Kaisernetwork.org – Feb. 10, 2009.

The American Medical Association, along with several state medical associations and physicians, on Monday filed two lawsuits in New Jersey federal court alleging that Aetna and Cigna used a flawed reimbursement system that underpaid physicians and overcharged patients for more than a decade, AMA officials said Tuesday, the AP/Chicago Tribune reports. The medical associations of Connecticut, New Jersey and New York are among the plaintiffs in the case.  Click title to read more…

According to the lawsuits, the insurers used faulty data from UnitedHealth Group subsidiary Ingenix to determine physician payments (AP/Chicago Tribune, 2/10). Investigations by New York state Attorney General Andrew Cuomo (D) found that the Ingenix database, used by many insurers to calculate reasonable and customary rates of reimbursement, had calculated rates between 10% and 28% too low. As a result, many people overpaid for out-of-network care.

UnitedHealth, Aetna, HealthNet and MVP Healthcare have settled investigations by Cuomo’s office by agreeing to pay millions of dollars to patients and physicians affected by underpayments and to stop using Ingenix. The settlements also involve payments toward the development of a new, independent database to replace Ingenix (Kaiser Daily Health Policy Report, 2/5).

In a statement, AMA President Nancy Nielsen said, “We can no longer ignore the improper business practices of health insurers who decide to play by their own rules without regard to patients, or the legitimate costs required to care for them,” adding that the two lawsuits are intended to spur an overhaul of the payment system and help physicians who were affected by the system.

Aetna and Cigna representatives could not be reached for comment, the AP/Tribune reports (AP/Chicago Tribune, 2/10).