Ingenix at Root of Reimbursement Rate Fraud?

On January 13, 2009, Attorney General Andrew M. Cuomo announced that Ingenix was at root of fraud scheme and that as a result a historic reform of the nationwide health care reimbursement system is needed that will end conflicts of interest and generate fair reimbursement rates for working families nationwide.

In the Spring of 2008, Cuomo's department uncovered a scheme with the second largest insurance company, UnitedHealth Group, to defraud consumers by manipulating reimbursement rates. At the center of the scheme was Ingenix. United and the largest health insurers in the country rely on the United-owned Ingenix database to determine their “usual and customary” rates. The Ingenix database uses the insurers’ billing information to calculate “usual and customary” rates for individual claims by assessing how much the same, or similar, medical services would typically cost, generally taking into account the type of service and geographical location. Under this system, insurers control reimbursement rates that are supposed to fairly reflect the market.  

Attorney General Cuomo's investigation concluded that the Ingenix database intentionally skewed “usual and customary” rates downward through faulty data collection, poor pooling procedures, and the lack of audits. That means many consumers were forced to pay more than they should have. The investigation found the rate of underpayment by insurers ranged from ten to twenty-eight percent for various medical services across the state.  As a result, Ingenix's database of billing information has been permanently closed for UnitedHealth.

In place of the Ingenix database, UnitedHealth has been ordered to pay a non-profit organization $50 million to create an independent database to help determine fair out-of-network reimbursement rates for consumers.

In addition, because the Attorney General believes this is a wide-spread problem, he has issued subpoenas to the Aetna, Cigna, and Well Point/Empire BlueCross BlueShield who also use the Ingenix database billing system. Cuomo expects that even more subpoenas will be issues for those insurance companies who use the Ingenix billing database.

Let us know what you think of the results of this investigation and whether it has impacted your organization.