By John Ballard
Have you ever looked at the details of an EOB (Explanation of Benefits -- the verdict rendered by an insurance company indicating how the amount of your benefits were determined) and come across a note that said insurance was not gonna pay the full bill because the amount charged was over the "usual and customary charges"? (The "R" officially means reasonable but even the professionals choke on the word, hence the vernacular alternative.)
For years I wondered about that little detail and in the course of following the health care debate I came across the source. The database providing "usual and customary charges" is Ingenix. And that company's DRG Desk Reference is to medical billing what the Kelly Blue Book is to automobiles. (DRG stands for Diagnosis Related Group, and medical billing is an enterprise that makes tracking sports statistics look like keeping score of a bowling game. Ever hear a doctor or insurance clerk refer to "coding"? That's where the codes are kept.)
You might think that the nation's largest repository of sensitive medical billing would be some dull, dark corner of the datamining universe compiling numbers and selling them to the industry for a nominal feel. But you would be wrong. Ingenix is a wholly owned subsidiary of United Health Care which is one of the country's major insurance cartels.
How do you spell conflict of interest?
Lost in the headlines of a global financial meltdown has been the tawdry tale of how this insurance giant was caught with pants down and punished by paying a fine as well as having the cookie jar put in another place.
In February 2008, New York State Attorney General Andrew M. Cuomo announced an industry-wide investigation into a scheme by health insurers to defraud consumers by manipulating reasonable and customary rates. The announcement included a statement that Cuomo intended "to file suit against Ingenix, Inc., its parent United Health Group, and three additional subsidiaries." Cuomo asserted that his investigation found that rates found in a database of health care charges maintained byIngenix were lower than what he determined was the actual cost of certain medical expenses. Cuomo said this inappropriately allowed health insurance companies to deny a portion of provider claims, thereby pushing costs down to members.
On January 13, 2009, UnitedHealth Group and Ingenix announced an agreement with the New York State attorney settling the probe into the independence of the health pricing database. Under the settlement, UnitedHealth Group andIngenix would pay $50 million to finance a new, non-profit entity that would develop a new health care pricing database. Ingenix would discontinue its medical pricing databases when the new entity makes its product available. The company acknowledge the appearance of a conflict of interest, but admitted no wrongdoing.
Sez here "admitted no wrongdoing."
Riiight...
But isn't that the usual and customary locution when the party being fined is guilty as hell?
A post today at Managed Care Matters (Joseph Paduda's blog) tells about the new place where the cookie jar will be kept.
We now know who will replace Ingenix as the nation's provider of usual, customary and reasonable (UCR) data; we also know when (by the end of 2010). As to the how, that's a bit less certain.
Syracuse University will be the home of a non-profit data house' to be called FAIR Health (Fair and Independent Research Health); Cornell, Upstate Medical Center, SUNY Buffalo, and the University of Rochester will also contribute (got to spread the largesse around). (full disclosure - Syracuse is my alma mater)
The new entity will be funded at least in part by the $100 million NY Attorney General Andrew Cuomo has gotten in settlements from Ingenix' UCR database customers. In addition to Cuomo's successes, Ingenix' parent company, UnitedHealth Group paid $350 million earlier this year to settle a class action suit, and other legal action is continuing which Cuomo expects to add to the $100 million total. The cash will be used to develop the database and set up a mechanism to deliver data to payers and consumers via a website. This last is a great idea - providing health care consumers and providers with access to UCR data should help promote transparency and enable price comparisons by consumers and price competition by providers.
FAIR will be headed up by SU Professor Deborah Freund, an expert in health economics, Distinguished Professor of public administration and economics in SU's Maxwell School and Senior Research Associate at Maxwell's Center for Policy Research. Dr Freund has a wealth of experience on the academic side of health policy and economics and has published on a wide range of topics in those fields.
The reader can now drill into the links for more information. Before I leave the post, here is a snip from the January story about the settlement.
"By using a flawed database to determine reimbursement rates for out-of-network care, insurers have increased profits at the expense of patients and physicians," AMA president Nancy Nielsen said in a statement. "By agreeing to the settlement, United Health Group has recognized the importance of restoring its relationship with patients and physicians by ending use of the rigged database."
The database in question contains the nation's largest pool of charges for medical services. Other insurers also depend on it to calculate what to pay doctors when patients seek care outside of an insurer's network.
The suit alleged that the database systematically set physician payments below the amount the physician normally charged, leaving patients with a bill from the physician to make up the difference.
I have already mentioned several times that even without specific legislation health care reform is already under way. This is another piece in the larger puzzle.
In this case, all I needed to find was the name "Cuomo" and I knew I would like the rest of the story.
Comments by the blogmaster as well as those left by readers at Managed Care Matters will give the reader an idea of how the insurance industry sees this development. Despite the obvious, that another corporate zit has been squeezed and busted, I get the impression that this development is little more than an annoyance.
There are much bigger problems to address, but cleaning up a train wreck like health care in America will take more than a season or two of legislative wrangling.
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