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PPG- Reform of the Out-Of-Network Reimbursement System
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Reform of the Out-Of-Network Reimbursement System

The following is excerpted from the website of the Office of the New York State Attorney General, Andrew Cuomo. For more information, including recent press releases, please visit the website at:

On January 13, 2009, the Attorney General announced groundbreaking reform of the out-of-network reimbursement system. The current system used by much of the industry is riddled with conflicts of interest. To remedy this problem, the Attorney General will select a qualified university to create a new, independent database, not controlled by any insurer, to help determine fair and accurate reimbursement rates. The university will also develop a website where for the first time consumers will be able to learn in advance how much they are likely to be reimbursed if they go out of network.

This reform arose out of an industry-wide investigation, launched in February 2008, into allegations that health insurers do not keep their promise to reimburse consumers based on the “usual and customary rate” of out-of-network care. Most health insurers use a database operated by Ingenix, Inc., a subsidiary of UnitedHealth Group. Ingenix gathers billing data from the industry and creates schedules used to determine the “usual and customary” rates. UnitedHealth Group, one of the nation’s largest insurers, uses the same schedules as a basis for reimbursing consumers. The Attorney General found that this gives Ingenix an incentive to manipulate the data so as to reduce reimbursement rates. Other health insurers that use Ingenix have the same conflict of interest.

With the creation of a new, independent database, consumers can now look forward to having more information, greater clarity and fundamental fairness in the out-of-network reimbursement system.

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