Cigna Agrees To End Use of Database To Determine Payments for Out-of-Network Medical Services
Cigna has agreed to end use of a database to determine reimbursement rates for out-of-network medical services that has led to underpayments, New York State Attorney General Andrew Cuomo (D) said on Tuesday, the AP/New York Times reports (AP/New York Times, 2/18).Health insurers pay for a certain percentage of the usual and customary rates for such services, based on an estimate of the cost for such procedures in the same geographic area. Ingenix, a subsidiary of UnitedHealth Group, operates the Prevailing Healthcare Charges System, a database most health insurers use to determine the usual and customary rates. The database contains information on more than one billion claims from more than 100 health insurers. Health insurers compare out-of-network claims with those found in the database and reduce the claim to a "reasonable" amount before they reimburse health care providers or members (Kaiser Daily Health Policy Report, 1/13). According to an investigation conducted by Cuomo, use of the database has prompted health insurers to underpay for out-of-network medical services on a regular basis (AP/New York Times, 2/18).
Under the agreement, Cigna will end use of the database and pay $10 million to help finance the development of a new independent database that likely will begin to operate in the next six months. Cigna officials said that they hope the new database will make prices for medical services more transparent.
Cuomo reached similar agreements with UnitedHealth, Aetna and several smaller health insurers earlier this year. He said that he expects the agreements to require a total of $100 million in payments and affect about 100 million health plan members (Fuhrmans, Wall Street Journal, 2/18). This is part of the Morning Briefing, a summary of health policy coverage from major news organizations. Sign up for an email subscription.
