Wednesday, January 14, 2009

Who is Scamming Who?

[Welcome Insurance Forum readers!]

New York Attorney General Andrew Cuomo made headlines over a settlement reached with United Healthcare (UHC) and a subsidiary (Oxford Health Plans) over alleged abuses in the handling of claims by Oxford.

Much has been said in the news over the $50M "settlement" and the fact that UHC admitted to doing nothing wrong.

Frankly, I concur. I see nothing wrong in their actions.

The headline story is about Mary Jerome of Yonkers, NY, a policyholder of Oxford Health Plans. Ms. Jerome was diagnosed with ovarian cancer and in 2006 (according to the news report) "chose to go to Memorial Sloan-Kettering Cancer Center in New York, an out-of-network hospital under her insurer".

That should be the end of the story, but apparently not for some.

She could have used a par (network) provider with lower out of pocket costs to both her and the carrier, but instead CHOSE to go elsewhere. She did not just wander in to SK, she voluntarily CHOSE to go out of network in spite of the penalties outlined in her policy.

The carrier reviewed the claims and determined that many of her treatments did not fit the guidelines of their policy and denied or reduced benefits. This resulted in some $46,000 in out of pocket costs to Ms. Jerome . . . a figure that no doubt would have been much less had she CHOSEN to use network providers.

The news article revolves around two primary players (other than the Attorney General). Ms. Jerome is the catalyst that led to the AG's investigation but Ingenix is identified as the major culprit.

Ingenix is a subsidiary of UHC and a major source of cost data for medical procedures. According to their website they sell data to some 1500 carriers. The data is used by the carrier to set premium rates and benefits for non-par procedures as well as factored in to claim reimbursement levels.

For years this kind of data was collected by an organization known as HIAA, the Health Insurance Association of America. That data was sold to carriers and used in the same manner as data from Ingenix is today.

At some point HIAA merged with other associations and eventually became AHIP (America's Health Insurance Plans) and they exited the data mining business. Whether they sold that data to Ingenix or not is not known.

It really doesn't matter, the point being, carriers have relied for years on independent data farmed from literally millions of claims to provide a relative cost basis for health care. Absent such a database providers could charge whatever they wish and the carrier, and the patient, would have to pay.

I was recently shown some figures for bilateral insertion of venting tubes (CPT 69436) for a patient in Wisconsin. The variance in surgical charges were nominal, ranging from $1950 - $2146 (before network repricing).

Nothing remarkable there.

But the differences in gross hospital billing was palpable. Facility charges ranged from a low of $3600 to a high of $12,000 on a gross billing basis.

Without data like this, neither carriers nor patient will know what to expect and would be at the mercy of the provider.

Claim data serves to reduce costs for everyone that can be passed on in the form of premium savings as well as OOP savings to the patient.

The fact that Ingenix collects this data and resells it to 1500 carriers (including UHC and Oxford) is immaterial. It is not like the data is manufactured or even massaged. It is what it is.

Also, no one wants to shift the blame to Ms. Jerome who had the opportunity to use par providers which would have resulted in a much lower OOP for her and the carrier.

So why is this news?

Mr. Cuomo, whose previous job included HUD Secretary from 1997 through 2001 during which time there was a major expansion of sub-prime lending programs especially those backed by Fannie Mae (FNMA), has an interesting past. He assumed his present position as N.Y. Attorney General following the fall of Eliot Spitzer.

This makes one wonder, is this an election year?

UPDATE [HGS, 1/17/09]: Well, well, well:
So is this the end of Ingenix?
Time will tell.
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