After several years of insurance companies aggressively setting limiting rates as to what they will pay out-of-network providers, New York has launched an investigation into whether insurance companies are unfairly setting those rates and causing patients to pay disproportionately high amounts of provider bills. Health insurers are being probed as part of an healthcare industry-wide investigation to determine whether they have schemed to "defraud consumers by manipulating reimbursement rates," according to the N.Y. attorney general's office.

A six-month investigation found that Ingenix, the nation's largest provider of healthcare billing information, "operates a defective and manipulated database that most major health insurance companies use to set reimbursement rates for out-of-network medical expenses." Further, the investigation found that two subsidiaries of United "dramatically under-reimbursed their members for out-of-network medical expenses by using data provided by Ingenix," according to a release.

As a result, state Attorney General Andrew M. Cuomo has issued 16 subpoenas to the largest insurers in the country, including Aetna, Cigna, and Empire Empire BlueCross BlueShield; he has announced that he intends to file suit against Ingenix, its parent UnitedHealth Group and three additional subsidiaries. You can read the notice of proposed litigation here.

In one example cited by the attorney general's office, United insurers knew most simple doctor visits cost $200, but claimed to members that the typical rate was only $77 -- a rate manipulated to be "remarkably lower than the actual cost of typical medical expenses," despite the fact the Ingenix database was supposed to be used to calculate a "reasonable and customary" rate. The insurers then applied the contractual reimbursement rate of 80 percent, covering only $62 for a $200 bill, and leaving the patient to cover the $138 balance.

Further, "When members complained their medical costs were unfairly high, the United insurers hid their connection to Ingenix by claiming the rate was the product of 'independent research,'" says the attorney general's office. This created "concern that the company's ownership of Ingenix created a clear conflict of interest because their relationship gave Ingenix an incentive to set rates that benefited United and its subsidiaries."

Interestingly enough, New York is the same state that is aggressively attacking centers that may be waiving or reducing out-of-network payments. On the positive side, this is one of the few situations we're aware of where a state is actually taking issue with insurance company underpayments.

Audio of Mr. Cuomo's announcement of the investigation results and subpoenas is available to download here.

We have been hearing more of late about interest in per-use, or per-click, space and equipment leases. Such arrangements should be handled with a very high level of caution.

Settlements in recent years, have increased federal scrutiny of per-click leases. One example is the Office of Inspector General settlement worth $270,000 with Dominican Health Services, d/b/a Holy Family Hospital, in which "The OIG alleged that Holy Family paid remuneration to induce referrals from an entity owned by urologists. The OIG alleged that Holy Family entered into a series of contracts with an entity owned by urologists under which Holy Family paid the entity in excess of fair market value for the lease of a lithotripter and contracted lithotripsy services. The OIG alleged that Holy Family's payments were to induce Federal health care program referrals from the urologists who owned the entity."

In a second example, the OIG also described the improper conduct that led to a $405,000 settlement with Inland Empire Lithotripsy as follows: "The HHS/OIG alleged that Inland, an entity owned by urologists, received payments from a hospital in excess of fair market value for rental of a lithotripter and provision of lithotripsy services in exchange for Inland's referral of Medicare patients to the hospital. The OIG has alleged that Inland terminated some of its physician members in retaliation for their failure to refer a sufficient number of patients to the hospital."

We are delighted to highlight the following companies in this week's E-Weekly.

ASCs Inc. ASCs Inc. helps physician-owners of ASCs form strategic relationships with leading ASC management companies and hospitals. Physician-owners of ASCs who are seeking a sale of their center, an exit strategy, improved management, resyndication and recruitment of new physicians, or expansion of their centers will benefit from a strategic relationship with a corporate partner. ASCs Inc. helps the physicians find the best long-term partner and the highest negotiated price. The principals of ASCs Inc. have been helping physicians form relationships and maximize profits from their ASCs since 1983. For more information contact Jon Vick, president, at 760-751-0250 or visit the company's Web site.

Eveia Health Consulting & Management Company Founded by I. Naya Kehayes, MPH, Eveia Health Consulting & Management is comprised of a team of seasoned professionals who are experts in reimbursement management, managed care contracting, and business management with a specialization in ASCs and surgical practices. Senior Management serve as advisors to national corporations and provide leadership in health policy initiatives related to reimbursement on behalf of ASCs at both state and federal levels. Eveia's services include contracting and contract analysis, acting as administrator and manager, customizing revenue management, financial analysis, and enhancing and maximizing the financial position of clients. In addition, Eveia implements training and reimbursement calculators, and it provides feasibility studies, payor due diligence, fee schedule development and coordination of business related activities. Eveia has serviced more than 100 clients in 25 states since its inception in 1998. For more information, call her at (425) 657-0494, or visit www.eveia.com.

HealthCare Appraisers. HealthCare Appraisers is a nationally recognized valuation and consulting firm providing services exclusively to the healthcare industry. Services include the following:

• Fair Market Value opinions for compensation and service arrangements (including but not limited to employment; on-call; medical directorships; collection guarantees; "per click" equipment leasing; billing under arrangements; and block leasing);
• Business Valuation (including but not limited to ASCs, hospitals, dialysis centers; home health, diagnostic and other treatment facilities, physician practices, and intangible assets);
• Consulting and Advisory Services; and
• Litigation Support.

Please visit Healthcare Appraisers' Web site or call the Delray Beach, Fla., office at (561) 330-3488 or the Denver, Colo., office at (303) 688-0700.