New Database Will Help Insurers Determine Pay for Out-of-Network Care

On Tuesday, New York state Attorney General Andrew Cuomo (D) announced a new national database to help health insurers determine reimbursement rates for out-of-network care, the New York Times reports.

Cuomo said that within one year, a not-for-profit company, called FAIR Health, will be established and work with a number of New York universities to operate the database. FAIR Health also will operate a Web site where consumers could check what an insurer is likely to pay for visits to out-of-network providers.

Consumer reimbursements "will actually go up now because the reimbursements were artificially deflated," Cuomo said (Abelson, New York Times, 10/28).

FAIR Health is being funded by nearly $100 million Cuomo obtained last year as part of a settlement with some of the country's top insurers over another database -- run by Ingenix, a subsidiary of UnitedHealth Group -- that was being used to establish reimbursement rates for out-of-network care (Stempel, Reuters, 10/27).

Typically, when patients go to physicians who are not part of their health plan's network, insurers will reimburse them based on what is referred to as the "reasonable and customary" cost of the services in their area, often less than the actual cost of treatment (New York Times, 10/28).

However, a report by the Senate Commerce Committee and an investigation by Cuomo's office found that Ingenix obtained the data it used to calculate out-of-network rates from the same firms that bought its rate information. These firms often removed high charges from the data submitted to Ingenix, while the database further manipulated data in the same way, according to the report.

Cuomo's investigation found that insurers using Ingenix underpaid for out-of-network care by as much as 28% (California Healthline, 6/25).

Comments

On Tuesday, Cuomo said that FAIR Health will "ensure transparency, accountability and fairness" for U.S. residents seeking out-of-network care (Reuters, 10/27).

Robert Zirkelbach, a spokesperson for America's Health Insurance Plans, said, "We hope this database will help shed light on the exorbitant fees that some out-of-network providers are charging patients for health care services."

White House Office of Health Reform Director Nancy-Ann DeParle called the new database "an important step forward for consumers, who too often are unable to penetrate the secrecy and bureaucracy of insurance companies" (New York Times, 10/28). This is part of the California Healthline Daily Edition, a summary of health policy coverage from major news organizations. Sign up for an email subscription.