Class-Action Suit Raises Questions About Setting Out-of-Network Rates

Last week, attorneys for a California surgery center filed an amended complaint in Los Angeles federal court to add more than 30 employers and self-funded health plans as defendants in a national class-action lawsuit against UnitedHealth Group, the Los Angeles Daily Journal reports.

Lawsuit Details

The suit, brought by Downey Surgical Clinic, alleges that UnitedHealth Group's use of its Ingenix database led to routine underpayments for out-of-network care.

The new defendants -- which include self-insured companies such as Best Buy, Cingular Wireless and General Electric -- did not directly interact with the Ingenix database because UnitedHealth Group administered claims for the self-funded accounts. However, prosecutors are seeking to hold the employers liable for the underpayments, which frequently shifted costs to patients.

Questions Over Setting Out-of-Network Rates

Under California law, insurers must reimburse out-of-network health care providers based on "reasonable and customary value" for services based on "statistically credible information that is updated at least annually."

However, HMOs and insurers in California generally do not provide substantial information on how they set their out-of-networks rates.

Observers say the lawsuit could spur efforts to increase transparency in how insurers and health care providers establish reimbursement rates for out-of-network care (George, Los Angeles Daily Journal, 5/11).