A six-month government investigation has led to charges that Ingenix operates a defective and manipulated database that is used by most major health insurance companies to set reimbursement rates.
New York Attorney General Andrew M. Cuomo revealed the results of his investigation today and announced that he is conducting an industry-wide investigation into a scheme by health insurers to defraud consumers by manipulating reimbursement rates.
At the center of the scheme is Ingenix, he said.
Ingenix is the largest provider of healthcare billing information in the country and serves as a conduit for rigged data to the largest insurers in the country, Cuomo charged.
He said he issued 16 subpoenas today to insurance companies, including Aetna, CIGNA and Empire BlueCross BlueShield, and he intends to file suit against Ingenix, Inc., its parent UnitedHealth Group and three additional subsidiaries.
Under the United insurers' health plans, members pay a higher premium for the right to use out-of-network doctors. In exchange, the insurers promise to cover up to 80 percent of either the doctor's full bill or of the "reasonable and customary" rate depending upon which is cheaper.
The investigation charged that by distorting the "reasonable and customary" rate, the United insurers were able to keep their reimbursements artificially low and force patients to absorb a higher share of the costs.
Cuomo said the investigation found a clear example of the scheme: United insurers knew most simple doctor visits cost $200, but claimed to their members the typical rate was only $77. The insurers then applied the contractual reimbursement rate of 80 percent, covering only $62 for a $200 bill and leaving the patient to cover the $138 balance.
"Getting insurance companies to keep their promises and cover medical costs can be hard enough as it is," said Cuomo. "But when insurers like United create convoluted and dishonest systems for determining the rate of reimbursement, real people get stuck with excessive bills and are less likely to seek the care they need."
"The lack of accuracy, transparency and independence surrounding United's process for setting a 'reasonable and customary rate' is astounding," Cuomo added. "United's ownership of Ingenix coupled with the inherent problems with the data it is using clearly demonstrate a broken reimbursement system designed to rip off patients and steer them towards in-network doctors that cost the insurer less money."
The United insurers and Ingenix are owned by the same parent corporation, United HealthGroup. When members complained their medical costs were too high, the investigation concluded, United's insurers allegedly hid their connection to Ingenix by claiming the rate was the product of "independent research."
Cuomo's notice to United expressed concern that the company's ownership of Ingenix created a clear conflict of interest because their relationship gave Ingenix an incentive to set rates that benefited United and its subsidiaries.
Founded in 1996, Eden Prairie, Minn.-based Ingenix employs more than 4,500 people and numbers more than 250,000 clients worldwide. Its businesses include Healthia Consulting and the Lewin Group (purchased last year), ENS, Claredi, HWT, i3 and IHCIS.
The American Medical Association's president-elect, Nancy Nielsen, MD, said, "The investigation launched today by New York Attorney General Andrew Cuomo calls into question the validity of a system that health insurers have used for years to reimburse physicians and their enrolled members. Patients have a right to expect fair and accurate payment for services promised by health insurers. The AMA greatly appreciates the Attorney General's interest and leadership in protecting consumers, and we offer our full cooperation in any effort to hold UnitedHealth accountable to New York state laws."