Friday, February 15, 2008

Data, use and misuse - The Devil is in the Hidden Details of the Database Black Box

New York State attorney general Andrew Coumo says he will sue UnitedHealth Group, Inc, and its subsidiary, Ingenix, Inc, for “gross conflict of interest.” Through its database, Ingenix sets the “usual and customary” rates that most of the health care industry uses.

The suspicion, as yet unproven, is that Ingenix manipulates the data within its blackbox database by knocking out price information from MDs with higher charges. The result is that algorithms within the black box consistently underestimate prevailing market rates, forcing customers to pay a greater part of bills.

An example: in New York the typical office visit rate is $200. If a patient goes out of network, the black box estimates usually and customary at $77, the insurer pays 80% of that or $62, leaving the customer to pay the difference of $138.

Among other things, Coumo is quoted as saying.

• “We believe there was an industrywide scheme perpetrated by some of the nation’s largest health insurers to deceive and defraud consumers.”

• “There is no disclosure; there is no transparency; there is no accountability.”

Whether Coumo is right is not yet known. The UnitedHealth Group denies any wrongdoing and says Ingenix is neutral and bases its calculations on more than one billion claims from more than 100 insurers. The impact of Cuomo’s suit could be huge - 54% of those insured are in PPOs with higher fees for out-of-network care, and UnitedHealth covers 26 million people and had $75.4 billion in revenues in 2007.

The outcome depends on bringing to light those opaque, hidden details -which may be quite legitimate – going on inside that black box

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