Large health insurance companies accused of "rigging" rates

Top elected officials in New York and California are accusing the nation's largest health insurers of rigging the rates they pay for physician visits, leaving patients with higher medical bills.(Source: "Heat is on health insurers," LA Times, Feb. 14, 2008.) Los Angeles City Atty. Rocky Delgadillo is probing industry practices such as canceling patients' coverage after they get sick and has unveiled "a first-of-its-kind website to solicit information about insurance cancellations and delays and denials of treatment." In New York, Attorney General Andrew Cuomo is conducting an industry-wide investigation of health insurers into allegations that reimbursement rates were manipulated to defraud consumers. (Source: "Medical Rate Setting Is Focus of Fraud Inquiry," NY Times, Feb. 13, 2008.)

At a news conference Wednesday, Cuomo said he intends to sue Ingenix, its parent UnitedHealth Group, and three additional subsidiaries. Ingenix provides health care billing information and serves as a conduit for rate data to the largest insurers in the country. Cuomo claims Ingenix operates a "defective and manipulative" database that other UnitedHealth subsidiaries used to keep reimbursement rates artificially low--sometimes even lower than the actual cost of typical medical expenses--thereby forcing patients to assume more of their health care costs. "For example, (Cuomo) said, a market survey showed physicians typically charge $200 for a routine visit. But the insurers, using Ingenix data, claimed to their members that the typical rate was $77. Applying the 80% reimbursement rate, they covered $62, leaving the patient to pay $138 out of pocket."

In the LA Times article, insurers defended their business practices, saying one of their top goals is to keep health insurance affordable for all and that many of the practices in the spotlight actually are good examples of their value in holding down healthcare costs. Karen Ignagni, president of America's Health Insurance Plans, said "At a time when the costs of medical services soar above inflation every year, health insurance plans' tools and techniques are mitigating the damage done to consumers and employers."