new independent database for consumer reimbursement and a new Web site where, for the first time, consumers can compare prices before they choose their doctors.

"FAIR Health and the upstate research network headquartered at Syracuse University will bring much-needed transparency, accountability and fairness to a broken consumer reimbursement system we have called Code Blue," said Cuomo. "By transforming this system for consumers nationwide, New York proves its reputation as a reform leader for the nation. By spending almost $100 million in settlement proceeds from health insurers, this initiative will also create new jobs and contribute to the development of the upstate economy which is vital to New York. Today is truly a triple win for consumers, New York and the nation."

The move has also drawn the support of the White House, which is pushing national health care reform in Congress.

"This is an important step forward for consumers, who too often are unable to penetrate the secrecy and bureaucracy of insurance companies," said Nancy Ann DeParle, Director of the White House Office of Health Reform. "Transparency is one of the central goals of health insurance. For consumers struggling to navigate today's health insurance system, knowledge is power."

The announcement arises from a wide-ranging investigation by Cuomo’s office into how the health insurance industry reimburses consumers for out-of-network health care charges. Cuomo said the investigation uncovered a fraudulent and conflict-of-interest ridden reimbursement system affecting millions of patients and their families and costing Americans hundreds of millions of dollars in unexpected and unjust medical costs.

Ingenix, a subsidiary of UnitedHealth, was used by insurers nationwide to set reimbursement rates when patients went out of network for health services. Cuomo said his investigation found that as a subsidiary of the second-largest insurer in the nation, Ingenix had a vested interest in helping set rates low, so companies could underpay patients for out-of-network services.

The investigation allegedly 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 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.

Approximately 70 percent of insured working families have out-of-network plans that let them choose their own doctors and the system impacts one in three individuals, or over 110 million people nationwide.

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