WellPoint Reaches Agreement To End Use of Database To Determine Payments for Out-of-Network Medical Services
WellPoint has agreed to end use of a database to determine reimbursement rates for out-of-network medical services that has led to underpayments to physicians and hospitals, New York State Attorney General Andrew Cuomo (D) said Wednesday, Long Island Newsday reports (Amon, Long Island Newsday, 2/19).Health insurers pay for a certain percentage of the usual and customary rates for services provided by out-of-network doctors, 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, 2/18).
Cuomo said that the database is "defective and manipulated" and has prompted health insurers to underpay for out-of-network medical services (Russell, Indianapolis Star, 2/19). In addition, he said that the database had a "virtual monopoly" because all major health insurers used the system and no alternatives existed.
Under the agreement, WellPoint will end use of the database and pay $10 million to help finance the development of a new independent database administered by a not-for-profit group. Cuomo, who reached similar agreements with five other health insurers earlier this year, said that his office hopes to have the new database operational in six months and estimated that the effort will cost about $100 million (Bray, Wall Street Journal, 2/19).
Comments
Cuomo said of the agreement with WellPoint, "By securing an agreement with the largest insurer in the country, we are continuing to expand the number of insured Americans who will now be free from the conflict-of-interest-ridden system that slammed hard-working individuals and family members with medical costs they did not deserve and could not afford to pay" (Levick, Hartford Courant, 2/19).
Ken Goulet, executive vice president and CEO of commercial business for WellPoint, said, "WellPoint acknowledges the conflicts of interest in the Ingenix database which the attorney general's investigation brought to light, and we support his efforts to increase the transparency of health care costs" (Wall Street Journal, 2/19). He added that WellPoint is "committed to appropriately processing claims and fairly reimbursing health care providers for covered services under the terms of each member's contract, while at the same time protecting our members and group customers against excessive charges by some non-participating providers" (Hartford Courant, 2/19).
