The State of NY has ordered United Health Group to update its fee database as part of an underpayment “scheme to defraud consumers”, settlement.
At issue is the United Health Group’s wholly owned Ingenix business unit, which operates databases that insurance companies use for making payments, under the rubric of “reasonable and customary”. However this ‘victory’ is limited to reimbursement when using an out of network doctor. These payments are calculated by what is known as the ‘prevailing local fees’. These fee schedules become part of the databases used for calculating payments that end up with your bill for services.
Here is the rub with this ‘victory’. It lets stands the concept of networks, where insurance companies and doctors agree on payments for services, under the assumption that the doctor will ‘win’ with a patient group requiring a single paperwork submission process, lowering his overhead and providing him with profit. The insurance company will ‘win’ by being able to negotiate cheaper fees in return for volume discounts, (those being the implicit promise of patients. Implicit rather than explicit as explicit is known as steering and is for the most part illegal.)
Prevailing Local Fees
PLF’s are calculations made by pooling billing data by geographical regions. The PLF fees which form the basis of this database, are skewed by ‘network’ arrangements, which have already been driven downward by pressure by the insurance industry. This database is shared among insurance companies, in what would seem in any other industry a violation of anti trust, but for federal McCarran-Ferguson Act of 1945 exempted the insurance industry from anti-trust regulation, so that this game can continue.
The insurance industry does not make money writing checks, they make money collecting premiums
You would think that on a common sense basis a provider like your hospital, clinic or doctor, who is doing a large volume of business, would have lower costs by ‘buying in bulk’, having less paperwork for payment processing, and so on. You would think that a big hospital which buys in bulk and has all of the diagnostic and surgical toys on site would provide medical care cheaper. Dream fucking on. So why is an aspirin costing you a dollar? Hospitals use every cost associated with their physical plants and add a piece of it for your bill. You come in for 6 stitches, you pay for an mri machine,staff, carts, advertising, and everything else the hospital can think of. Part of this is valid, most is not.
So when you get medical services, and receive bills that are far outside of what the contract between you and an insurance company, this is why. So the ‘victory’ is a bullshit move.
Even this is bullshit:
Under the agreement, UnitedHealth will pay $50 million to finance the creation of the new database, which will be intended to determine the prevailing costs of medical care in specific regions. Although the university to operate that database has not yet been selected, Mr. Cuomo said he would prefer it to be based in New York. Meanwhile, UnitedHealth’s Ingenix unit is allowed to continue running the operations.
Source NYT Online
Also note that we have not discussed health care yet.