UnitedHealth, Aetna Accede to New York Rate Reforms

Two major health insurers felt the sting of technology woes this week as New York’s Attorney General Andrew Cuomo reached agreements with the firms to stop using a controversial database maintained by UnitedHealth Group Inc.'s Ingenix unit to set the "usual and customary" rate for insurance reimbursements.

UnitedHealth Group Inc. agreed on Thursday to pay $350 million to resolve class action lawsuits over reimbursing patients for out-of-network medical services, according to a Reuters report.

Following a probe by into the independence of the company database used to set reimbursement rates for patients' medical bills, UnitedHealth struck an agreement with the New York attorney general.

Cuomo also reached agreement on Thursday with Aetna Inc., which will pay $20 million to help establish an independent database used for calculating rates.

Aetna's funding of the database is in addition to the $50 million UnitedHealth agreed to pay earlier this week to fund it. UnitedHealth reports that it also is shutting its Ingenix medical billing information service—the database at the center of the investigation.
The UnitedHealth settlement, which will be made using cash on hand, resolves litigation filed on behalf of a variety of stakeholders; the American Medical Association, health plan members, health care providers and state medical societies, and covers procedures performed since 1994. Both Aetna and UnitedHealth did not admit wrongdoing, and as part of the settlement, UnitedHealth will be released from claims relating to its out-of-network reimbursement policies through 1994.

In a press conference, Cuomo said that insurers often promise to cover up to 80% of the so-called "usual and customary" rate of an out-of-network expense, with consumers responsible for paying the balance. The Ingenix database would skew these rates downward compared with the actual market rate, shortchanging consumers, Cuomo said.

Other health insurers also face similar class action lawsuits, said Reuters. DowJones reports that in February, Cuomo said he would sue UnitedHealth over the continued use of the database, and issued subpoenas to a number of health insurance companies that use it, including Aetna, Cigna Corp., and Empire Blue Cross Blue Shield, a subsidiary of WellPoint Inc.