Will New York Destroy U&C Method?
As most of you know today, an industry-wide investigation into the reimbursement practices of health insurers has been launched by New York Attorney General Andrew M. Cuomo. From this, a threatened law suit is in play against Ingenix regarding Ingenix’s Usual and Customary database which it sells and most insurers use, to set reimbursement rates for out-of- network medical expense. The AG described the U&C rates as “defective and manipulated.”
So, how could U&C be a problem in the commercial group health world? Once a plan member goes out of network in some plans they will have the lesser of 80% of billed charges or U&C rates covered under the plan, but will pay higher premiums in exchange for the “right” to go out of network. So, a $100 bill that is generated from an office visit to an out of network provider would lead to an $80 payout from the carrier to the provider leaving the plan member to pay $20. Yet, if U&C takes the $100.00 bill down to $60 (being the lesser), then the patient could be on the hook to pay $40 instead of the $20. In other words, the patient will be balanced billed.
The main problem with this potential suit to me is not if Ingenix’s data base of rates are perfect, but the fact that the AG of New York could be taking away a control mechanism for keeping medical costs down. As usual, individuals in the government don’t completely understand how the system works, and that valid controls are in place. Using U&C simply helps to control unfair billing. The legal system will determine the validity of the U&C rates, but the concept is a good one.
On the other side of this of course is the fact that carriers need to represent correctly their plans and understand the states they are working in. With so many laws and rules/regulations it is a challenge to keep up with them all. So, I understand and agree that the AG has to defend the citizens against anything that is unfair.
Also, more than likely, Mr. Cuomo saw that attacking the insurance industry is good politics. The last time this happened in New York the situation gave them a new governor, Mr. Spitzer.
February 15th, 2008 at 2:37 pm
Certainly builds a case for payors need to utilize objective 3rd party data for determining fair and equitable payments for out-of-network claims.
In 2003 the Office of Inspector General issued a mandate that due to increasing fraud and abuse, fair and reasonable payment to providers should be based on REIMBURSEMENT rates, not charges. (Federal Register, Volume 68, No. 178, 09/15/03, p. 53939). While not widely accepted or even known about, if payors were to adopt protocol to adhere with the OIG, the mystery surrounding fees, reimbursement, contracted rates would suddenly be transparent. Consumers and commercial payors would then have the ability to assess providers not only on quality, but also cost benchmarks as well. As more costs are pushed down to the consumer level in healthcare, I believe that we will see this become commonplace.
February 18th, 2008 at 8:23 am
It should be interesting to see if they focus the investigation of the validity of usual and customary in general or if they make it be more specific to Ingenix and thier practices for obtaining and keeping the data up to date.
February 19th, 2008 at 2:01 pm
While the case will certainly be interesting to watch, the striking thing to me in this matter is the fact that we have, yet again, another government official with little to no experience in healthcare, healthcare billing, or what may be in the best interest of patient and payor intervening in the operations of the system. Further, as we have seen occur in New York in the past, pursuing such issues is a fast track to getting elected to a higher office (i.e. Eliot Spitzer being elected Governor).
It is a shameful day when politicians use issues of concern, like healthcare, to sway public opinion. However, it is of far greater concern when politicians break an operational system in order to “fix” a perceived problem. Attorney General Cuomo will undoubtedly cause serious doubts in the validity of Ingenix data, and may ultimately undo the concept of comparing claims to a usual and customary standard. Like the Presidential candidates who likewise are spouting “solutions” to the healthcare problem, ultimately government intervention will only muddy the waters further.
Just as the national Presidential debate is harnessing the perceived fears of the public over healthcare, here we add another doubt to the public perception. One must ask Attorney General Cuomo why he chose this precise moment in time to bring this matter forward. Could the Attorney General for New York be hoping for an appointed position in a newly elected Democrat Administration? Has such a position already been worked out with the Senator from New York? One must wonder. We all should be more concerned with what “backroom deals” may have been cut by the politicians pushing these matters. Ultimately, they may pose a larger threat to America!