Earlier this week, New York Attorney General Andrew Cuomo announced a "victory" in his battle with the insurance industry over how out-of-network physician claims are paid. Cuomo had argued that the industry’s use of its out-of-network "customary and reasonable" database "defrauded" consumers and he sued the database’s manager, United Health’s Ingenix, over the controversy.
In a February 2008 post I said, "In a few months, we will hear that Ingenix paid a big fine and agreed to fix something (that no one will understand) and Cuomo will have another notch in his belt."
Here’s how the settlement will work: Ingenix will pay $50 million to
set up an independent not-for-profit to operate the customary and
reasonable database. The industry gets to continue determining what
customary and reasonable
physician charges are through this non-profit and just exactly how they
do it will continue to be done by systems gurus the way systems gurus
do things–pretty much in a "black box." While an undetermined
university will operate the system, the industry, who will finance it,
will presumably have a great deal of input into
it. The industry’s use of the database will be more defensible since
one of its own is no longer arguably directly controlling the entity.
$50 million is peanuts compared to the out-of-network customary and reasonable savings
any one of the big health plans achieves every year and this settlement
makes the ability of state medical societies and trial lawyers to
attack the system much harder.
What will be better is that
consumers, presuming they know about the new "transparency" website,
will be able to go on-line to see what their allowable charges will be
in advance. So, if Joe Middle America is on vacation in Orlando and
needs to go out-of-network to the emergency room,
prior to rushing off for treatment they can go find a computer, find
the website, and shop around for emergency rooms that have the lowest
out-of-network payments. Gosh, Andy, thanks!!!
The big losers
here are the docs. The result is going to be about the same and their
medical societies will now have less reason to challenge the customary and reasonable system than they did before.
"In a few months, we will hear that Ingenix paid a big fine and
agreed to fix something (that no one will understand) and Cuomo will
have another notch in his belt."
Why poor Andy is being passed over for the Senate I just don’t know!
Robert Laszweski has been a fixture in Washington health policy
circles for the better part of three decades. He currently serves as
the president of Health Policy and Strategy Associates of Alexandria,
Virginia. Before forming HPSA in 1992, Robert served as the COO, Group
Markets, for the Liberty Mutual Insurance Company. You can read more of
his thoughtful analysis of healthcare industry trends at The Health Policy and Marketplace Blog.