New York Attorney General Andrew Cuomo said Tuesday that a new nonprofit company and a group of New York universities will jointly develop a national database of medical prices to replace a flawed version owned by UnitedHealth Group.
Cuomo investigated the UnitedHealth database after receiving complaints that it caused insurance companies to underpay doctors, leaving consumers with excessive bills.
The new company, FAIR Health Inc., together with Syracuse University and others, will use almost $100 million from a settlement with Cuomo to set up an independent database to be used by the health insurance industry to calculate payments to doctors when patients seek care out of their insurance networks.
The UnitedHealth database contained the nation's largest pool of charges for medical services. Other insurers depended on it to calculate what to pay doctors when patients sought out-of-network care.
The new database "will bring much-needed transparency, accountability and fairness to a broken consumer reimbursement system we have called Code Blue," Cuomo said Tuesday.
The old database collected prices from insurance claims. The new one will include other sources, including doctors and hospital groups, said a spokesman from Cuomo's office.
FAIR and its partners also will design a new consumer website where patients can look up -- at no charge -- how much they are likely to be reimbursed for out-of-network services in their area. The data also will be available for academic research.
Last year, Cuomo went after UnitedHealth, saying that since the database was owned by Ingenix, and Ingenix is a subsidiary of UnitedHealth, Ingenix had a vested interest in skewing rates low, so insurers could underpay doctors for out-of-network service. Through "faulty data collection, poor pooling procedures and the lack of audits," insurers underpaid by 10 to 28 percent for various medical services, Cuomo said.
UnitedHealth paid $50 million
In January, UnitedHealth agreed to close the database and pay $50 million to help a nonprofit entity set up a new database. Cuomo later extracted settlements from other insurers -- $20 million from Aetna Inc., $10 million from Wellpoint Inc. and $10 from CIGNA Inc., among others -- totaling almost $100 million.
UnitedHealth, which is America's largest health insurer by revenue, also earlier this year settled a long-running lawsuit led by the American Medical Association over the same issue, saying it will pay $350 million to customers and medical providers who had been shortchanged going back nearly 15 years.
Revenues from the database made up less than 2 percent of Ingenix's revenue of about $1.5 billion last year.
"We stand ready to work with FAIR Health, Syracuse University and the research consortium on an expeditious transition of the database," UnitedHealth said in a statement.
Chen May Yee • 612-673-7434