Attorney General Cuomo Secures Agreement With Nation's Largest Health Insurer To Join Historic Reform Efforts

NEW YORK, NY (February 18, 2009) – Attorney General Andrew M. Cuomo today reached an agreement with WellPoint, Inc. (NYSE:WLP) (“WellPoint”) the largest insurer in the U.S., in his historic reform of the healthcare reimbursement system. WellPoint marks the seventh insurer to sign an agreement with the Attorney General’s office to end its relationship with the defective Ingenix database in Cuomo's nationwide sweep of the insurance industry to end conflicts of interest and generate fair reimbursement rates for working families nationwide. 

WellPoint’s subsidiary Empire BlueCross Blue Shield (“Empire”) is the largest health insurer in New York State, with approximately five million members. Nationwide, WellPoint covers over 35 million people. WellPoint will pay $10 million to a qualified non-profit organization that will establish a new, independent database to help determine fair out-of-network reimbursement rates for consumers throughout the United States. WellPoint used and contributed data to the Ingenix database at various periods of time.

“Today’s agreement means that we are just steps away from reaching every insured New Yorker with our reform efforts,” said Attorney General Cuomo. “By securing an agreement with the largest insurer in the country, we are continuing to expand the number of insured Americans who will now be free from the conflict-of-interest ridden system that slammed hard-working individuals and family members with medical costs they did not deserve and could not afford to pay. Our industry-wide sweep is almost complete, and my Office is continuing to work on the next major step – setting up this new, independent database with the $90 million we’ve secured so far.”

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 year-long investigation revealed that the health insurance industry relied on a defective database to help set rates, Cuomo reached groundbreaking, national agreements with UnitedHealth Group Inc. (NYSE: UNH) (“United”), the owner of the Ingenix database and the second-largest insurer in the country, along with Aetna (NYSE: AET), the nation’s third-largest health insurer, and CIGNA (NYSE: CI), another major insurer.

Cuomo has also brought his reform efforts to Upstate New York, securing agreements with the Schenectady-based MVP Health Care, Inc./ Preferred Care (“MVP”), Buffalo-based Independent Health (“Independent”) and Buffalo-based HealthNow. He has filed notice of intent to sue two other Upstate insurers: Capital District Physician’s Health Plan (“CDPHP”) and Excellus Health Plan (“Excellus”) (including its Buffalo-based affiliate, Univera), for continuing to defraud consumers and manipulate rates.

Attorney General Cuomo’s investigation concerned allegations that as a subsidiary of United, 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 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 owned and operated by a nonprofit organization, is designed to remove this conflict of interest.

Under the agreement secured with United, 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’s agreement with Aetna secured another $20 million for the database and CIGNA has agreed to contribute $10 million. With the money secured from WellPoint today, the total for the new database is $90 million.

Under the terms of today’s agreements:

  • WellPoint will pay $10 million toward a new, independent database run by a qualified nonprofit organization;
  • The 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.

In February 2008, Cuomo announced that he had issued subpoenas to the nation’s largest health insurance companies that use the Ingenix database, including Aetna, CIGNA and WellPoint/Empire BlueCross BlueShield. The Attorney General’s industry-wide investigation is ongoing.

Ken Goulet, Executive Vice President and CEO of WellPoint's Commercial Business, said: “WellPoint is committed to appropriately processing claims and fairly reimbursing healthcare providers for covered services under the terms of each member's contract, while at the same time protecting our members and group customers against excessive charges by some non-participating providers. WellPoint acknowledges the conflicts of interest in the Ingenix database which the Attorney General’s investigation brought to light, and we support his efforts to increase the transparency of health care costs.”

Nancy H. Nielsen, M.D., President of the American Medical Association, said: "Today's agreement between Attorney General Cuomo and WellPoint constitutes another giant step toward ensuring all patients and physicians will receive fair and accurate reimbursements. The American Medical Association commends this insurer for stepping forward and committing to the creation of a new, independent database."

Michael H. Rosenberg, MD, President of the Medical Society of the State of New York (MSSNY), said: “We commend Attorney General Andrew Cuomo for negotiating an agreement with WellPoint, Inc. to finally end the abusive use of the Ingenix database for calculating out-of-network medical payments.  Today’s announcement of the Attorney General’s seventh Ingenix agreement brings us infinitely closer to achieving a major goal that the Medical Society of the State of New York has been working on since 2000. We hope this agreement, coupled with WellPoint’s generous $10 million contribution, are an indication that the insurance industry will continue to modify its way of doing business and work with physicians to provide better and more affordable healthcare for patients.”

Chuck Bell, Programs Director for the Consumers Union, said: "Today’s announcement confirms that national insurers are coalescing behind a comprehensive, industry-wide strategy to reform the way that out-of-network charges are calculated, so consumers will be paid fairly.  We commend WellPoint, Inc. for declaring its support for a new independent nonprofit institute that will collect and maintain data on out-of-network charges, and for contributing $10 million to fund its work."

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.

In January, 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


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