Cuomo's reasonable investigation into health plan pricing

New York takes on United over an allegedly rigged system for pricing services by out-of-network physicians.

Editorial. March 10, 2008.

A six-month investigation by New York Attorney General Andrew Cuomo echoes what physicians have claimed for years: The system that insurers nationwide use to set "usual, customary and reasonable" prices for out-of-network care is seriously flawed.

Cuomo alleges that UnitedHealth Group subsidiary Ingenix operates a database that is defective and intentionally manipulated to set UCR rates that are too low. On Feb. 13, he revealed his intent to sue United. His plans don't stop there. Cuomo said he already has issued subpoenas to 16 other insurers who use Ingenix data.

The American Medical Association, which is involved in a separate suit against United over the UCR system, commended the attorney general's efforts. At Cuomo's news conference announcing his investigation, AMA President-elect Nancy H. Nielsen, MD, PhD, said the problems he detailed are pervasive.

As physicians and Cuomo see it, use of an invalid system has allowed insurers to profit while patients and doctors are shortchanged. Consumers pay higher premiums for health plans that offer access to out-of-network physicians.

Insurers promise to cover a portion of the bill, typically 80% of the doctor's full charge or 80% of the usual and customary rate, whichever is cheaper. The problem, Cuomo says, is that bad Ingenix data set UCR prices that are artificially lower than physicians' actual costs. The result: The 80% of the UCR insurers pay out-of-network doctors is substantially less than what doctors charge. Health plans leave patients holding the bag.