New York Attorney General Andrew Cuomo has settled his lawsuit against Ingenix, the United Health subsidiary that owns the health insurance industry’s standard “reasonable and customary” (“R & C”) database. Ingenix will fund the development of a new (or improved) R&C (or “UCR” – “usual, customary, and reasonable”) database, to be managed from the presumably more impartial halls of a university.
You might think I’d be thrilled – especially since the Ingenix database was behind an unexpected medical expense for $1,500 I incurred last month. Here’s what happened: I have a health plan that says it pays 80% for out-of-network care. My doctor billed $2,500, and I naively expected to pay about $500 (which is 20% of the bill.) But the Ingenix database says that the “reasonable and customary” charge – the market rate – for that procedure is slightly more than $1,000. So I’ll be paying $1,500, not $500.
Here’s how things will change in the future, according to this settlement: First, an independent university-based group will determine “reasonable and customary” charges. That should mean I’m less likely to see such a large gap next time between my bill and what the insurance company’s willing to pay. Next, I’ll be able to go to an online database and find out what the prevailing rate is for my procedure, then compare it to the price charged by my doctor and facility.
So why aren’t I happier about this settlement? First, because most people aren’t going know how to go online and check these prices. In my case, the doctor decided during an examination that a procedure was needed and did it immediately. There was no time for research or negotiation. And history shows that fee databases, which are available for hospital charges in several states, are seldom used. (Here’s a case in point.) Creative thinking will be needed before that changes.
Even if had been given advanced notice of the surgery, I would have needed to ask the doctor which procedure codes she planned to use. I would have also had to find out what the charges were going to be for facility use, nurse support, and anesthesia. I would’ve needed to understand all the medical bill coding logic used.
And none of that prevents the doctor from opening me up, finding something unexpected, and doing a different procedure altogether.
People in this country aren’t used to asking doctors or hospitals what they charge — and they won’t get a warm response very often when they do. Even supposed “insiders” like this author don’t do it very often. And there are even deeper underlying problems with our health system – ones which the Ingenix settlement won’t address and could even aggravate:
“Usual and customary” fees have scant relationship to market prices, inflation trends, or any other external economic forces: If all the dermatologist/surgeons in Santa Monica (where my procedure took place) decide to increase their rates by 30% one year, a “usual and customary” database has no way of knowing what the right number should be. As a result, there’s a good chance that the “UCR” number would go up dramatically, especially under this new settlement, even if the increase isn’t justified.
Different methodologies have been used to address this, like adding a limiting factor on cost increases or tying charges to some core expenses (for materials, labor, etc.) But ultimately, “usual and customary” fees have been driven by what doctors charge. Nor are these fees reduced when new technologies make it possible to perform a procedure in 15 minutes that used to require one hour.
No doubt the new, university-driven database will attempt to take these factors into account. But the process will, of necessity, be politically driven from this point onward. The battle isn’t over; it’s just beginning.
The “usual and customary” debate doesn’t address frequency. Medical economics suggests that providers sometimes respond to downward price pressures by increasing the frequency with which they perform certain services. And medical studies have shown wide variati0ns in treatment patterns for procedures like cardiac surgery, independent of people’s health or outcomes. Changing the calculation of “usual and customary” fees for any given service will not affect the number of times that service is given, nor will it create a medically appropriate relationship between medical need and the use of that service.
Nobody is advocating for denying people the care they need. But when economic interest influences the delivery of that care, the patient doesn’t win. It’s inconvenient, uncomfortable, and dangerous to be subjected to an unnecessary or questionable procedure. It happens, more often that most people realize. When it does, patients suffer – and so does the overall health system.
This settlement is not necessarily a bad thing. But it’s important that it be recognized as a small piece of a much larger problem.