A reform for health insurers
Attorney general’s transparency plan sheds light on out-of-network costs
Attorney General Andrew M. Cuomo last week unveiled his latest reform of an industry in need of supervision. This time, following his upending of the college loan scam, he has targeted health insurers.
Specifically, he has picked apart the false system by which insurers calculated out-of-system reimbursement rates and has announced the creation of a new nonprofit company. FAIR Health will work with Syracuse University and others, including the University at Buffalo, to operate a new database and consumer Web site that will bring transparency and credibility to a payment system that few could comprehend and no average user could challenge.
Cuomo announced this plan months ago following an investigation that showed health consumers were cheated out of hundreds of millions of dollars by an evaluation system that routinely deflated the so-called reasonable and customary costs charged in any particular region, thus reducing the amount an insurer had to pay.
That system was created by a company called Ingenix, a subsidiary of United Health Group, itself a large insurer and, thus, a player in a massive conflict of interest. Following the attorney general’s investigation, United Health agreed to stop operating the database as soon as a new one could be created. The company acknowledged no wrongdoing.
In its place, Cuomo announced creation of a new Web site that will allow consumers to see what an insurer was likely to pay before they went to an out-of-network doctor. FAIR Health and the upstate universities will set up and operate the Web site and the new database upon which insurers will base their out-of-network reimbursement rates. The system is expected to be functioning within a year.
Cuomo has made a name for himself by training his sights on broken and even corrupt systems that are largely invisible to most people, but which take money out of their pockets. Not long after taking office in 2007, he discovered that many colleges were colluding with lenders, benefiting both those parties at the expense of students. He forced the creation of a new system.
That’s what is occurring here. The attorney general’s work will help lower the costs of out-of-network care. At the same time, it shows why so many people favor a public option in health reform. More competition is needed to wring this kind of gamesmanship out of the system.
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