Senate panel hears from witnesses detailing insurer practices that limit transparency of payment rates

Witnesses at a Senate Commerce, Science and Transportation Committee hearing on Thursday discussed the need for increased consumer protections that would limit the practice of insurers underpaying for out-of-network medical services, CQ HealthBeat reports.

Among the witnesses was Linda Lacewell, counsel for economic and social justice in the office of New York State Attorney General Andrew Cuomo (D), which has conducted investigations and settled resulting lawsuits against 11 insurers operating in the state that had been using a database known as Ingenix. The database, operated by UnitedHealth Group, is intended to calculate market rates for care provided by out-of-network doctors. However, Ingenix had been accepting claims information from insurers, which it uses to identify average out-of-network rates, without verifying or questioning the data, Lacewell said. The low payments rates calculated by Ingenix led to patients being charged for differences of as much as 28% between real market rates for payments and those generated by the database.

She said, "Ingenix is nothing more than a conduit for rigged information that is defrauding consumers of their right to fair reimbursements for their out-of-network health care costs." Insurers have said they would provide about $95 million for the creation of a new, independent database that will be available to insurers nationwide and could be operational within a year. Lacewell also noted other "deceptive industrywide practices" that are "staggering in scope and impact" (Adams, CQ HealthBeat, 3/26). Committee Chair Jay Rockefeller (D-W.Va.) said Cuomo's efforts should provide a national model for increasing the transparency of out-of-network payments.

American Medical Association President Nancy Nielson also testified before the panel. Nielsen said, "If you elect to go out of network, (patients) should know what the charges are, and they have the right to know what they are going to be reimbursed (by the insurance companies.) That's really the issue," adding, "Otherwise, it's price-fixing." She said her group's members have a "strong ethic against overcharging" for care and rebuffed insurers' argument that they intended to control costs for consumers. Sen. Olympia Snowe (R-Maine) said, "There is very little competition in the insurance market," adding that five of the nation's largest insurers comprise 75% of the market, while in some states, the top five make up almost 90% of the market. "This is deeply troubling ... leaving consumers with nowhere else to go," Snowe said (Goto, CongressDaily, 3/26).

Rockefeller said he favored including transparency requirements in health care overhaul legislation, but did not discuss a specific proposal. He said, "I want to make sure exactly what it is we need to do." Consumers Union Programs Director Chuck Bell also spoke at the hearing.

Insurance executives will appear before the panel on Tuesday (CQ HealthBeat, 3/26). The witnesses will include the CEOs of UnitedHealth and Ingenix (CongressDaily, 3/26).