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Attorney General Cuomo announced historic nationwide reform of the consumer reimbursement system for out-of-network health care charges.

A new not-for-profit company, FAIR Health, Inc., and an upstate research network headquartered at Syracuse University will develop a new independent database for consumer reimbursement and a new website where for the first time consumers can compare prices before they choose their doctors. In addition to Syracuse University, the upstate research network consists of the State University of New York (“SUNY”) at Buffalo, Cornell University, University of Rochester, and SUNY Upstate Medical University. Almost $100 million in settlement money will fund the new reimbursement system, creating jobs and helping develop New York’s upstate economy. The new database will make FAIR Health a center for health care research and an engine of health care reform. These Ingenix databases are riddled with errors and conflicts of interest. The investigation uncovered a fraudulent and conflict-of-interest ridden reimbursement system affecting millions of patients and their families and costing Americans hundreds of millions of dollars in unexpected and unjust medical costs. The research project will be led by Dr. Deborah A. Freund, Distinguished Professor of Public Administration at Syracuse University.

The other upstate research universities, SUNY at Buffalo, Cornell University, University of Rochester, and SUNY Upstate Medical University, will bring a diverse and critical range of talents and expertise as members of the upstate research network. In addition to creating and managing the new database, FAIR Health and the upstate research network will design a new consumer web site where, for the first time, patients around the country can find out in advance how much they are likely to be reimbursed for out-of-network health care services in their area. Information in the new database will be made available for academic research, and the database itself, in non-industry hands for the first time, is expected to make FAIR Health a significant driver in health care reform efforts.

The creation of FAIR Health and the upstate research network is the culmination of Attorney General Cuomo’s longstanding, nationwide healthcare reform investigation into the defective and conflict-ridden Ingenix database. Ingenix, a subsidiary of UnitedHealth, was used by insurers nationwide to set reimbursement rates when patients went out of network for health services. The Attorney General’s investigation found that as a subsidiary of the second-largest insurer in the nation, Ingenix had a vested interest in helping set rates low, so companies could underpay patients for out-of-network services. The investigation revealed that the database intentionally skewed “usual and customary” rates downward through faulty data collection, poor pooling procedures, and the lack of audits, meaning consumers were forced to pay more than they should have. The rate of underpayment by insurers ranged from ten to twenty-eight percent for various medical services across the state. The Attorney General found that having a health insurer determine the “usual and customary” rate - a large portion of which the insurer then reimburses creates an incentive for the insurer to manipulate the rate downward.

Approximately 70 percent of insured working families have out-of-network plans that let them choose their own doctors and the system impacts one in three individuals, or over 110 million people nationwide. Attorney General Cuomo also worked with the New York State Department of Insurance to establish a new insurance regulation to codify his efforts and ensure they become industry standard. The new Insurance regulation will govern health and accident insurers as well as health maintenance organizations (“HMOs”) that promise to reimburse consumers who go out of network based on the usual and customary rate of the service provided. It requires them to use an independent source for establishing usual and customary rates, as well as disclose to their members how and by whom the rates were established.

Source: Fox23News

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