NY Attorney General Begins Lawsuit Against Ingenix® for Possible Fraud

March 7, 2008

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By William S. Henderson FACMPE
Administrator, Upstate Neurology Consultants
Member, AAN.com Practice and Technology Editorial Board
Member, Practice Management and Technology Subcommittee
Member, BRAINS
Author Disclosure

On February 13, 2008, New York State Attorney General Andrew Cuomo announced that he had expanded an investigation that focused on Ingenix, a $1.7 billion arm of UnitedHealth. Ingenix collects, sorts, and analyzes a large array of data, including therapeutic outcomes and billing information. After an initial six-month investigation, the AG has begun a lawsuit against Ingenix and has subpoenaed many New York health insurers to gather additional information on how they used the Ingenix data.

"This involves fraud in the hundreds of millions of dollars, affecting thousands and thousands of families," Cuomo said at a Feb. 13 briefing. "Too many people have been hurt. It has to stop. We believe there was an industry wide scheme perpetrated by some of the nation’s largest health insurance companies to defraud consumers."

In a typical scenario, Mr. Cuomo said an out-of-network doctor might charge $200 for an office visit but is told that the going rate is $77. The insurer then usually pays only 80% of that figure, leaving the patient responsible for the difference of about $138. At the heart of the lawsuit is how that "$77 rate" got set in the first place: the number was derived from a database of claims data created and maintained by Ingenix, and sold to other insurers.

In response to the Attorney General's allegations, UnitedHealth said it believes it is delivering "dependable database tools." Further, the company claimed that "the reference data is rigorously developed, geographically specific, comprehensive and organized using a transparent methodology that is very common in the health care industry."

Not so, said Linda Lacewell, who heads Cuomo's healthcare industry taskforce. She accused UnitedHealth of lying to consumers. She characterized the Ingenix database as "garbage in, garbage out." Another source reported Ms. Lacewell's description of Ingenix and UnitedHealth's use of data as "deception, manipulation of data and outright fraud."

Specific charges made in the New York Attorney General’s notice of proposed litigation against Ingenix included the following:

  • Their database lacks information about the physician's training and qualifications, the type of facilities where comparative services were provided, and the condition of patients.
  • They manipulate that database by deleting or even editing charges, particularly the higher charges.
  • They fail to collect information identifying what type of health care provider provided the service.
  • They pool data from dissimilar providers (such as nurses, physician assistants and physicians) for use in its database.
  • Their database contains outdated information.
  • They fail to audit the data they receive from data contributors to ensure that all the appropriate data was submitted and that it did not include negotiated or discounted rates.

Not the First Lawsuit Against Ingenix

This isn't the first time the Ingenix database has triggered legal action. According to a February 28 article by Ronald M. Davis, MD, the American Medical Association sued UnitedHealth in March 2000, alleging the database is inaccurate. The suit is still pending in US District Court for the Southern District of New York. "There is a profit motive for keeping reimbursements low," said Dr. Nancy Nielson, President-Elect of the American Medical Association, quoted in Dr. Davis' article. She also complained that there is no oversight of the data provided by Ingenix. "It's shocking and unacceptable for an insurance company to hide behind a shroud of secrecy. It's another example of UnitedHealth playing by its own rules," said Nielson. Price Rigging?

Daniel Sisto, President of the Healthcare Association of New York State, issued a statement that included the following comments:

If the Attorney General's allegations are proven true, we believe that United and Ingenix's practices have cheated the entire health care provider community by artificially lowering reimbursement for the services they provided. The "Usual, Customary, and Reasonable" (UCR) methodology is often used as a baseline for determining contract rates with health care providers. If the UCR is artificially low, then it follows that the discounted contract rates are also artificially low. Put more simply, if these allegations are true, this activity has been nothing short of hi-tech price rigging.

Little Impact on UnitedHealth's Projected Earnings

In spite of this latest accusation by the AG, financial analysts say that UnitedHealth is still likely to reach its forecasts of 13 percent profit growth in 2008 and 2009.

Author Disclosure

Author has nothing to disclose.