A New Era of Medical Billing Transparency
by Michael VizardJune 25, 2009
As a result of investigations by Congress and the Attorney General’s office of the State of New York, a new era of transparency is about to dawn when it comes to medical bills.
For that last 10 years, about two-thirds of health insurance providers have been relying on a database operated by a company called Ingenix to determine what to charge patients that visited doctors that are outside of the network established by any given health insurance provider.
The theory was that this Ingenix database would establish some baselines for compensating those doctors based on the average cost for any given treatment as determined by the data collected by Ingenix. That’s nice in theory, but the problem is that Ingenix is a subsidiary of United Healthcare, one of the largest providers of health insurance coverage on the planet. As a result, there was no oversight of the data being collected by Ingenix, which turns out to have been deeply flawed. The end result of the flawed data collected by Ingenix has been higher costs for patients that relied on the services of any doctor outside of their network because the data from Ingenix underestimated the cost of those services.
This means that patients had to cover the costs of the services of doctors outside their network because the health insurance providers were using faulty data to reduce their payments to doctors. Physicians were then faced with the untenable position of passing the costs of the services that insurance providers would not pay for back to the patients, or simply eating the difference. It’s impossible to say how many people were ultimately affected by this flawed process, but somewhere in the neighborhood of 100 million people have insurance plans that allow them to consult with physicians outside their insurance providers’ network.
Nobody involved in this process is admitting to any wrongdoing, but United Healthcare is shutting down the Ingenix database. More importantly, what is being done is that a portion of the $350 million that United Healthcare agreed to pay to settle the case will be used to create new database operated by an independent, nonprofit organization. The data in this database will be available to consumers so they can see for themselves what the actual costs for services are from a trusted third-party. And the way they will get to that data is going to be through a variety o online services, starting with those offered by Microsoft and Google, that will use the data collected by this new nonprofit entity to make finding out the real cost of medical services as simple as entering a search query.
What all this amounts to is the beginning of a new era in medical billing that for first time should allow patients to feel more comfortable about the real cost of medical services they receive, versus what everybody else pays for the same services. This doesn’t mean that the cost of delivering those services is going to automatically drop. But it’s a major step in the right direction because as with all negotiations, fairness starts with transparency.
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