Good morning.  This is the second hearing this Committee is holding on so-called "usual, customary, and reasonable" payment practices in the health insurance industry.

Last week, we heard from the New York Attorney General's office, which conducted a year-long investigation into these practices, and we heard from doctors and consumers.

Today we're going to hear from the insurance industry. 

The Committee is pleased to welcome Mr. Andy Slavitt, CEO of Ingenix  and Mr. Steven Hemsley, the CEO of UnitedHealth Group.  

Before we go any further, I would like to personally thank both of these gentlemen for voluntarily appearing today to testify and answer our questions.

In the hearing last Thursday, we heard some very strong language.  Our witness from the Consumer's Union, Mr. Chuck Bell, said that the way the insurance industry reimbursed consumers for out-of-network medical care was a "ripoff."  

Ms. Linda Lacewell, from the New York Attorney General's office, said the insurance industry’s practices amounted to “a fraudulent and conflict-of-interest-ridden reimbursement scheme.” 

In my own statement, I was a little more temperate.  I called these practices "deceptive."

Because our witnesses today are probably going to take issue with these characterizations, I want to explain very clearly why I think what they did was deceptive.

Consumers and their health insurance companies have a contractual relationship.  Consumers promise to pay a certain premium and, in return, the insurer promises to provide a certain level of health coverage.  

As we learned last Thursday, more than 100 million Americans have paid for health insurance coverage that gives them the option of going outside of their provider networks for care.

Let’s be very clear about this.  The insurers aren’t letting their policyholders see non-network doctors out of the goodness of their hearts.  Consumers are paying for this option - through higher premiums and higher cost sharing.

There are many reasons American consumers decide to pay the extra money for health insurance with an out-of-network option.   One New York consumer we heard from last week, Dr. Mary Jerome, said she paid extra for the “peace of mind” that she could get the best care available when she really needed it.

What we learned at our first hearing was that while consumers held up their side of the bargain, the insurers did not.

The insurance industry promised to base their out-of-network payments on what they call the “usual, customary, and reasonable” cost of medical care in a particular area.

Thanks to the New York investigation and other lawsuits, we now know that the insurance companies were not delivering what they promised. 

In Erie County, New York, for example, insurance companies were reimbursing their policyholders for doctor visits at rates that were 15 to 25% below the local prevailing rates.  

A federal judge recently concluded that the reasonable and customary data insurers used in New Jersey was 14.5% lower than the prevailing market rates.

Everywhere experts have looked at this data, they have found what statisticians call a “downward skew” in the numbers.  

For ten years or even longer, this skewed data was used to stick consumers with billions of dollars that the insurance industry should have been paying.

The source of the skewed data was Mr. Slavitt’s company, Ingenix.  Ingenix markets two “usual and customary” database products that every major payer in the health insurance industry used to calculate their reimbursement payments.

Ingenix is a wholly-owned subsidiary of Mr. Hemsley’s company, UnitedHealth Group.  UnitedHealth not only owns Ingenix, but it also used the skewed Ingenix data to under-reimburse its own policyholders.

I am pleased that as a result of Attorney General Cuomo’s investigation, Ingenix and UnitedHealth have agreed to close down their database.

But I also think accountability is important.  I think people deserve to know how these practices harmed them and who was responsible for them.  That’s the goal of today’s hearing.

I now yield to the Ranking Member.