A federal court judge on Thursday granted preliminary approval of a $350 million settlement that involves the American Medical Association, UnitedHealth Group, and UnitedHealth's subsidiary, Ingenix.
The case deals with Ingenix's database that many insurers used to determine "prevailing" and "usual, customary and reasonable charges" for out-of-network physician services. New York Attorney General Andrew Cuomo investigated the Ingenix database and earlier this year Ingenix and parent UnitedHealth agreed to a settlement with the New York Attorney General's office to resolve what investigators called "an industry-wide investigation into a scheme to defraud consumers by manipulating reimbursement rates."
The deal also required UnitedHealth to close two databases run by Ingenix, and to help fund a new independent database to collect price information.
A number of other health insurers that used Ingenix to find out-of-network costs also agreed to pay to help create the new independent database that will be run by a nonprofit company, FAIR Health, which will work with Syracuse University and a group of other state universities.
The Ingenix issue dates back to March 2000 when the AMA, Missouri Medical Society, and New York State Medical Society filed a suit that alleged UnitedHealth Group "colluded with others to underpay physicians for out-of-network medical services," according to the AMA.
The suit sought relief for physicians who were "seriously harmed by the insurer's long-term use of the flawed database," noted the AMA.
The AMA is pleased with the U.S. District Court for the Southern District of New York's preliminary approval and the court is expected to set a final approval hearing in the courtroom of U.S. District Judge Hon. D.J. McKenna.
"The court's approval is an important step in finalizing a settlement that recognizes UnitedHealth's flawed payment scheme resulted in significant damages to physicians who provided out-of-network care to patients enrolled with UnitedHealth," said AMA Immediate Past President Nancy H. Nielsen, MD.