Patients Allegedly Over-Billed for Out Of Network Medical Care

New York, NYIt is probably little surprise to anybody who has dealt with health insurance companies that once again those companies are being accused of less than honest business practices. This time, those practices involve out of network physicians and the ways that insurance companies decide on reimbursement rates for out of network medical care.

In 2008, New York Attorney General Andrew Cuomo announced that he was investigating whether or not health insurance companies were forcing patients to pay more for out of network care than they should have been. Insurance companies set rates for out of network care to avoid paying high costs for patients who might choose expensive medical care over the care provided by in-network physicians.

Many health insurance plans require patients to pay a percentage of the cost of out of network care, basically to deter people from choosing more expensive care. However, according to Cuomo, the industry purposely underestimated how much various procedures typically cost, leaving patients to pay the difference.

For example, according to a report in The New York Times, doctors in New York City typically charge $200 for an office visit. However, Ingenix (the company that set reimbursement rates) calculates the charge for a visit at $77. If a typical plan covers 80 percent of that cost, then the insurer would pay $62. The patient would be stuck paying the remaining $138. Basically, the insurer has paid only 30 percent of the charge for the doctor's visit, even though the policy states it will pay 80 percent. That's a huge discrepancy, and it once again leaves patients responsible for high bills that they do not expect to pay.

According to reports, part of the problem is that Ingenix, the company that is used by the insurance industry to set rates, is owned by UnitedHealth Group—putting it in a potential conflict of interest. After all, the company that owns Ingenix has an interest in paying as little as possible.

UnitedHealth has said that it believed data provided by Ingenix was fair.

Since Cuomo announced his investigation, UnitedHealth has agreed to pay $50 million to settle claims against it. However, doctors and medical societies have filed their own lawsuit against insurance companies including WellPoint Inc., alleging the insurers fixed reimbursement rates for out of network services. The American Medical Association has filed lawsuits against CIGNA Corp., Aetna Inc. and UnitedHealth Group alleging similar misconduct.

But, the problem of out of network fees may have more severe repercussions for patients than paying more for medical care. A lawsuit filed by Newton Memorial Hospital against Horizon Blue Cross Blue Shield alleges that the health insurance company harassed physicians and recommended that patients leave the hospital, which is an out of network hospital—going so far as to call on patients while they were in the hospital.

According to the lawsuit, Horizon attempted to contact 2 elderly people to get them to move to another hospital after they were admitted to Newton Memorial. One of the elderly patients was suffering from double pneumonia, while the other had been admitted at the emergency room with respiratory failure. The patient with pneumonia was allegedly hand-delivered a letter to his or her hospital bed suggesting the patient choose an in-network hospital.

Newton Memorial says it withdrew from Horizon medical insurance coverage on November 23, 2008, because Horizon's reimbursement rates meant Newton—a not-for-profit hospital—would lose money on inpatient admissions. The 2 sides were unable to reach an agreement on new reimbursement rates, leading to Newton Memorial leaving Horizon's network. Now, the hospital says Horizon is intimidating its patients, physicians and physician's groups.

According to the lawsuit, this intimidation included Horizon threatening to terminate physicians' contracts with Horizon if they referred patients to Newton Memorial. Horizon has responded by calling the charges "outlandish" and saying that a response will be filed in court.