Thanks to almost $100 million in settlement proceeds from health insurers, a new reimbursement database for out-of-network healthcare charges is being developed in New York.
A new nonprofit, FAIR Health, Inc., will develop the database for consumer reimbursement, as well as a Web site where consumers can compare health pricing, said New York Attorney General Andrew M. Cuomo, who made the announcement Tuesday in Syracuse, N.Y. FAIR Health will develop the network in collaboration with the State University of New York (SUNY) at Buffalo, Cornell University, the University of Rochester and SUNY Upstate Medical University.
The settlement is the result of an investigation led by Cuomo into a database created by Minnesota-based United Healthcare's subsidiary, Ingenix, which was used by insurers nationwide to set reimbursement rates when patients went out of network for health services. According to Cuomo, the database intentionally skewed "usual and customary" rates downward through faulty data collection, poor pooling procedures and the lack of audits.
"By transforming this system for consumers nationwide, New York proves its reputation as a reform leader for the nation," said Cuomo. "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."
In January, Cuomo obtained nearly $100 million from insurers such as UnitedHealth, WellPoint and Aetna to fund FAIR Health. His agreements with nearly every national and regional health insurer operating in New York State called for them to end their use of the Ingenix database and financially commit to the new, independent database.
"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."
Cuomo also worked with the New York State Department of Insurance to establish a new insurance regulation to codify his efforts and ensure they become industry standard. The regulation will govern health and accident insurers as well as health maintenance organizations that promise to reimburse consumers who go out of network based on the usual and customary rate of the service provided. It requires them to use an independent source for establishing usual and customary rates, as well as disclose to their members how and by whom the rates were established.
"The American Medical Association commends Attorney General Andrew Cuomo for the landmark achievements of forcing health insurers to end to a rigged system for setting payments and successfully negotiating a transition to a more transparent system," said American Medical Association Board Member William A. Dolan, MD.
"The cumulative impact of these achievements will bring national reforms that will benefit tens of million of Americans who receive care outside their insurer's network of physicians," he said.