The last couple weeks have been tough for United HealthGroup subsidiary Ingenix. Everyone’s heard about NY Atty Gen Andrew Cuomo’s announcement that his office is filing charges citing Ingenix’ determinations as inaccurate.
A bit less well-known is the January decision by an appellate court in Massachusetts – less well known but no less significant. The Mass. ruling essentially threw out ingenix’ claim that its health care database is an accurate representation of prevailing provider charges.
The case, Davekos v Liberty Mutual, involved a provider who objected to the insurance company reducing his bills; the basis for the reduction was Ingenix’ database and the use of that database to establish a range of ‘reasonable and customary’ charges.’ Davekos was heard in the Northern District. The court found that Ingenix’ database was hearsay and therefore not admissable.
But that was only part of the decision. In the opinion, the court found that Ingenix
could not prove that the underlying data was accurate, that it was a fair representation of provider charges in an area, or that the results were anything more than “dollar amounts resulting from the statistical extrapolations from whatever bills were actually included in its database.”
Other than that…
What does this mean for you?
Be very careful that your repricing methodology is accepted in the states where you operate.
So, what’s the appropriate remedy here? Should out of network doctors just be allowed to charge anything they like and be paid for it by insurers? If so, what’s the incentive to be in network? Suppose an out of network surgeon’s charge for, say, gall bladder surgery is 5 times or more what he routinely accepts as full payment from Medicare but Ingenix’ usual and customary rate is only 2.5 times the Medicare rate. How can the Medicare rate be fair and reasonable (the surgeon accepts it after all) but Ingenix’ UCR rate is unreasonable? Looks like a totally screwed up system that makes absolutely no sense, at least to me.
It is a screwed up system that doesn’t make sense. If Bob Laszewski doesn’t understand it, I bet few do.
The thing I don’t understand is that it shouldn’t matter to a provider what ingenix says the reasonable and customary is, because the provider can always balance bill the patient. If anyone should be suing, it’s the patient, saying that R&C is too high. If the provider is concerned about not being able to yield money from his extortion attempts, he shouldn’t see non-par patients.
Certainly builds a case for payors need to utilize objective 3rd party data for determining fair and equitable payments for out-of-network claims.
In 2003 the Office of Inspector General issued a mandate that due to increasing fraud and abuse, fair and reasonable payment to providers should be based on REIMBURSEMENT rates, not charges. (Federal Register, Volume 68, No. 178, 09/15/03, p. 53939). While not widely accepted or even known about, if payors were to adopt protocol to adhere with the OIG, the mystery surrounding fees, reimbursement, contracted rates would suddenly be transparent. Consumers and commercial payors would then have the ability to assess providers not only on quality, but also cost benchmarks as well.
Such reimbursement data is available, objective, authentic and certified through MCR. As more costs are pushed down to the consumer level in healthcare, I believe that we will see this become commonplace.
A paradigm shift in “networks” could be the result. Imagine rather than discounting physician charges by a payor with a network contract, the provider could be incentivized by additional payment above and beyond the objective fair and reasonable reimbursement based review. Seems like a win/win for all involved.
According to Ingenix, the Medicare reimbursement rate for CPT-4 Code 99213 (15 minute office visit) in New York City is $70. The physician list in price at the 75th percentile is $150 in NYC. At the 90th percentile, it’s $300.
Individual health plans (not Ingenix) use this data to determine at what level they will set out of network reimbursement rates. The higher they set them, the higher the premium they must charge their customers. There has been a trend in recent years toward setting out of network rates as a percentage of Medicare rates rather than based on a percentile ranking of list prices. Out of network rates set this way are clustering in a range of 110% to 140% of Medicare, again, according to Ingenix.
For most insurers, only 5%-10% of their entire medical spend is for out of network services in any given year. The real problem, in my opinion, relates to the complete misunderstanding among members as to how this process works. Not only can the provider balance bill, but the difference between the insurer determined usual and customary reimbursement rate and the provider list price does not even count toward the member’s out of pocket maximum exposure for the year. So, coverage is not nearly as complete or comprehensive as the member is led to believe it is.
It should not be that hard for insurers to provide members with such information as what the Medicare reimbursement rate for the service in question is in that market and where the specific provider’s list price ranks in percentile terms within that market. As a further benchmark, the price equating to the 50th percentile would also be helpful to provide the member with some tools to either go back to the provider and challenge the bill as excessive and, if the provider insists on full payment anyway, let it be known that he just lost a patient unless his skills are so special that they can’t be easily matched or duplicated elsewhere.
Would the R&C published by Igenix be even less than the medicare allowable ?
If so, then some lucky smart lawyer is going to have some fun with all the words twisting.
If AG Cuomo’s suspicions are correct, this is just one example of billions of travesties that occur every single day in the US. As a family dentist in East Hampstead, New Hampshire, and a Dental Examiner for the North East Regional Board of Dental Examiners, Founder of IADMD, an organization for doctors of all disciplines that honor the Hippocratic oath—not the bottom line of powerful interests, there is waste and there is deception shortchanging every policyholder’s wallet and it needs to end. Americans who need health care and make sacrifices in their quality of life to afford to pay for insurance should not be cheated or deceived by their insurers. For hard working payers of insurance, IADMD’s plan can avert deceptions and place policyholders facing problematic situations in recovery. The IADMD doctor-led universal health care plan recommends allowing unbiased teams of two physicians and two dentists from the association to stand before insurance commissioners in every state, to oversee and stop problems before they happen, and to intervene and correct when they are found to have gone awry. How else do we begin to recover from this and from like situations happening in parallel? We do so by asking legislators to listen to IADMD, by bringing dentists and physicians together to become a vital part of the insurance regulatory process. When insurers request their all-too-frequent rate increase proposals and their numbers for usual, customary and reasonable services (UCR) to state insurance commissioners, we let IADMD provide a voice on behalf of optimal patient-care and intervene on inappropriate rate increases and lowered UCR requests which put insurance profits before patient-care and affordability. As patients tend to go with what is covered as opposed to a doctor’s preferred treatment of choice, in this example of possible inappropriately lowered UCR, patients tend to forgo the treatment considering it unaffordable. Besides these allegations there is much more debris that has to be cleaned up, and I will help Andrew Cuomo and others in any form as I am needed to help pick up the pieces of a shattered bureaucracy and assist in building a more responsive to patient-care United States for every individual and without socialized medicine—promoting the way to do this is by bringing doctors back in charge of medicine —for the United States stay the leader in the world of health care—NOT succumb to following other nations! As I remain dedicated to promote, protect, and advance human life, with a message to put health care back in the hands of doctors, I will help you get this message out and I welcome your questions.
John J. Ryan, DMD
Phone: (603) 382-7675,
http://www.iadmd.org
e-mail: DrJohnJRyanDMD@iadmd.org
IADMD® Mission:
Dedicated to promote, protect, and advance human life, our mission is to put health care back in the hands of doctors.
JJR
I have just been told by Aetna that the customary and reasonable charge for psychiatric services in Westchester County (north of NYC) has DECLINED effective 1/27/08 from 250 per seission to 245. I have tried to find the data supporting this change and can find none. It certainly defies common sense to suggest that the C&R fee declined in the recent past. My wife is a shrink and her fee and the fees of her colelagues have all gone up by about 10 percent in the last year. But how does one challenge this information?
I find Steve F.’s comment most interesting.
I am both a broker and consumer and find Aetna’s practices to be fraudulent in this area (despite their out-of-network reimbursement rates being higher than many other carriers).
My son was diagnosed with nodules on his vocal folds and was sent for voice therapy. The charge for initial consultation (90 minutes) was $350, yet Aetna would only allow $200 – there seems to be no CPT code distinguishing the length of the evaluation.
An unscientific survey – calling providers on Aetna’s directory and posing as a cash paying patient, found that the $350 charge was well within reason and below what most providers charge. An appeal to Aetna was unsuccessful.
Follow up therapy sessions are $135 per 45 minute session. Up until January, Aetna recognized this full charge. All of the sudden, a February visit was only recognized at $130. In response to my inquiry I was told that for the specific geographic location and specific date $130 represents the 80th percentile UCR. I asked the representative on the phone if he’s aware of ANYTHING that he pays for that has gone down in price from January of 2008 to February of 2008. The answer was an obvious no, yet he has no power to reverse the decision. I’m in appeal now, and wait to hear what they will come up with next.
Fact #1 – if you are an Aetna member, there is seldom if ever a need to go out of network. The provider base is comprehensive and credentialed. You (or by extension your employer) has contracted with Aetna to provide a proscribe product. By going outside of the network, you have voluntarily chosen to go from a defined benefit system to a defined payment system.
Fact #2 – frequently medical providers will choose not to participate in provider networks specifically because their payment demands are excessive or they can not meet the credentialing requirements of the insurer.
Fact #3 – if you want 100% coverage regardless of what medical providers you see, that coverage is available. Those policies are generally individually underwritten and will cost you several times the cost of a PPO policy.
Fact #4 – restating point #3, don’t complain about the cost, don’t complain about cost containment, don’t buy insurance, just take out a $1 million bond and pay for your care out of your own pocket.
Fact #5 – no I don’t work for Aetna, but I do work in the industry.
I think the point of this post, and the point of the lawsuit against Ingenix is that Ingenix is somehow determining UCR without then providing supporting data. The onus is on the payer to justify and explain any reduction of a provider’s charge. This is not about supporting one side or the other, this is about being fair and reasonable to both sides of the fence. If the payers cannot justify their reductions, providers do not need to accept them. Plain and simple.
A second point; previous posters have suggested that Medicare reimbursement should be enough. How anyone can honestly suggest that Medicare reimbursement rates would sustain our current levels of healthcare as well as provide the wherewithal for innovation is beyond me. Show me a hospital that can survive on Medicare patients alone, and I’ll eat my computer.