March 26, 2009 / 8:00 PM / 10 years ago

U.S. doctors urge transparency on insurer payments

* Doctors group says transparency means savings

* AMA urges more openness on out-of-network services

WASHINGTON, March 26 (Reuters) - Requiring health insurers to be more open about how they set reimbursement rates for out-of-network medical services would save everyone money, the top U.S. doctors group told Congress on Thursday.

American Medical Association President Nancy Nielsen said such a move would prevent insurance companies from shortchanging patients and upsetting their relationship with their doctors by underestimating what doctors should be charging for services.

“The AMA believes enormous savings would accrue to patients, physicians, health insurers and other third-party payers if there were complete transparency,” she told the Senate Commerce, Science and Transportation Committee.

Insurer reimbursement rates for out-of-network services are often set at what are considered “usual” or “customary” charges. The problem for doctors and patients is that insurers have been systematically underestimating those charges, Nielsen said.

Recent lawsuits are changing those practices, Nielsen said. But she urged Congress to make sure health insurance payment transparency is part of a broad healthcare overhaul that President Barack Obama wants enacted by the end of the year.

Neilsen’s testimony comes a day after the AMA and others sued WellPoint Inc WLP.N, accusing it of fixing payments for out-of-network services artificially low.

The lawsuit, filed in Los Angeles federal court, followed similar federal claims led by the AMA against Cigna Corp (CI.N) and Aetna Inc AET.N in New Jersey, and against UnitedHealth Group Inc (UNH.N) in New York.

WellPoint said on Wednesday in response to the lawsuit that it was “committed to providing appropriate reimbursement for out-of-network services.”

In January, UnitedHealth agreed to pay $350 million to resolve class action litigation and $50 million to settle an investigation by New York Attorney General Andrew Cuomo into its Ingenix database.

Reporting by Donna Smith; Editing by Doina Chiacu

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