UnitedHealth settles New York reimbursement probe

NEW YORK (Reuters) - UnitedHealth Group Inc UNH.N agreed on Tuesday to a settlement with the New York State attorney general following a probe into the independence of its database used to set reimbursement rates for patients' medical bills.

The agreement followed a year-long investigation by Attorney General Andrew Cuomo, who said that consumers around the country have been forced to pay more than they should have for out-of-network medical services through skewed patient reimbursement rates.

Cuomo said his office reviewed more than 1 million medical bills in its probe. He said that as many as 100 million people nationwide may have been affected by the faulty billing rates.

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.

Cuomo said he hopes the new system will be operational in about six months.

UnitedHealth will not need to take a financial charge related to the settlement, a spokesman for the insurer said.

The company did not acknowledge any wrongdoing, but its General Counsel Mitchell Zamoff said that “we regret that conflicts of interest were inherent” in the Ingenix databases.

A probe by Cuomo, announced last February, found that UnitedHealth’s Ingenix unit operates a “defective and manipulative” database that most major health insurers use to set reimbursement rates for out-of-network medical expenses.

“We believe Ingenix is essentially the black box for consumers,” Cuomo said, announcing the settlement before an audience of doctors and others at St. Vincent’s Hospital in Manhattan.

He said the system “forced consumers to write a blank check” for procedures without knowing how much they would ultimately have to pay out of their own pockets.

Insurers often promise to cover up to 80 percent of the so-called “usual and customary” rate of an out-of-network expense, with consumers responsible for paying the balance. Cuomo said the Ingenix database would skew these rates downward compared with the actual market rate, shortchanging consumers.

UnitedHealth was the only insurer involved in the settlement. Cuomo said he was putting other insurance companies “on notice today” that his office would approach them about using the new database and contributing money to fund it.

The names of other companies he listed included Aetna Inc AET.N, Cigna Corp CI.N and WellPoint Inc WLP.N.

Cuomo said he believes that past overcharges involving UnitedHealth customers alone totaled in the hundreds of millions of dollars. He did not demand any restitution from UnitedHealth for patients as part of the settlement, saying he would await the resolution of various lawsuits brought by other parties before taking any action.

“We’ll see how these litigations proceed,” he said. Cuomo said his office could pursue its own restitution lawsuits down the road if it were unsatisfied with the results of the existing cases.

Among the outstanding lawsuits is one involving the Medical Society of the State of New York. The group’s president, Michael Rosenberg, said he hopes the case will be resolved “in a manner that will recognize United’s responsibility to make just compensation for its prior use of the Ingenix database.”

In afternoon trading, UnitedHealth shares were off 2 cents to $25.60 on the New York Stock Exchange.

Additional reporting by Lewis Krauskopf and Joan Gralla, editing by Gerald E. McCormick