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AMA Sues Health Insurers in Federal Court

February 11, 2009
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In an effort to build on recent agreements in New York state that bar several insurers from using flawed data in determining how doctors and patients will be reimbursed for out-of-network care, the American Medical Association filed two federal suits in New Jersey on February 9.

In class-action suits filed in federal court in Newark, New Jersey, against Aetna Health and Cigna Corp., the AMA was joined by the medical societies of New York, New Jersey, Connecticut, North Carolina and Texas.

Both suits also seek restitution for what the medical groups charge has been the insurers’ routine use of data that underestimated regional “usual, customary and reasonable” medical charges.

That data was generated by Ingenix, a subsidiary of United Health Group.

Typically, health plans pay about 80 percent of such out-of-network charges when a doctor is not in a plan’s network. By underestimating those costs, the plaintiffs charge, the insurers shortchanged both patients and doctors.

Dollar figures were not named in the suits, but the president of the Medical Society of the State of New York, Dr. Michael Rosenberg, has said damages for New York physicians alone should total hundreds of millions of dollars.

New York state Attorney General Andrew Cuomo earlier this year reached settlements with Aetna and other companies in which they agreed to stop using the Ingenix data and to pay a total of $70 million toward setting up a new nonprofit entity to replace Ingenix. That entity has yet to be named, but Cuomo said it will be based at a New York university.

“The attorney general got rid of Ingenix, but so far he hasn’t really touched the retribution issue,” said a spokeswoman for the medical society.

At the AMA, a source familiar with the litigation calls the new litigation “a belt and suspenders action” meant to guarantee that should other plans try to continue using Ingenix data in other states by claiming that the Cuomo settlement applies only in New York, they will not be able to do so.

A spokeswoman for Aetna declined to comment on the new suits, but added: “We’re disappointed the medical community has chosen to litigate on top of already pending consumer litigation on the topic. If everyone believes that are entitled to additional payments, the health care system as a whole will bear the burden.”

Filed by Gale Scott of Crain’s New York Business, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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