It sure is great that the United States relies more than any other developed nation on the private insurance industry for care. Otherwise, we wouldn’t get great results like this:
Congressional investigators have discovered that large health insurers in every region of the country are relying on faulty databases to underpay millions of valid insurance claims.
In a report released Wednesday, the Senate Commerce Committee said insurance companies nationwide have failed to provide consumers with accurate or understandable information about how they calculate “reasonable” or “customary” charges for out-of-network care.
Insurers also signed contracts prohibiting them from disclosing information about the databases to consumers or doctors, the report said.
The flawed databases are owned by Ingenix Inc., a subsidiary of UnitedHealth Group Inc. UnitedHealth recently settled with the New York attorney general’s office to resolve charges that Ingenix drew up billing rates that underpaid hospitals and doctors for out-of-network care.
Patients had to make up the difference. It is unclear how much they have overpaid over the years.
Providers and patients have suspected for years that insurers were underpaying for out-of-network care, but they haven’t been able to prove it.
Committee investigators found that Ingenix developed its payment models based on claims data provided by its customers, the insurance companies.
A committee aide said those companies sometimes would “scrub” the data sent to Ingenix—throwing out outlying high costs. Ingenix then would use questionable statistical models to come to its own rate estimates.
So basically, the insurers would set their own rates by lying about it. It’s not clear to me how exactly these rates should be set: the article does not mention Medicare and Medicaid, so perhaps they set them in different ways. When you use terms like “usual and customary charges” in a system dominated by third-party providers you’re liable to get into some problems.
But it’s a nice little racket for the insurers: you jam down the “providers” — aka the doctors — on rates, and then you jack up the prices for the “consumers”. If anyone tries to challenge you, you force them to spend a lot of money in the process. Works quite well. Except for, you know, the public.