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.