Out of Network Health Insurance Overcharges

The New York Attorney General's Health Care Report has determined that the Consumer Reimbursement System is 'Code Blue': they found its database to be "unreliable, inadequate and wrong". For the past year, legal experts have been conducting investigations into allegations that health insurance companies conspired to reduce insurers' reimbursements by charging them with too much of the cost of out-of-network care.

Allegedly, some of the nation’s biggest health care companies underpaid millions of people across the country when it determined insurance reimbursements for out-of-network care. The companies include Aetna, Blue Cross Blue Shield, Cigna, Health Link, Unicare, United Health Care, and Wellpoint/Anthem, and their subsidiaries.

Most health insurers use schedules compiled by Ingenix, Inc. (“Ingenix”) in determining reimbursement rates for out-of-network care. Investigators revealed that a monopoly was created through Ingenix: the Ingenix database is supposed to fairly reflect the market where the consumer lives. However, as a wholly-owned subsidiary of UnitedHealth, Ingenix has a conflict of interest in preparing schedules that are supposed to fairly reflect the market.

How it Works

Ingenix gathers billing data from the largest health insurers in the country and then sends back schedules to those health insurers and others, based on the pooled data, which the insurers use as a benchmark to set their reimbursement rates.

Health insurers allegedly manipulated the data they submitted to Ingenix so they could depress reimbursement rates based on the data pool, which forces consumers to pay more. According to the New York Attorney General, the insurers and Ingenix manipulate the data to skew the “usual and customary” rates downward. This means that many consumers were reimbursed far less than they should have been for out-of-network medical services. The Healthcare Industry Taskforce Office of the New York State Attorney General found that the Ingenix databases understate market rate by up to 28 percent across the state for an ordinary doctor's office visit: this means losses of hundreds of millions of dollars for consumers over the past ten years in the United States.

As well, the consumer doesn't know before choosing a doctor what reimbursement rate to expect from the insurer because Ingenix databases are a “black box” to the consumer.

Consumer Settlements

Since its investigation, the New York Attorney General’s office announced settlements with United Health and some other insurers over the artificially low reimbursement. Under the settlements, Ingenix will no longer provide the data to establish the “usual and customary” rates; instead, a new, independent database run by a qualified nonprofit organization will determine the rates.

Wellpoint, the country's largest health insurer, agreed to pay $10 million to settle allegations of price fixing brought by New York State's Attorney General Andrew Cuomo. WellPoint is now the seventh insurer to end its relationship with the defective Ingenix database and it agreed to pay $10 million to a qualified non-profit organization that will establish a new, independent database to help determine fair out-of-network reimbursement rates for consumers throughout the US.

Also, the New York Attorney General has negotiated reimbursements for some customers of New York health plans. However, the New York Attorney General cannot do the same for residents of other states.

Other Insurance Companies Under Investigation

Many health insurance companies go by different names. One is WellPoint, Inc., one of the nation’s largest health insurance companies. WellPoint serves customers throughout the United States, under various names and subsidiary companies, or affiliates including the following:
Anthem Blue Cross and Blue Shield
Anthem Blue Cross Life and Health Insurance Company
Anthem Life Insurance Company
Anthem Life & Disability Insurance Company
Blue Cross and Blue Shield of Georgia, Inc.
Blue Cross of California (Anthem Blue Cross)
Empire BlueCross BlueShield
Empire BlueCross BlueShield HMO
Golden West Health Plan, Inc.
HealthKeepers, Inc.
HMO Colorado, Inc.
HMO Nevada
HMO Missouri, Inc.
Machigonne, Inc.
Peninsula Health Care, Inc.
Priority Health Care, Inc.
UNICARE Health Insurance Company
If you believe your health plan used inadequate “usual and customary” rates to pay your out-of-network doctor, and you had to pay the difference, you should seek legal help.