New York investigates insurance scheme

March 6, 2008 – ­­­New York Attorney General Andrew Cuomo announced he is conducting an industry-wide investigation into a possible scheme by health insurers to defraud consumers by manipulating reimbursement rates.

The investigation will focus on Ingenix Inc., the nation’s largest provider of healthcare billing information, which allegedly serves as a conduit for rigged data to the largest insurers in the country.

Cuomo has issued 16 subpoenas to the nation’s largest health insurance companies including Aetna, CIGNA, and BlueCross BlueShield, and intends to file suit against Ingenix, as well as parent company UnitedHealth Group. Cuomo claims Ingenix operates a defective and manipulated database that many major health insurance companies use to set reimbursement rates for out-of-network medical expenses. 

Cuomo’s investigation discovered that United insurers knew most simple doctor visits cost $200, but claimed to their members the typical rate was only $77. The insurers then applied the contractual reimbursement rate of 80 percent, covering only $62 for a $200 bill, leaving the patient to cover the $138 balance.

Source: Office of New York State Attorney General, www.oag.state.ny.us/home.html