Diagnosed with breast cancer last April, Nancymarie Bergman knew choosing surgeons outside of her insurance network for a mastectomy would be costly, but it sounded manageable: 70 to 80 percent of the "usual, customary and reasonable" costs would be covered.
Then, two months after Bergman's first operation, her insurance company, Oxford, said only $18,000 of the $42,000 surgery would be reimbursed.
"I was simply shocked and dismayed," said Bergman, 46, of Merrick.
Yesterday, in announcing a $10 million settlement with the nation's largest health insurer, WellPoint Inc., New York Attorney General Andrew Cuomo stood beside Bergman and used her story to illustrate what he said was a "conflict-of-interest-ridden system" of reimbursing out-of-network care.
In-network care is completely covered after a predetermined patient co-pay. For out-of-network care, insurers usually reimburse a portion of a procedure's "usual, customary and reasonable" rate or UCR.
Cuomo said WellPoint -- along with its subsidiary, Empire BlueCross Blue Shield, New York's largest health insurer with 5 million customers -- and most other insurers, including Oxford, essentially rigged UCRs by using a Minnesota company, Ingenix, which set rates up to 20 percent below fair market value, as determined by state investigators. Ingenix is owned by one of the nation's largest insurers, UnitedHealth Group, and received its information from insurers, Cuomo said.
The result cost consumers more than $350 million over the past decade, Cuomo said.
The WellPoint settlement was key, he said, because it has 35 million customers in 13 states, virtually nationalizing changes to reimbursement rates.
"This is as egregious a situation as I've seen of a virtual monopoly, virtual rate-setting," Cuomo told a packed auditorium at North Shore University Hospital in Manhasset yesterday.
Some consumers may be able to recoup underpayments through litigation.
In a statement, WellPoint executive vice president Ken Goulet said the Indianapolis company is committed to "protecting our members and group customers against excessive charges."
UnitedHealth, which settled last month for $50 million, said Ingenix is no longer providing that service. "The company believes the agreement will enhance the transparency of information related to physician fees for out-of-network services."
Seven medical insurers have settled in the past month to avoid litigation with the state, including Aetna and Cigna. The companies acknowledged Ingenix's conflicts of interest and agreed to stop using its rates, the attorney general's office said. The settlement payouts -- totaling $90 million -- will launch a new nonprofit, possibly run by a university, to collect information and set rates based on fair market value, Cuomo aides said.
Charles Bell, programs director for the Consumers Union in Yonkers, applauded Cuomo's yearlong probe but said: "It may down the road translate into premium increases because it seems unlikely to me that insurance companies will just suck up increased costs and not pass it on."
Bergman said her experience with Oxford, owned by UnitedHealth, nearly caused her to reconsider having breast reconstruction surgery. She eventually underwent the operations in October and December and was reimbursed, which she said was "such a relief."
Still unresolved, however, is the $24,000 bill from the April operation. She challenged it in Oxford's appeal system but lost. The second appeal is pending. To see more of Newsday, or to subscribe to the newspaper, go to http://www.newsday.com Copyright (c) 2009, Newsday, Melville, N.Y. Distributed by McClatchy-Tribune Information Services. For reprints, email tmsreprints@permissionsgroup.com, call 800-374-7985 or 847-635-6550, send a fax to 847-635-6968, or write to The Permissions Group Inc., 1247 Milwaukee Ave., Suite 303, Glenview, IL 60025, USA.
Copyright (C) 2009, Newsday, Melville, N.Y.