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Reasonable and Customary, I think not.

Posted Jan 16 2009 3:02pm
T he insurer stands by the quality of the information in the database and does not acknowledge any wrongdoing. That was the line from United Health after a yearlong investigation undertaken by the New York attorney general’s office that found out hundreds of millions of dollars were taken away from patients over a ten year period in the form of underpayments.


In a nut shell United Health Group (UHG) operates and industry wide database that sets the reimbursement rates for medical care that is obtained by patients when they use an “out of network” provider. The database that is run by UHG reportedly understated the real market rates for medical services by as much as 28%. Insurers typically reimburse patients for 70 – 80 percent of the “reasonable and customary” costs of medical care (who decides what is reasonable anyway?) and the remainder of the bill becomes an out of pocket expense for patients. The database which is used by UHG and other insurers was shortchanging patient’s reimbursements.


The article in the New York Times equated this dubious act by UHG akin to “pulling back the curtain on the wizard of Oz”. The short of the long is that UHG will spend some $50 million to establish a new database to be located as a yet to be named university to ensure that this type of thing doesn’t repeat itself. In the mean time are the patients that filed medical claims over the past ten years going to be able to get some of their money back from insurance companies?


When I see stories like this it is difficult to see how insurance companies are patient advocates trying to help out. It’s easy to see third party payers as nothing more than loan sharks that charge an arm and a leg for a policy and then decide how much if at all they are going to pay on a patient’s behalf. Clearly the concern here is obvious if the Obama administration gets into the insurance business with universal healthcare. To use a phrase from Rush Limba this is a clear cut example of the “fleecing of America” by the health insurance sector.

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