Getting Your Health Insurance to Pay Your Medical Bills; A New Way to Calulate “Usual and Customary” Rates

The New York Attorney General has entered into a $50 million settlement with the largest health care insurer so that consumers can get a reasonable reimbursement when using a medical provider “out of network.”

    The insurance industry has used a wholly owned company to establish “usual and customary” rates.  In essence, the insurance industry is the judge and jury in determining what it will pay when a policyholder goes out of network.

Here is how the “usual and customary” rates have been used by the insurance industry:

  1. The policyholder goes to an “out of network” doctor or hospital.  Often this occurs when the insured has a serious medical condition, and he feels that he must go outside the network of approved providers in order to obtain the best medical treatment. 
  2. The “out of network” doctor charges the patient $450 for the consultation.  The doctor requires immediate payment, and the patient pays the doctor with a credit card.
  3. The patient submits the “out of network” doctor bill to his health insurer for reimbursement.
  4. The insurance company pays only $70.  First, the insurance company determines that $100 is the “usual and customary” charge for the service.  Second, the insurance company applies 30% co-insurance for going “out of network.”

The Attorney General has found that insurance companies turn to Ingenix to determine the “usual and customary” charge.  However, Ingenix is wholly owned by UnitedHealth Group, the nation’s largest health insurer.  Ingenix gets its rate data from the insurance companies.   This is a gross conflict of interest.   There is a motivation by both Ingenix and the insurance companies to keep the “usual and customary” rates artificially low so that the insurance companies’ reimbursements are smaller.  

Pursuant to the settlement, Ingenix will reform its data collection practices so that its “usual and customary” rates conform to reality.  This is a victory for New York policyholders.  We applaud Attorney General Andrew Cuomo.

We have handled cases involving insurance company reimbursements and insurance companies’  failure to pay claims.  If you have a question regarding your insurance company reimbursement, please feel free to call me at 800-581-1434.

Mark E. Seitelman, 1/14/09,


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