Wednesday, January 14, 2009

UnitedHealth (and Ingenix) Settles

UnitedHealth just settled yet another lawsuit. As reported by the New York Times,

In a settlement with one of the nation’s biggest insurers, New York’s attorney general, Andrew M. Cuomo, has ordered an overhaul of the databases the industry uses to determine how much of a medical bill is paid when a patient uses an out-of-network doctor.

A statement from Mr. Cuomo’s office said the industry had engaged in 'a scheme to defraud consumers' by systematically underpaying the nation’s patients by hundreds of millions of dollars over the last decade.

The move, to be announced Tuesday, is part of a settlement with the insurance giant UnitedHealth Group, which operates the industry databases. It results from a yearlong investigation by Mr. Cuomo’s office that concluded the data had understated the true market rates of medical care by up to 28 percent.

The settlement will have a nationwide impact because UnitedHealth, the biggest health insurer in New York, operates the databases used by the entire industry, through its Ingenix business unit. The deal calls for creation of a new independent database, to be run by a university that is still to be selected.

Because insurers typically reimburse patients for only 70 to 80 percent of the 'reasonable and customary' cost of medical services when they visit doctors outside the insurer’s designated network of physicians, the patient can get shortchanged if the insurer understates the prevailing local fees.

According to Mr. Cuomo, the databases consistently understated the local 'reasonable and customary' rates, which Ingenix collects from insurers. The report of the investigation’s findings described the industry calculations as 'created in a well of conflicts' that produced information that was 'unreliable, inadequate and wrong.'

In an interview Monday, Mr. Cuomo said: 'For years this database was treated as credible and authoritative, and consumers were left to accept its rates without question. This is like pulling back the curtain on the wizard of Oz. We have now shown that for years consumers were consistently low-balled to the tune of hundreds of millions of dollars.'

It is amazing how often the antics of UnitedHealth leadership have been grist for the Health Care Renewal mill. As we noted in September...

We have posted quite a bit about leadership problems at one of the US biggest for-profit managed care organizations/ health care insurers, the UnitedHealth Group (UHG), most recently here.

UHG has not always been known for being particularly patient-, employer-, or physician-friendly. For example, as reported by the Hartford Courant, "UnitedHealth Group Inc., the largest U.S. health insurer, will refund $50 million to small businesses that New York state officials said were overcharged in 2006." We have previously discussed how UHG promised its investors it would continue to raise premiums, even if that priced increasing numbers of people out of its policies (see post here); allegations that the UHG acquisition of Pacificare in California lead to a "meltdown" of its claims paying mechanisms (see post here); charges that the UHG acquisition of Sierra Health Services would give it a monopoly in Utah, and that UHG was transferring much of its revenue out of the state of Rhode Island, rather than using it to pay claims (see post here); and numerous violations of Nebraska insurance laws by UHG (see post here).

Such anecdotes conflict with the UHG mission statement, as recently revised. The company pledged to:
* Enhance the performance of the health care system, and improve the overall health and well-being of the people we serve and their communities.
* Work with health care professionals to expand access to high-quality health care so people get the care they need at an affordable price.
* Support the physician/patient relationship and empower people with the information, guidance and tools they need to make personal health choices and decisions.

One hypothesis is that UHG has trouble adhering to its idealistic mission because of the shortcomings of its leadership.The story of the fall of its recent CEO, Dr William McGuire, was strikingly instructive. As we have previously discussed, (see these posts here, here, and here from 2006 with links backward) Dr McGuire received outrageously lavish remuneration, which stood in stark contrast to the previous UHG mission's pledge to "make health care more affordable."Controversy has swirled over the timing of huge stock option grants given to Dr McGuire (see post here), leading to his resignation in October, 2006 (see post here). More recently, McGuire agreed to pay back some of those options, although that would reportedly leave him with more than $800 million worth of options (see post here).

Note that the latest settlement seems to make a mockery of the last point in the UnitedHealth mission statement as listed above. It would appear that information as it appeared in UnitedHealth subsidiary's Ingenix's data-base disempowered people, that is, people other than UnitedHealth leadership.

Nonetheless, despite all this bad behavior, UnitedHealth is still one of the US' largest managed care organizations/ health insurers. That suggests how fundamental problems in leadership of health care organizations are to the ongoing health care crisis.

By the way, note that this recent settlement is about dodgy practices at UnitedHealth's Ingenix subsidiary. Just yesterday, we discussed a report that made the rather bizarre assertion that the US would soon face a shortage of gastroenterologists, members of a quite well recompensed procedurally oriented sub-specialty. But we noted that not only was the report sponsored by a company that manufactures the endoscopes and related equipment used by gastroenterologists, but that it was authored by the Lewin Group, often portrayed as independent and authoritative, but in fact another part of Ingenix. The just announced settlement should suggest even more skepticism about the independence and authoritativeness of this report.

Just as the prevalence of conflicts of interest affecting medical researchers and academic medicine should make patients and physicians skeptical of the clinical research they do, the prevalence of conflicts of interest affecting health services and policy researchers and pundits should make people, physicians, and policy makers skeptical of the policy research they do, and the policy recommendations they make.


Mark said...

It seems that this is just a drop in the bucket. It will be interesting to see what else comes of this. See here...

Anonymous said...

I happen to be a gastroenterologist, and I can tell you why there will be a shortage. It comes down to the fellowship being changed to a three year training program from a two year program in the 1990's which slowed the rate of training while the demand after 2000 has skyrocketed and the number of training programs remains limited. It is extremely hard to get a spot in this specialty because of the large number of physicians being driven away from primary care by the economics of medicine, desiring to enter this specialty, and the limited number of spots for training.