UnitedHealth faces suit on reimbursement policy

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NEW YORK - New York Attorney General Andrew Cuomo will sue UnitedHealth Group and subpoena 16 other insurers to investigate reimbursement practices that allegedly cheated customers out of hundreds of millions of dollars.
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Cuomo said he plans to sue UnitedHealth of Minnetonka, Minn., the largest US health insurer, over practices that limit payments to customers by claiming their medical charges were unreasonably high. Cuomo accused UnitedHealth of a conflict of interest in how it set limits on repayments.

"When insurers like United create convoluted and dishonest systems for determining the rate of reimbursement, real people get stuck with excessive bills and are less likely to seek the care they need," Cuomo said in a statement yesterday.

UnitedHealth touched $44 after Cuomo's disclosure of the industrywide probe - its lowest price since Oct. 19, 2004, when his predecessor, Eliot Spitzer, widened a probe of insurance brokers' fees. It fell $1.30 to close at $46.97 in New York Stock Exchange trading.

"This is obviously going to be a negative for the company," said Sheryl Skolnick, an analyst with CRT Capital Group in Stamford, Conn., in a telephone interview. "These things typically take a long time to work their way through. It does make it more difficult for United to argue that they have fixed their challenges."

The investigation of reimbursement practices is part of a larger probe of the industry by Cuomo. Last year he pressured health insurers to adopt stricter standards on how they rated doctors recommended to customers. Cuomo had accused the industry of steering customers to the cheapest doctors.

Among the firms Cuomo said he will subpoena over reimbursement practices are: Aetna Inc., Cigna Corp., Empire Blue Cross & Blue Shield, and Humana Inc.

UnitedHealth's Ingenix unit provides data for the industry that set "reasonable and customary" rates, which are used to put a ceiling on reimbursement to patients, Cuomo said. When patients go out of network, health insurance companies generally cover only 80 percent of "reasonable and customary" charges.

"Ingenix, being owned by United, is a gross conflict of interest," Cuomo said at a press conference.

United said in a statement that it was cooperating with Cuomo's office in the probe