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UnitedHealth Group has agreed to settle a case filed by the New York Attorney General’s office. That lawsuit, filed in the spring of 2008, accused the health care giant of defrauding its members by underpaying reimbursements for visits to out of network doctors. The company was able to deceive its policy holders by relying on what was billed as an independent database to establish the "reasonable and customary" rate of reimbursement. In fact, the database, Ingenix, was owned and operated by UnitedHealth in a clear conflict of interest.

As an example, consider the following. Most insurance companies reimburse the patient for 80% of the reasonable and customary medical charge by an out of network medical provider. If a patient was billed $1000 for a medical procedure, and that amount was considered reasonable and necessary, the patient would be reimbursed $800. What the state found, however, was that the database was lowballing the reasonable and customary rate by as much as 28%. Thus, in our example, the database would say that the reasonable and customary rate was only $720 for that procedure and would thus reimburse the patient only $576 (80% of $720), cheating the patient out of $224. To make matters worse, this database was used by companies throughout the insurance industry. UnitedHealth looked out for its friends.

Under the terms of the settlement, UnitedHealth has agreed to pay $50,000,00 to set up an independent database. Andrew Cuomo, the New York State Attorney General, has set the stage for an overhaul of long practiced abuses:

According to Mr. Cuomo, the databases consistently understated the local “reasonable and customary” rates, which Ingenix collects from insurers. The report of the investigation’s findings described the industry calculations as “created in a well of conflicts” that produced information that was “unreliable, inadequate and wrong.”

In an interview Monday, Mr. Cuomo said: “For years this database was treated as credible and authoritative, and consumers were left to accept its rates without question. This is like pulling back the curtain on the wizard of Oz. We have now shown that for years consumers were consistently low-balled to the tune of hundreds of millions of dollars.”

This settlement, however, does nothing to recoup the losses that individuals have suffered over the years. That will only be accomplished by individual or class-action lawsuits. Obstetrics and pediatrics are specialties that often involve out of network providers because of the personal nature of the doctor-patient relationship. If you think that you may have been a victim of this scheme, contact us. We have been fighting insurance companies for more than 25 years and would like to help you out if we can.

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