WellPoint Paying $10 Million Toward Database in Settlement With N.Y. Attorney General

WellPoint Inc. will stop using databases run by Ingenix and pay $10 million to a nonprofit organization that will establish a new, independent database that will determine reimbursement rates for members when they visit out-of-network doctors, under a settlement with the New York attorney general.

WellPoint (NYSE: WLP), the largest U.S. health insurer by membership, becomes the fourth national health insurer to reach an agreement with Attorney General Andrew Cuomo, who began an industrywide probe of out-of-network reimbursement rates a year ago.

His investigation centered on Ingenix, a health-billing database owned by UnitedHealth Group (NYSE: UNH). The database, which many health insurers use to determine their "usual and customary rates" for doctors outside of their networks, was rigged and ripped off consumers by "hundreds of millions of dollars," Cuomo charged.

WellPoint's subsidiary, Empire Blue Cross Blue Shield, is the biggest health insurer in New York state, with about 5 million members, the attorney general's office said.

In a statement, the Indianapolis-based WellPoint said it agreed to discontinue the use of the Ingenix database, which it uses in determining out-of-network reimbursement "for certain products and in certain states."

"WellPoint is committed to appropriately processing claims and fairly reimbursing health care providers for covered services under the terms of each member's contract, while at the same time protecting our members and group customers against excessive charges by some nonparticipating providers," said Ken Goulet, executive vice president and chief executive officer of WellPoint's commercial business, in a statement. The company acknowledges the conflicts of interest in the database, he said.

UnitedHealth, Aetna (NYSE: AET) and Cigna (NYSE: CI) have reached similar accords with the attorney general, agreeing to contribute $50 million, $20 million and $10 million, respectively, to the yet-to-be-named nonprofit organization (BestWire, Feb. 18, 2009).

"By securing an agreement with the largest insurer in the country, we are continuing to expand the number of insured Americans who will now be free from the conflict-of-interest ridden system that slammed hardworking individuals and family members with medical costs they did not deserve and could not afford to pay," Cuomo said in a statement.

WellPoint subsidiaries currently have Best's Financial Strength Ratings ranging from A to A- (Excellent).

(By Fran Matso Lysiak, senior associate editor, BestWeek: [email protected])