Millions of patients gouged?

By Carol Gentry
6/26/2009 © Health News Florida

Patients enrolled in popular health plans sponsored by some of the nation's largest insurers have been paying more than they really owed for out-of-network treatment for at least 10 years, according to a Senate committee report. If  it's correct, a huge number of Floridians are owed millions of dollars -- and consumer advocates say the state should go after it.

The report, Underpayments to Consumers by the Health Insurance Industry, didn't get a lot of attention when it was released on Wednesday, perhaps because Washington's attention is on insurance reform legislation and because the machinations that took place in the industry are complicated.

But if the report is correct, the consequences could be huge, since more than 100 million Americans pay extra for the type of health insurance coverage that allows them to receive care outside the insurer's network of health providers. These include preferred-provider organizations (PPOs) and point-of-service (POS) plans for workers in the public and private sectors, members of the military and their dependents, and workers in self-funded employer plans administered by major insurers.

When Health News Florida shared the report with Florida consumer advocates, they were shocked. "Once again consumers have fallen victim to the shoddy practices of insurance companies," said Richard Polangin of Florida Public Interest Research Group.  "This is another example of why Congress needs to approve a public plan to compete with private insurance companies to keep them honest." 

Walter Dartland, a long-time consumer advocate on insurance matters in Florida, pronounced the report "a fantastic piece of work." He said he always suspected that there was a problem with balance-billing on out-of-network care, but said the secrecy inherent in the contracts between insurers and health-care providers kept matters under wraps.

"Now that I know, I'm appalled," he said.

The heart of the problem is the calculation of the "usual and customary charges" by health-care providers in a given geographic area. Insurers tell their customers that they're calculating what they'll pay by taking a certain percentage of that -- say 70 or 80 percent -- leaving the customer to pay the balance.

What happened is that the majority of large insurers all got their data on "usual and customary charges" from the same vendor, Ingenix Inc.. And Ingenix, which was until recently a subsidiary of UnitedHealth Group, had been fudging the numbers to make them lower than they really should have been. So if the insurer said it was paying 80 percent, it might have actually been paying 70 or 60 percent, leaving the patient to make up the difference without knowing it.

An investigation by the New York State Attorney General indicates patients were being overcharged from 2 to 28 percent in that state.

In January, under pressure from the New York Attorney General, UnitedHealth Group agreed to pay $50 million to establish a new, independent database to be run by a nonprofit organization. That organization would create a Web site that would let consumers know up front how much they'd be reimbursed for out-of-network services in their area. But there was no agreement to repay customers. That state's investigation is continuing.

One of the shortcomings in this week's Senate committee report is that it doesn't identify the companies that have been using the vendor with the flawed data, because the committee had to promise confidentiality to get the information. But among the companies that have been identified in testimony or other investigations are UnitedHealth, Humana and Aetna.

Blue Cross and Blue Shield of Florida was one of the companies from whom the Senate requested data, but a spokesman for the company said it does not use that vendor except for some dental claims.

--Carol Gentry can be reached at 727-410-3266 or by e-mail.