Aetna to Pay $5 Million To Settle Claims of Underpaid Student Claims
Aetna Inc., one of the nation’s largest insurers, will pay more than $5 million to reimburse thousands of college students for medical claims that were underpaid, New York state officials said.
The settlement will also close the books on an investigation into Aetna’s billing practices by the New York Attorney General’s office. That investigation found that Aetna Student Health underpaid at least $5.1 million in student health insurance claims across the United States from 1998 until April 1, 2008. The settlement amount will reimburse claims by more than 73,000 students at 200 colleges.
Aetna Subsidiary Cheated Students
The charges against Aetna stem from the company’s 2003 purchase of a student health subsidiary, formerly called Chickering. Aetna said after acquiring Chickering, the company learned that Chickering had underpaid some student health claims from healthcare providers who were not part of Aetna’s network. Those underpayments averaged about $25, officials said.
The underpayment problem has been fixed and customers who were shorted cash are having their claims reprocessed, Aetna said.
The underpayments reportedly were discovered as New York Attorney General Andrew Cuomo’s office undertook a broader investigation into how health insurance companies handle payments for out-of-network providers.
UnitedHealth Group Also Fined Earlier
Aetna is the second large U.S. insurer to face fines for its handling of billing practices in the past month. In January 2009, UnitedHealth Group Inc., the largest insurer of Americans, agreed to settle claims brought by New York officials over the company’s use of a database used to set reimbursement rates for patients’ medical bills.
UnitedHealth had claimed the Ingenix medical billing information service was an independent firm not owned by the insurance giant, but investigation showed that UnitedHealth in fact owned Ingenix and used the database’s numbers to underpay claims submitted by its insured.
Through a settlement, UnitedHealth agreed to shut down the Ingenix data base and pay $50 million to finance a new, independent database that will be used to determine market rates for health-care procedures.
Aetna, one of the companies that also used Ingenix to calculate payments, has agreed to pay $20 million to help establish the new database. The student insurance claims at the center of the settlement were reportedly underpaid using out-of-date payment schedules from the Ingenix databases, officials said.
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