Wednesday, February 13, 2008

Cuomo misques on medical consumer protection

Today the New York attorney general Andrew Cuomo announced plans to sue UnitedHealth Group Inc. as part of an investigation into the way the health-insurance industry sets payment rates for hospitals and doctors outside of their networks. Sixteen of the nation’s largest health insurers, including Aetna Inc., Cigna Corp. and Wellpoint Inc.'s Empire Blue Cross Blue Shield unit.

Mr. Cuomo said that he believes that the reduced payments for out-of-network doctors and hospitals are part of an “industry-wide scheme perpetrated by some of the nation's largest health insurance companies to defraud consumers”.

Consumer advocates traditionally take the opposite stance and consider preferred provider networks to be a positive force promoting medical prices in an otherwise unregulated medical pricing system. Members of the health insurance industry responded by saying that Mr. Cuomo misunderstands how doctors and hospitals charge out-of-network providers and believe that the suit is largely a publicity stunt by the attorney general. Without the medical cost database maintained by Medicare and insurance industry PPO organizations, consumers would have no idea of the conventional price of a specific medical service.

The insurance industry’s position is backed by the fact that even the lowest out-of-network provided are higher than the amounts paid by the government Medicare system – the largest health care payer. By comparison, the insurance PPO payments are generous to providers and consumers.

Fortunately the short term medical insurance industry sidesteps the PPO issue entirely. Payments are the same regardless of a provider’s network affiliation. All of the plans at provide coverage at the usual and customary rate for each geographical market area in the United States.

Regardless of whether using a short term medical insurance or a regular medical insurance policy, patients should always ask whether their medical provider will accept their insurance as full payment after the patient pays the cash deductible. When this issue is addressed in advance of treatment, all risks are avoided.

If Mr. Cuomo really wants to help protect consumers, it would be far more effective to endorse a simple law requiring medical service providers to accept the reasonable and customary charge for a service as determined by private PPO systems. This provision has already been part of the Medicare system for years. Experience proves that this simple provision does not adversely affect the care or finances of patients.

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