Attorney General Cuomo Secures Agreement With Aetna To Reimburse Health Insurance Claims For Over 73,000 Students At Over 200 Colleges Nationwide

NEW YORK, NY (February 2, 2009) – Attorney General Andrew M. Cuomo today announced an agreement with Aetna (NYSE: AET), the third-largest health insurer in the country, to reimburse health insurance claims by over 73,000 students at over 200 colleges, including 20 colleges in New York.  Under the agreement, Aetna will pay more than $5 million, plus interest and penalties, for claims involving out-of-network care.  The agreement resolves an investigation into the use of outdated reimbursement rate information by Aetna’s subsidiary, Aetna Student Health, which shortchanged students and doctors across the nation.

The investigation disclosed that Aetna Student Health underpaid in excess of $5.1 million in student health insurance claims nationwide between 1998 and April 1, 2008.  More than $2 million worth of these claims were attributable to almost 21,000 students who attended college in New York State.  The health plans in question were sponsored by the students’ colleges, underwritten by Aetna Life Insurance Company and administered by Aetna Student Health, formerly known as Chickering Student Health.

“Health insurers must honor the promises they make to reimburse consumers fairly.  Here, students were particularly vulnerable to being cheated because they placed their trust in health care plans sponsored by their colleges.  Aetna Student Health broke that trust.  I commend Aetna for correcting this problem, committing to pay restitution, interest and penalties to the affected students, and taking steps to ensure this does not occur again,” said Attorney General Cuomo. 

In settling the Attorney General’s case, Aetna has agreed to pay students or, where appropriate, their doctors, more than $5.1 million for underpayments, plus interest and penalties calculated under governing state law.  Late payments in New York are subject to 12 percent interest.  The scope of the agreement is nationwide.

Under the agreement, Aetna will also:

  • update Aetna Student Health’s claims processing system within 30 days after receiving new market rate schedules and annually certify when that was done;
  • hire an independent third party examiner to review Aetna Student Health’s compliance and training procedures, and improve those procedures based on the examiner’s recommendations; and
  • provide all employees of Aetna and its subsidiaries enhanced training on reporting compliance issues. 

"At a time when tuition and educational expenses at many colleges and universities are going up, students and parents simply can't afford to overpay for health care," said Charles Bell, programs director for Consumers Union.  "We are very pleased that Aetna has agreed to refund $5 million to students who were shortchanged on their health insurance claims.  This national settlement also establishes strong consumer protections to ensure that students will be fairly reimbursed when they use out-of-network medical services in the future."

Today’s agreement is related to a settlement between the Attorney General and Aetna announced on January 15, 2009, in which Aetna agreed to stop using databases operated by UnitedHealth Group, Inc.’s subsidiary, Ingenix, Inc., to determine out-of-network reimbursement rates.  Under that agreement, Aetna agreed to pay $20 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. 

Today’s agreement concerns the use of outdated schedules from the Ingenix databases to reimburse students.  Because the schedules were out of date, they indicated lower reimbursement rates than the students were entitled to.  The agreement resolves restitution issues arising from the use of outdated schedules to reimburse students; it does not resolve any other restitution issues arising from the use of the Ingenix database.

In February 2008, the Attorney General announced an industry-wide investigation into allegations that health insurers unfairly saddle consumers with the cost of out-of-network care.  At the center of that investigation is Ingenix, the nation’s largest provider of healthcare billing information, which gathers data from health insurers and creates schedules insurers use to formulate out-of-network reimbursement rates.  Ingenix is used by the largest insurers in the country and is a wholly-owned subsidiary of UnitedHealth Group Inc. (NYSE: UNH), the nation’s second largest health insurer.  The Attorney General’s office learned of Aetna Student Health’s underpayments through the industry-wide investigation. 

The agreement with Aetna announced today is the result of an investigation by James E. Dering, Deputy Bureau Chief of the Health Care Bureau, 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.

Aetna will send notice to all affected individuals with details on securing reimbursements. For more information, including consumer tips for out-of-network care, or to file a complaint, go to www.ag.ny.gov.

Attachment:

For Adobe PDF files you can download Adobe Reader from Adobe Systems.


sitemap Intergov foil PressOffice RegionalOffices SolicitorGeneral AppealsandOpinions ConvictionBureau CrimPros OCTF MFCU PublicIntegrityInvestigations TaxpayerProtection Antitrust ConsumerFrauds Internet InvestorProtectionRealEstateFinance CharitiesCivilRightsEnvironmentHealthCareLaborTobaccoCivilRecoveriesClaims Litigation RealPropertySOMB Budget LegalRecruitment Human Resources Bureau home oaghome contact private policy disclaimer