A Rip-Off by Health Insurers?

When patients visit an out-of-network doctor, insurers typically agree to pay 80 percent of the reasonable and customary rate charged by doctors in the same geographic area. The patient is stuck with the rest, and as any patient knows, that rate always seems to fall short of what their own doctor is charging. If the attorney general’s investigators are right, we can understand why.

The numbers are mainly compiled by an obscure company known as Ingenix, which — as it turns out — is owned by UnitedHealth Group, one of the nation’s largest health insurers. Ingenix collects billing information from UnitedHealth and other health care payers to compile a database that is then used by the insurers to determine out-of-network reimbursement rates.

This system is an invitation for abuse. UnitedHealth owns the company whose database will affect its costs and profitability, so both have a strong financial interest in keeping reimbursement rates low. Even Ingenix seems unwilling to stand behind its numbers. In licensing its database to insurers, it stresses that the data is “for informational purposes only” and does not imply anything about “reasonable and customary” charges. Yet that is precisely what the health insurers use the data for, as Ingenix knows, according to investigators.
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The attorney general’s investigators did their own survey and concluded that $200 is the fair market rate in New York City and Nassau County for a 15-minute consultation with a doctor for an illness of low to moderate severity. Ingenix, the investigators said, calculated the rate as $77, of which United would pay $62, leaving the patient to pay $138.