February 2, 2009 / 7:59 PM / 10 years ago

UPDATE 1-Aetna settles student pay probe-NY Attorney General

NEW YORK, Feb 2 (Reuters) - Health insurer Aetna Inc AET.N will pay more than $5 million to reimburse students for medical claims and resolve an investigation by New York state, the attorney general’s office said on Monday.

Attorney General Andrew Cuomo’s office said it found that Aetna Student Health underpaid at least $5.1 million in student health insurance claims nationwide between 1998 and April 1, 2008. The company will reimburse claims by more than 73,000 students at 200 colleges.

Aetna has agreed to pay students or their doctors, where appropriate, for underpayments, plus interest and any penalties for issues such as late payment.

Aetna acquired the student health subsidiary, formerly known as Chickering, in 2003. It said it learned the unit had underpaid some student health claims from providers who were not part of its network. Underpayments averaged about $25, Aetna said.

“Chickering has corrected the issue going forward and is reprocessing past claims that were affected for additional payments to members and providers,” Aetna spokeswoman Cynthia Michener said.

Cuomo’s office said it learned of the underpayments during a broader investigation into out-of-network payments by health insurers.

Last month, UnitedHealth Group Inc (UNH.N) agreed to a settlement with Cuomo’s office after an investigation into the independence of its database used to set reimbursement rates for patients’ medical bills.

The settlement calls for UnitedHealth to shut down its Ingenix medical billing information service and pay $50 million to finance a new independent database to determine market rates for health-care procedures.

Aetna also has agreed to pay $20 million to help establish that database.

The agreement over student claims concerns the use of outdated schedules from the Ingenix databases, Cuomo’s office said. (Reporting by Lewis Krauskopf)

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