New U.S. System For Health Care Charges Unveiled In N.Y.

NU Online News Service, Oct. 27, 3:50 p.m. EDT

New York Attorney General Andrew Cuomo announced the creation today of a new system that will establish more objective rates for the nation's health insurers to charge for out-of-network medical treatment.

He explained that a not-for-profit company will be set up funded by a $100 million settlement his office arranged with health insurers.

Speaking at Syracuse, N.Y., Mr. Cuomo said the majority of the 60,000 complaints he has received over the last year have been about health care. One problem, he said, is the method used to reimburse the 70 percent of Americans who have out-of-network insurance plans.

He said an investigation revealed that virtually all health insurers use one company–Ingenix–to determine the "usual and customary rate" (UCR) for medical procedures. Ingenix, in turn, obtains the information it uses to develop the UCR from those same insurers. Additionally, Mr. Cuomo said Ingenix is owned by United Health Group.

"In our opinion, that is a conflict of interest," he said. A plan was developed to get companies to stop using Ingenix, substitute a new system and institutionalize that system, he said.

Today's announcement establishes FAIR Health, a not-for-profit company and an upstate research network headquartered in Syracuse that will develop a new database of information used for reimbursements nationwide, Mr. Cuomo said.

Additionally, he added, consumers will be able to access information so they will know what reimbursements should be before they go to the doctor.

Mr. Cuomo and others, including Nancy Ann DeParle, director of the White House Office of Health Reform, have promoted this initiative as a way to shed light on what they see as the secrecy and bureaucracy of insurance companies.

However, a representative from America's Health Insurance Plans (AHIP) said he believes making the information public will actually expose exorbitant rates that out-of-network medical providers, not insurers, are charging, which he said could be up to 10 times what Medicare charges for the same procedures.

Robert Zirkelbach, AHIP spokesman, said he does not believe this initiative will lower health care rates because it is merely changing who compiles data from Ingenix to a not-for-profit company.

But he said no one has been looking at what physicians are charging insurers, and with the information now available to consumers, he said consumers may be shocked when they find out.

FAIR Health will be funded by $100 million from health insurers.

Mr. Cuomo said he hopes to see FAIR Health up and running in a year.