Ingenix will soon be out and FAIR Health will be in for calculating usual-and-customary physician payment rates in New York state, Attorney General Andrew Cuomo announced.
FAIR Health is the name given to a new, not-for-profit physician payment database and research center to be operated by a consortium of universities in New York and headquartered at Syracuse University, Cuomo said.
No timeline was given for when the database would become operational.
When it does, it will replace the system maintained by the private firm Ingenix, a subsidiary of UnitedHealth Group.
Ingenix was accused by Cuomo's office of fudging its data to understate the fees charged by physicians in the marketplace. UnitedHealth Group had agreed in January to settle the charges and pay $50 million to support a new system, though without admitting any wrongdoing. (See Usual-and-Customary Database Overhaul Promised in Insurer Settlement)
Several other large insurers, including Cigna, Aetna, and WellPoint, also relied on the Ingenix database to determine usual-and-customary fees. They and seven other firms also reached settlements with Cuomo and contributed millions more to the replacement entity.
In total, Cuomo said, close to $100 million in settlement money will be used to fund FAIR Health.
In addition to creating and managing the new database, FAIR Health and its university partners will design a new consumer Web site that will allow patients around the country to estimate reimbursements for out-of-network healthcare services in their area, according to a statement from Cuomo's office.
"Information in the new database will be made available for academic research, and the database itself, in nonindustry hands for the first time, is expected to make FAIR Health a significant driver in healthcare reform efforts," the statement said.
Cuomo's office began the investigation in February 2008 after receiving complaints from patients and physicians who said the usual-and-customary fees calculated by insurers were substantially below actual local market standards.
Investigators obtained more than a million actual doctors' bills from providers across New York state, and compared them with usual-and-customary fee calculations by Ingenix.
They found that Ingenix had systematically understated market rates -- by up to 20% in Manhattan, and by as much as 28% in the Buffalo area.
Ingenix and UnitedHealth Group were also sued by the American Medical Association and state medical societies in New York and Missouri, which prompted an additional $350 million settlement from the companies.
AMA board member William A. Dolan, MD, an orthopedic surgeon in Rochester, N.Y., lauded Cuomo's efforts on behalf of fair physician reimbursements.
In a statement issued by the AMA, Dolan said the AMA "commends [Cuomo] for the landmark achievements of forcing health insurers to end a rigged system for setting payments and successfully negotiating a transition to a more transparent system."
Said Dolan, "The AMA had been fighting in court for almost a decade against the industry-wide insurer scheme to defraud patients and physicians of proper reimbursement. It was Attorney General Cuomo's intervention that really helped us move beyond the AMA's lawsuit and get to a point where critical reforms could be implemented nationally."