New Hope for Over-Charged Health Insurance Customers

Replacing a 'corrupt' database could keep patients from being stiffed.

June 29, 2009, 5:57 PM

June 30, 2009— -- Mary Reinbold Jerome doesn't know how much time she has left.

After being diagnosed with ovarian cancer in 2006, surgery and chemotherapy helped the Yonkers, N.Y., woman enter remission for more than a year. But the cancer recurred last October and Jerome is fighting for her life once more.

No matter how this new battle ends, Jerome said she's grateful for at least one victory: her struggles with her health insurance company will help bring about the demise of a database that critics say allowed insurers to routinely rip off patients who sought "out-of-network" care -- medical care outside of a patient's insurance company network.

While insurance companies have defended the database containing market rates for hospital procedures -- run by a company known as Ingenix -- they nonetheless have agreed to provide millions of dollars to discontinue the database and create a new, independent one in its place. Government officials told that they are optimistic that the new database will be in operation by early next year.

"I'm just thrilled, in a funny way," said Jerome. The 65-year-old woman said that at one point, her medical bills rose to $50,000 because of her insurer's stingy reimbursement practices.

"It's given meaning to my terminally ill diagnosis," she said. "It makes me feel like I fought a battle that should have been fought, even though I was at the weakest and lowest point of my life."

The database that won the ire of patients like Jerome, lawmakers and law enforcement officials is run by Ingenix, a subsidiary of health insurer UnitedHealth Group Inc.

The Ingenix database is used widely by health insurance companies to determine what the rates for various health care services should be.

But critics argue that Ingenix and the insurance companies that use it systematically underestimate the costs of services. That means consumers like Jerome are left making up the difference between what doctors charge and what insurance companies pay.

Health Insurance Reimbursements: Conflict of Interest?

The New York State Attorney General's office, in a long-running investigation of Ingenix, found that conflicts of interest "corrupted" the Ingenix database: Since Ingenix was owned by UnitedHealth, it had "a vested interest in helping set rates low, so companies could underpay patients for services," the office said.

A report by the Senate Committee on Commerce, Science and Transportation revealed last week that 17 major national and regional health insurance companies used Ingenix data to determine out-of-network reimbursements.

The report showed that "millions of Americans have been forced to pay unjustified extra charges for health insurance coverage when they go out of network," committee chairman John D. Rockefeller IV, D-W.V., said in a written statement. "This is outrageous at any time, but especially as families all throughout our country are doing everything they can to make ends meet in this economy – this is despicable."

In testimony before Congress in March, UnitedHealth Group CEO Stephen J. Hemsley said that the insurance company stood by the integrity of the Ingenix database.

In the last six months, the New York State Attorney General's office has secured agreements with 12 health insurers -- including Ingenix owner UnitedHealth Group, Aetna, Cigna and WellPoint, Inc. -- to stop using Ingenix. The insurers, instead, will contribute millions toward the creation of a new, independent national database to replace it.

The database is expected to benefit the some 100 million health insurance customers across the country who pay extra premiums for health insurance coverage that includes out-of-network benefits.

The new database will be "a completely unaffiliated third-party system," the A.G.'s office said, and won't be racked by the same conflicts of interest as Ingenix.

The office has collected, thus far, about $94 million through settlements with the insurance companies, including $50 million from UnitedHealth, $20 million from Aetna and $10 million each from Cigna and WellPoint.

Later this summer, the Attorney General's office will name a nonprofit group to run the database. The database should be in operation about six months, Cuomo's office told, after the group is named.

'World-Class' Health Insurance, High Bills

It was complaints by health insurance consumers like Jerome that brought the Ingenix issue to the attention of the New York State Attorney General.

Jerome said she was shocked by the medical bills she began receiving shortly after she began her cancer treatments in 2006. Her then-health insurer, Oxford -- which is owned by UnitedHealth -- was footing tens of thousands of dollars in medical expenses, but by 2007, Jerome was still on the hook for at least $50,000.

Jerome, an English-as-a-second language professor at Columbia University, used a small inheritance from her military-veteran parents to pay some of her medical bills. But she also appealed to various officials, including Cuomo's office, asking them to investigate the issue.

"I realized this wasn't right," she said. "You can't be getting a world-class health insurance and be asked to pay this much."

Cuomo's office and the Senate Commerce Committee have highlighted Jerome's story and stories like hers in their efforts to change the system.

These days, Jerome said, her health insurance company -- she now gets her coverage directly from UnitedHealth -- treats her very well.

"They know who I am now," she said with a chuckle. "I'm infamous in their eyes."

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