Another Insurance Giant Brought to Its Knees by NY Prosecutors

New York Attorney General Andrew M. Cuomo has reached an agreement with another large insurer to settle ongoing allegations that insurance companies rigged the system used to calculate reimbursement rates for out-of-network medical care, cheating patients and physicians across the United States.

The agreement with WellPoint, Inc., which covers 35 million Americans, is the seventh such deal reached with an insurer forcing the company to change its practices and following an investigation led by Cuomo and other New York state officials. The list of corporate names taken down in the state’s investigation reads like a who’s who of the American insurance industry and includes BlueCross/Blue Shield, UnitedHealth Group Inc., Aetna, Cigna, and others.

The companies were accused of relying on a computer database company, called Ingenix, to calculate how much patients and physicians would have to pay for medical procedures performed outside their coverage networks. Prosecutors said the database constituted a conflict of interest, since the companies paid for and maintained the numbers in it, and that the numbers were manipulated in order to lessen the companies’ expenses.

During the year-long investigation into the practice, it was determined that Ingenix was in fact a subsidiary of UnitedHealth, even though the company claimed it relied on independent sources for such financial information.

As part of the settlements with the insurance companies, Cuomo required the companies to suspend use of the Ingenix database and pay for the creation of a new, independent system for determining patient reimbursement rates. WellPoint agreed to chip in $10 million toward the creation of that new system, bringing the total now being paid the insurance companies to set it up to about $90 million.

Cuomo, in a statement announcing the settlement with WellPoint, said his sweep of the insurance industry was now drawing to a close and signaled a shift toward monitoring efforts by the companies to set up the new system for determining out-of-network reimbursement rates.

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