N.Y. AG Prescribes Subpoenas to UnitedHealth Group, Others

Feb. 13, 2008— -- The nation's largest health care insurer, four of its subsidiaries and a number of other large insurers are being served subpoenas -- 16 in all -- in a suit to be brought by New York Attorney General Andrew Cuomo that charges the companies used "rigged data to manipulate the reimbursement rate to their customers who filed claims."

At the center of the scheme, according to the attorney general, is Ingenix, Inc., "the nation's largest provider of health care billing information, which serves as a conduit for rigged data to the largest insurers in the country."

Cuomo notified Ingenix and its parent company, UnitedHealth Group, of his intent to file suit and subpoenaed 16 other companies, including Aetna, CIGNA, and Empire BlueCross BlueShield. The central allegation is that companies manipulated reimbursement rates. In addition to Ingenix, the suit is also encompassing three other UnitedHealth Group subsidiaries.

UnitedHealth Group did not immediately respond to a request for comment.

According to a statement by Cuomo's office, "the six-month investigation found that Ingenix operates a defective and manipulated database that most major health insurance companies use to set reimbursement rates for out-of-network medical expenses."

"Further, the investigation found that two subsidiaries of United (the "United insurers") dramatically under-reimbursed their members for out-of-network medical expenses by using data provided by Ingenix," Cuomo's office said.

"The Attorney General's investigation found that by distorting the 'reasonable and customary' rate, the United insurers were able to keep their reimbursements artificially low and force patients to absorb a higher share of the costs."

"When insurers like United create convoluted and dishonest systems for determining the rate of reimbursement, real people get stuck with excessive bills and are less likely to seek the care they need," Cuomo said in a statement. In one example, cited by the attorney general, "United insurers knew most simple doctor visits cost $200, but claimed to their members the typical rate was only $77. The insurers then applied the contractual reimbursement rate of 80 percent, covering only $62 for a $200 bill, and leaving the patient to cover the $138 balance."

According to Cuomo's office, although United insurers and Ingenix are owned by the same parent corporation, United HealthGroup, when members complained their medical costs were unfairly high, the United insurers allegedly hid their connection to Ingenix by claiming the rate was the product of "independent research."

The attorney general's notice of intent to sue names UnitedHealth Group and its subsidiaries, United HealthCare Insurance Company of New York, Inc., United Healthcare of New York, Inc., United Healthcare Services, Inc. and Ingenix.

The subpoenas served requested documents and records showing how the insurer computes "reasonable and customary rates, copies of member complaints and appeals, and communications with members and between Ingenix and the insurer on the issue."

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