Out-of-network charges: unusually high and customarily secret

Consumers Reports.org
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Health
July 9, 2009

More evidence emerged from a recent Senate investigation that the insurance industry has routinely underpaid for out-of-network care. The investigation by the Senate Committee on Commerce, Science and Transportation* found that health insurance companies in every region of the United States have used faulty databases from Ingenix, Inc. to underpay the insurance claims of millions of Americans. As a result, billions of dollars in bills that should have been paid by insurance companies have been shifted to consumers, the report said.

The revelations build upon those from an investigation by the attorney general of New York, which found that Ingenix, a wholly owned subsidiary of one of the largest insurance companies in the country, UnitedHealth, systematically understated market rates up to 28 percent across New York state. Further, the company’s databases were never accessible to consumers, and none of the insurers disclosed that the data used to calculate the rates was compiled by a major health insurer.

More than 100 million Americans pay extra for health insurance that allows them to go out of their network to receive care from doctors of their choice. Consumers who use such PPOs can expect their insurance company to pick up a percentage of the bill when they use out of network providers. But insurers don’t pay a portion of the whole bill—just a percentage of the portion that they deem to be "usual and customary."

That’s where Ingenix comes in. The company’s allegedly flawed data was used by 17 of the 18 private insurance companies in the Senate investigation, and 12 companies in the New York state investigation, as well as some government plans. And according to the Senate investigation, it may not just be Ingenix’s faulty methodology that kept usual and customary rates down for insurers: There’s evidence that some of the insurance companies that provide data to Ingenex scrubbed the highest rates from their reports. For the rest of the story, click here.