WASHINGTON, D.C. – The Senate Committee on Commerce, Science, and Transportation held a full committee hearing today on “Deceptive Health Insurance Industry Practices– Are Consumers Getting What They Paid For?”

Today was the first of two hearings examining how the health insurance industry reimburses consumers for health care services.  These hearings focus on the way the industry calculates “usual, customary and reasonable” reimbursement rates for consumers who choose to receive care from out-of-network doctors and other health care providers. 

A recent investigation conducted by the Attorney General of New York concluded that for a number of years, the insurance industry has systematically under-estimated the out-of-network reimbursement rates it pays its policy holders, costing consumers billions of dollars in excessive out-of-pocket costs.  The victims of this deceptive practice – more than 100 million Americans who pay for health insurance coverage that allows them to go outside of their provider network for medical care.

Key Quotes From Today’s Hearing:

• “The health insurance industry has been promising to pay a certain share of consumers’ medical bills, but then they have been rigging health charge data to avoid paying their fair share,” Rockefeller said.  “The result is that billions of dollars in health care costs have been unfairly shifted to millions of American consumers.”

• In written testimony, Dr. Mary Jerome, a cancer patient, shared her personal experience with unfair practices and fees: “When I was diagnosed with cancer, I thought the most difficult hurdle I would face would be the disease. Little did I know, that dealing with my insurance company would be my greater battle, because unknown to me, they were operating with deceptive methods of reimbursement. I had to battle cancer – and I am still battling it – and I had to battle my insurance company to try and get fair coverage. It was almost too much to bear."

• “Nationwide, medical costs are the leading cause of individual bankruptcy, even though the individual usually had insurance,” testified Linda Lacewell, representing the Office of the New York State Attorney General. “Fraudulent under-reimbursement for insured Americans is one part of this negative equation for consumers.”

• Representing the Consumers Union, Chuck Bell explained: “The key problem with the out-of-network reimbursement system is that the UCR (“usual, customary and reasonable”) rates were not calculated in a fair and impartial way. For the last ten years or so, the primary databases that are used by insurers to determine “usual, customary and reasonable” rates have been owned by Ingenix, a wholly-owned subsidiary of UnitedHealth Group.”

• Dr. Nancy Nielsen, president of the AMA, was joined by the Medical Society of the State of New York, the Missouri State Medical Association and several other parties in initiating a class-action lawsuit against United Health Group for using skewed data to determine out-of-network payment rates.  “After nearly a decade of litigation, the AMA is very pleased that United Health Group recognized the importance of restoring its relationship with patients and physicians and is settling the AMA’s lawsuit by agreeing to pay $350 million toward reimbursing the patients and physicians it short-changed, and by confirming in federal court its separate agreement with New York Attorney General Cuomo to end the use of this database and trust its repair and operation to a not-for-profit institution,” Dr. Nielsen testified.

***On Tuesday, March 31, 2009 at 10:00 a.m., the full committee will conduct the second part of this hearing on deceptive health industry practices with testimony from Mr. Stephen J. Hemsley, President and Chief Executive Officer of UnitedHealth Group and Mr. Andy Slavitt, Chief Executive Officer of Ingenix.***

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