UnitedHealth Settles Class Action Lawsuit with Doctor GroupJan 16, 2009 | Parker Waichman LLP, LLP
UnitedHealth Group has settled a class action lawsuit over its Ingenix database. The $400 million settlement with the American Medical Association (AMA) comes just days after UnitedHealth settled similar charges with the state of New York for $50 million.
United and the largest health insurers in the country rely on a database operated by Ingenix -a wholly-owned subsidiary of UnitedHealth - to determine their “usual and customary” rate. 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. That means many 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’s investigation also 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.
Earlier this week, 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.
According to Bloomberg.com, the AMA had been in a dispute with UnitedHealth over the same issue since 2000. It's class action lawsuit claimed that UnitedHealth used Ingenix to manipulate payments to doctors and patients for the last 15 years. As part of the settlement, UnitedHealth agreed to put $350 million into a class-action restitution fund to pay physicians and policyholders for services provided by out-of-network providers, the company said in a statement today.