business

New database for out-of-network claims coming soon

The system, established after a settlement over UnitedHealth Group-owned Ingenix, will show what it considers "usual, customary and reasonable" rates.

By — Posted Jan. 24, 2011

Print  |   Email  |   Respond  |   Reprints  |   Like Facebook  |   Share Twitter  |   Tweet Linkedin

Physicians are likely to know by this summer how their out-of-network pay will be affected by the organization that was designed to replace UnitedHealth Group-owned Ingenix as the arbiter of "usual, customary and reasonable" payment rates.

The new FAIR Health database, created under agreements with the New York attorney general's office, is set to launch by late January. Payments based on the new figures could be sent to physicians by the summer. In late March, the office plans to unveil a consumer site that will publish typical charges for a given service.

"We feel like we're giving birth to a baby whale -- it's huge and it's happening all at once," FAIR Health President Robin Gelburd said.

The database's release will try to fulfill what New York Gov. Andrew Cuomo, then state attorney general, said in 2009 would be "an enormous step toward pricing transparency and consumerism in health care."

But it's unclear whether the FAIR Health database will mean higher pay for physicians who treat patients outside an insurer's network.

That will depend on how many insurers outside New York use the FAIR Health database, how individual policies are structured, and how FAIR Health changes the data collection, auditing and calculations from what Ingenix had been doing.

For years, big insurers used databases produced by Ingenix, a UnitedHealth Group subsidiary, to figure out what they would pay out-of-network doctors for care.

Cuomo's office investigated if Ingenix was using flawed data to set those rates. Eventually, the investigation led to a settlement that included every large health insurer operating in New York agreeing to stop using Ingenix data. In many cases, plans said they would stop using it anywhere nationally.

The plans and Ingenix did not admit any wrongdoing. But big health plans pledged to make out-of-network payments fair and ensure that the data are transparent. They also agreed to pay nearly $100 million collectively to establish an independent nonprofit database -- FAIR (Fair and Independent Research) Health. The database would be available to the public to help patients estimate out-of-pocket costs if they choose to see an out-of-network physician.

As the Cuomo case was settling, the Litigation Center of the American Medical Association and the State Medical Societies, along with state medical societies in New York and Missouri, settled a lawsuit filed in 2000 against United, alleging that the Ingenix databases were flawed and deliberately skewed payments downward. That resulted in a $350 million settlement paid to physicians, but United admitted no wrongdoing.

In October 2009, the new entity, FAIR Health, was established, and staff started work on the new database within months.

The FAIR Health is expected to first release dental and outpatient data. Other data will be released on a staggered schedule.

"We're on target, exactly where we hoped we would be," Gelburd said.

She said it is difficult to say whether physicians will be paid more for out-of-network care after FAIR Health data are in use, because there are more variables at play than the database a given insurer uses.

The database generally provides the health plan with a percentile range of charges for a given service in a geographic area.

It's up to the health plan to decide if it will pay at a certain percentile, or a fraction of that figure.

For any given service, the changes FAIR Health has made could mean that the range moved up or down, so it's difficult to know how often a physician will be paid more, Gelburd said. But she said her organization would set up a fair and transparent system to determine those payments.

Possible competition?

Meanwhile, BlueCross BlueShield-affiliated plans filed with the Securities and Exchange Commission in December 2010 to establish its claims database -- Blue Health Intelligence -- as a separate entity from the BlueCross BlueShield Assn. Since 2006, the database has been available only to Blues plans.

BlueCross BlueShield Assn. spokesman Brett Lieberman said that in the coming months, Blue Health Intelligence will hire a CEO, choose an office location and determine its target customers. He emphasized that its potential uses would be in improving quality of care through data. He wouldn't say whether the Blues' business would consider itself in competition with FAIR Health.

FAIR Health President Gelburd said in a statement that there are good reasons for health insurers to choose FAIR Health over any competitor.

"Our products are further distinguished by the fact that the original settlement required academic input into the methodologies and algorithms supporting the database," she said. "Based on that mandate, our products are informed and enhanced by leading academic researchers who are devoid of bias. Thus, FAIR Health's brand is unique and remains set apart from the competition."

Potential settlement loophole

Oxford, United's subsidiary in New York, reportedly has changed the terms in many renewing policies to make out-of-network pay based on Medicare fee schedules rather than UCR. That would mean potentially lower pay rates that are not based on FAIR Health's data.

Physicians would be faced with the choice to lose money on their services, join United's network or balance-bill patients, said Andrew Kleinman, MD, a plastic surgeon in Rye Brook, N.Y. Dr. Kleinman also is president of the New York State Society of Plastic Surgeons and assistant treasurer of the Medical Society of the State of New York.

"This is more evidence that UnitedHealthcare will do whatever they can in order to increase their profits," he said. "The end result is that patients now who can go out of network for any physician they want to will not be able to afford it anymore."

United spokeswoman Cheryl Randolph said the company has been offering plans with the "other option" for determining out-of-network pay nationally for six years.

"We have discussed this option with regulators and done all the required filings," she said in an e-mail. "We fully intend to use the FAIR Health database in our UCR products as well once it's up and running."

Back to top


ADDITIONAL INFORMATION

Making a FAIR database

FAIR Health affiliate Upstate Health Research Network identified changes to Ingenix's Prevailing Healthcare Charges System database that would make the resulting information more accurate and hopefully result in fairer payments to out-of-network physicians. The changes made thus far are the first in what is expected to be an ongoing series of adjustments to the data.

  • FAIR Health will remove the screen previously used by Ingenix to eliminate the highest and lowest charges submitted by providers. In other words, no claim submitted will be excluded from the FAIR Health database solely because it contains charges within the highest or lowest ranges of fees in a geographic area.
  • FAIR Health will reconcile the negative and missing values in the database instead of automatically excluding all such values. Negative billed charges often are used to offset an equal positive charge that has been entered in error.
  • If there are fewer than 40 observations for a CPT code in a geographic area, FAIR Health will use a new method to find valid data.
  • FAIR Health will use claims data from the previous five years on a graduated basis proceeding year to year as necessary to reach a 40-observation threshold, adjusting charges from prior years using the consumer price index. If that adjustment yields fewer than 40 observations, FAIR Health will look to a broader geographic area to reach 40 observations or use a regional or national average if that isn't possible.
  • The FAIR Health database will include a description or indicator of the aggregation methods where possible.
  • If fewer than 10 physicians submitted a claim for a CPT code in a geographic area, the exact number will be noted, where practical, in the FAIR Health data products.

Source: FAIR Health (link)

Back to top


ADVERTISEMENT

ADVERTISE HERE


Featured
Read story

Confronting bias against obese patients

Medical educators are starting to raise awareness about how weight-related stigma can impair patient-physician communication and the treatment of obesity. Read story


Read story

Goodbye

American Medical News is ceasing publication after 55 years of serving physicians by keeping them informed of their rapidly changing profession. Read story


Read story

Policing medical practice employees after work

Doctors can try to regulate staff actions outside the office, but they must watch what they try to stamp out and how they do it. Read story


Read story

Diabetes prevention: Set on a course for lifestyle change

The YMCA's evidence-based program is helping prediabetic patients eat right, get active and lose weight. Read story


Read story

Medicaid's muddled preventive care picture

The health system reform law promises no-cost coverage of a lengthy list of screenings and other prevention services, but some beneficiaries still might miss out. Read story


Read story

How to get tax breaks for your medical practice

Federal, state and local governments offer doctors incentives because practices are recognized as economic engines. But physicians must know how and where to find them. Read story


Read story

Advance pay ACOs: A down payment on Medicare's future

Accountable care organizations that pay doctors up-front bring practice improvements, but it's unclear yet if program actuaries will see a return on investment. Read story


Read story

Physician liability: Your team, your legal risk

When health care team members drop the ball, it's often doctors who end up in court. How can physicians improve such care and avoid risks? Read story

  • Stay informed
  • Twitter
  • Facebook
  • RSS
  • LinkedIn