February 2, 2009
New York Attorney General Andrew M. Cuomo today announced an agreement with Aetna, the third-largest health insurer in the country, to reimburse health insurance claims by over 73,000 students at over 200 colleges nationwide.

Under the agreement, Aetna will pay more than $5 million, plus interest and penalties, for claims involving out-of-network care.

The agreement resolves an investigation into the use of outdated reimbursement rate information by Aetnas subsidiary, Aetna Student Health, which shortchanged students and doctors across the nation.

The investigation disclosed that Aetna Student Health underpaid in excess of $5.1 million in student health insurance claims nationwide between 1998 and April 1, 2008. More than $2 million worth of these claims were attributable to almost 21,000 students who attended college in New York State.

The health plans in question were sponsored by the students colleges, underwritten by Aetna Life Insurance Company and administered by Aetna Student Health, formerly known as Chickering Student Health.

Health insurers must honor the promises they make to reimburse consumers fairly. Here, students were particularly vulnerable to being cheated because they placed their trust in health care plans sponsored by their colleges. Aetna Student Health broke that trust, said Cuomo.

Aetna has agreed to pay students or, where appropriate, their doctors, more than $5.1 million for underpayments, plus interest and penalties calculated under governing state law. Late payments in New York are subject to 12 percent interest. The scope of the agreement is nationwide.

Under the agreement, Aetna will also:

• update Aetna Student Healths claims processing system within 30 days after receiving new market rate schedules and annually certify when that was done;

• hire an independent third party examiner to review Aetna Student Healths compliance and training procedures, and improve those procedures based on the examiners recommendations; and

• provide all employees of Aetna and its subsidiaries enhanced training on reporting compliance issues.

"At a time when tuition and educational expenses at many colleges and universities are going up, students and parents simply can't afford to overpay for health care," said Charles Bell, programs director for Consumers Union.

"We are very pleased that Aetna has agreed to refund $5 million to students who were shortchanged on their health insurance claims. This national settlement also establishes strong consumer protections to ensure that students will be fairly reimbursed when they use out-of-network medical services in the future," Bell said.

Todays agreement is related to a settlement between the Attorney General and Aetna announced on January 15, 2008, in which Aetna agreed to stop using databases operated by UnitedHealth Group, Inc.s subsidiary, Ingenix, Inc., to determine out-of-network reimbursement rates.

Under that agreement, Aetna agreed to pay $20 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.

Todays agreement concerns the use of outdated schedules from the Ingenix databases to reimburse students. Because the schedules were out of date, they indicated lower reimbursement rates than the students were entitled to. The agreement resolves restitution issues arising from the use of outdated schedules to reimburse students; it does not resolve any other restitution issues arising from the use of the Ingenix database.

In February 2008, the Attorney General announced an industry-wide investigation into allegations that health insurers unfairly saddle consumers with the cost of out-of-network care.

At the center of that investigation is Ingenix, the nations largest provider of healthcare billing information, which gathers data from health insurers and creates schedules insurers use to formulate out-of-network reimbursement rates. Ingenix is used by the largest insurers in the country and is a wholly-owned subsidiary of UnitedHealth Group Inc. (NYSE: UNH), the nations second largest health insurer. The Attorney Generals office learned of Aetna Student Healths underpayments through the industry-wide investigation.

Aetna will send notice to all affected individuals with details on securing reimbursements.