Troubling times have insurers in the hot seat

February 1, 2009

Big name insurers are getting smacked with fees and penalties for dropping the ball

Let's start with United. As you probably heard, the company agreed to pay $350 million to settle a class-action suit that claimed its subsidiary, Ingenix, had understated usual-and-customary fees by as much as 28%. A separate agreement calls for United to pay $50 million toward the establishment of a non-profit entity that would create an independent source of usual-and-customary fees-one that is not owned by an insurer.

The new database is supposed to offer patients price transparency. There are at least 100 million beneficiaries nationwide under insurance plans that use such data to price claims for out-of-network services. They will finally have the opportunity to see the typical fees in their local markets.

EVERCARE COMPLAINTS

Also on UnitedHealth's plate recently is more trouble with its contracted services for the state of Texas, according to the Dallas Morning News.

The state fined United's Evercare unit $1 million late last year and ordered it to increase staff and improve its operations for a program meant to coordinate care for more than 80,000 elderly, blind and disabled people. Patients complained about inaccurate network directories and call center staff who knew nothing about the program. The Texas Health and Human Services Commission fielded more than 1,300 complaints.

Although it has contracts with the state for four programs, which bring in billions, UnitedHealth or one of its units has paid the department of insurance more than $10 million in fines since 2000, according to the Morning News. The company did respond to concerns about Evercare by increasing staff, adding providers and setting up more phone and fax lines. Patients say it's still not much better.

In other news, WellPoint, another industry giant, was ordered by CMS to stop marketing and enrolling seniors in its Medicare plans because it had violated federal regulations, including denying access to drugs. That is one of the toughest penalties ever given to a private insurer by CMS. WellPoint said its computer system caused the problems, and it had been cooperating with CMS when the order was handed down.

These unfavorable headlines come within days or weeks of all the big insurers announcing layoffs and posting lower-than-expected earnings.

NOT NOW

New York Attorney General Andrew Cuomo, who was instrumental in the settlements to fund the usual-and-customary database, as well as several other suits against private health insurance companies, believes the tide must turn on insurers. Some could argue Cuomo had the state's best interest and the best interest of patients at heart. Others could argue the lawsuits were more about making a political statement.

Either way, now is not the time for insurers to so much as give the appearance of any impropriety, incompetence or shady behavior. The new Congress is looking to pass paramount legislation in healthcare, and bad news travels fast.

Julie Miller is editor-in-chief of MANAGED HEALTHCARE EXECUTIVE. She can be reached at julie.miller@advanstar.com

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