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Independent Health, HealthNow New York Latest Insurers to Swear Off Ingenix Database

Feb 16, 2009 | Parker Waichman LLP Two Buffalo, New York insurers have reached an agreement with the state's Attorney General to stop using Ingenix, the reimbursement database owned by UnitedHealth Group.   Independent Health and HealthNow New York Inc. are just the latest insurers to agree to end their use of a database the Attorney General's called “a defective system” to calculate reimbursement rates for patients who go out-of-network.

Independent Health, HealthNow, and many other insurers have used the th United-owned Ingenix database to determine their “usual and customary” rates for out-of-network care.  The Ingenix database uses the insurers’ billing information to calculate “usual and customary” rates for individual claims by assessing how much the same, or similar, medical services would typically cost, generally taking into account the type of service and geographical location.  Under this system, insurers control reimbursement rates that are supposed to fairly reflect the market.

Last year, the New York Attorney General’s office began an investigation into allegations the Ingenix database intentionally skewed “usual and customary” rates downward through faulty data collection, poor pooling procedures, and the lack of audits.  The investigation found that because of Ingenix, many consumers were forced to pay more than they should have for out-of-network care, with underpayment by insurers ranging from ten to twenty-eight percent for various medical services across the state.  The Attorney General’s investigation also  found that having a health insurer determine the “usual and customary” rate  for a service – a large portion of which the insurer then reimburses – creates an incentive for the insurer to manipulate the rate downward.

In January, the New York Attorney General announced that it had reached a deal with UnitedHealth in which the company would pay $50 million to set up a new database for determining reimbursement.  The database is to be owned and operated by a non-profit organization in order to eliminate insurance company conflicts of interest.

In addition to agreeing that they will no longer use Ingenix, Independent Health will contribute $475,000 and Health Now $212,500 towards the new, independently-operated database, the Attorney General's office said.  The two companies join UnitedHealth Group, Aetna and Schenectady, N.Y.-based MVP Health Care, Inc.  in pledging to fund the new database.

“With two of the largest insurers in the Buffalo area signing on to our agreement today, we’ve taken an enormous step towards protecting consumers across Western New York from the skewed rates of a corrupt system,” Attorney General Andrew Cuomo said in a statement. “Companies like Independent and HealthNow that proactively embrace reform are an essential part of our continued momentum towards change that is nationwide and industry-deep.”

The statement also announced that HealthNow has adopted the Attorney General's Doctor Ranking Model Code, which has become the national standard for the health industry. By using the code, HealthNow has pledged to several stipulations, including employing several measures to foster more accurate physician comparisons and disclose to physicians how rankings are designed.


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