Attorney General Cuomo Announces Expansion Of Healthcare Reform Efforts To Upstate Ny; Schenectady-based Mvp Health Care To End Relationship With Ingenix
NEW YORK, NY (February 4, 2009) – Attorney General Andrew M. Cuomo today announced the expansion of his historic reform of the nationwide healthcare reimbursement system to Upstate New York. Cuomo has reached an agreement with the Schenectady-based insurer MVP Health Care, Inc. in his ongoing drive to eliminate the defective and conflict-of-interest ridden Ingenix database and generate fair, out-of-network reimbursement rates for patients. Cuomo also announced that he has filed a five-day notice to file suit against another Upstate health insurer, Capital District Physician’s Health Plan (CDPHP), for failure to embrace these reforms.
MVP, a non-profit health insurer that covers over 700,000 patients across Upstate New York and the East Coast, did not contribute data to Ingenix, but, like other insurers across the country, relied on the database to determine reimbursement rates for patients who went out of network. Despite not being a contributor, MVP has proactively agreed to embrace Cuomo’s reform efforts and end its relationship with Ingenix, becoming an industry-wide leader in the fight to ensure fair reimbursement rates for working families nationwide.
“Companies like MVP that proactively embrace reform are an essential part of our continued momentum towards change that is nationwide and industry-deep,” said Attorney General Cuomo. “I commend MVP for being a true industry leader and hope that their forward-thinking actions today encourage others to follow suit. If they do not, as my notice to CDPHP today makes clear, this Office will not hesitate to bring legal action against anyone who was involved with Ingenix.”
Earlier this month, Attorney General Cuomo announced sweeping reforms to end the manipulation of reimbursement rates at the expense of patients across the country. After a months-long investigation revealed that the health insurance industry relied on a faulty database to set rates, Cuomo reached groundbreaking agreements with UnitedHealth Group Inc. (NYSE: UNH), the owner of the Ingenix database and the second-largest insurer in the country, along with Aetna (NYSE: AET), the nation’s third-largest insurer.
Attorney General Cuomo’s investigation concerned allegations that as a subsidiary of a major health insurer, Ingenix had a vested interest in setting 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. That means many consumers were forced to pay more than they should have. The investigation found 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. The establishment of a new database, independently maintained by a nonprofit organization, is designed to remove this conflict of interest.
In early January, Attorney General Cuomo announced the first settlement in his investigation with UnitedHealth, under which the database of billing information operated by Ingenix will close. United also agreed to pay $50 million to a qualified nonprofit organization that will establish a new, independent database to help determine fair out-of-network reimbursement rates for consumers throughout the United States. Cuomo has since reached an agreement with Aetna who will pay $20 million to the new database.
Today’s agreement with MVP is the first involving a non-profit, upstate insurer and demonstrates the industry’s growing commitment to Cuomo’s reforms. Under the terms of the agreement:
- MVP will cease using the Ingenix databases to calculate out-of-network reimbursement rates;
- MVP will also amend their member disclosures to provide clearer information to its members about their method of determining reimbursement rates;
- If MVP continues to promise its members that they will be reimbursed based on “usual and customary rates,” MVP will use the new database;
- MVP will contribute $535,000 over a five-year period to help fund the new, independent database;
- A nonprofit will own and operate the new database, and will be the sole arbiter and decision-maker with respect to all data contribution protocols and all other methodologies used in connection with the database;
- The nonprofit will develop a website where, for the first time, consumers around the country can find out in advance how much they may be reimbursed for common out-of-network medical services in their area;
- The nonprofit will make rate information from the database available to health insurers;
- The nonprofit will use the new database to conduct academic research to help improve the health care system;
- The nonprofit will be selected and announced at a future date
Denise Gonick, MVP Health Care executive vice president and chief legal officer, said: “Like many other health insurers, MVP used the Ingenix database. We recognize the Attorney General’s concern about conflicts of interest inherent in the Ingenix database and appreciate his providing our industry with an independent process that is transparent and helps consumers make more informed health care purchasing decisions. MVP welcomes the opportunity to be the first upstate New York based health insurer to introduce this reform to our members, and believes that consumers and providers will be well-served by the joint effort that we are announcing today.”
Dr. Nancy Nielsen, President of the American Medical Association, said: "We are encouraged that health insurers are stepping forward and recognizing the importance of restoring their damaged relationships with patients and physicians by committing to the creation of a new, independent database that will restore fair reimbursements. The American Medical Association commends MVP/Preferred Care for joining United Healthcare and Aetna by agreeing to the solution proposed by New York Attorney General Cuomo and calls upon other health insurers to do the same."
Dr. Michael H. Rosenberg, President of the Medical Society of the State of New York, said: “Today’s announcement – that brings us another big step closer to achieving a major goal that the Medical Society of the State of New York and the American Medical Association have been working on since 2000. This agreement with MVP is particularly noteworthy because it will help to reduce the cost of out-of-network medical care for patients in this area, which has been impacted by the economic downturn. Efficient use of the healthcare dollar is particularly important to these New Yorkers today.”
Chuck Bell, Programs Director for Consumers Union, said: “Attorney General Andrew Cuomo’s investigation of the health insurance industry has blown the cover on a massive, national problem in the out-of-network reimbursement system. Thanks to this investigation, we now know that many, many consumers are being grossly underpaid by their insurers when they go out of network to visit a physician or medical provider. We commend MVP Health Care for being an early leader in supporting a new independent nonprofit institute based in New York state that will collect and maintain data on out-of-network charges, and contributing half a million dollars to fund its work.”
Cuomo also announced today that he has given CDPHP five-day notice of intent to sue for refusing to abandon the use of the Ingenix database and embrace reform. CDPHP is another non-profit insurer based in the Capital Region that insures 400,000 patients throughout 29 counties in New York State.
The Attorney General’s five-day notice states that the Office intends to commence litigation against CDPHP in order to stop the unlawful acts and practices that they have engaged in and continue to engage in. It will also seek to obtain injunctive relief, restitution, damages, and civil penalties. The unlawful acts and practices complained of consist of engaging in repeated and persistent fraudulent, deceptive, and illegal business practices in connection with CDPHP’s continued use of the Ingenix databases for reimbursing members’ covered out-of-network services in New York State.
The agreement announced today is the result of an investigation by Deputy Chief of the Health Care Bureau James E. Dering, Senior Trial Counsel Kathryn E. Diaz, and Assistant Attorneys General Brant Campbell and Sandra Rodriguez, under the direction of Linda A. Lacewell, the head of the Attorney General’s Healthcare Industry Taskforce.Earlier this month, Cuomo also issued a report on his investigation, “Health Care Report: The Consumer Reimbursement System is Code Blue.” The report highlights the conflicts of interest and other defects in the current system and calls for the reforms announced today. To access the report, get consumer tips for out-of-network care, or to file a complaint, please visit http://www.ag.ny.gov/.
- Health Care Reform Presentation
- NOTICE OF INTENT TO SUE SENT TO CDPHP
- Attorney General's agreement with MVP
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