Debunking Usual Customary and Reasonable

As both a practitioner and consumer of health care services, I have always found the concept of UCR, that is, “usual, customary and reasonable” to be one that defies logic. Even the most astute reader of fine print will not find out what UCR means in an individual policy, except possibly as a phrase appearing in the glossary. The main problem with UCR reimbursement rates are the secrecy with which they are calculated, and their lack of accessibility to the public. It is estimated that about 70 percent of the nation’s insured families are enrolled in health plans that allow visits to “out of network” providers. Patients typically assume that the insurer will pay a set percentage, usually 80 percent of the actual charge, if they are in an indemnity plan, or go out of network. In these cases, the insurers pay only a percent of what they determine “usual, customary and reasonable.” If that determined amount is lower than the actual charge, the patient is obligated to pay the difference.This “culture”of billing in healthcare is different from any other product- when else does someone buy a product or service and really have no idea what it will end up costing them????

Happily, thanks to Andrew M. Cuomo, the New York attorney general, this “great black box” in the insurance industry is about to be opened. It was announced in late October that a new national database is going to be created in order to help determine how much insurance companies should reimburse patients who go out of network to see a medical provider, including occupational therapists. The announcement is part of a settlement reached over the last year with more than a dozen insurance companies. This is due to a class action suit that contended that true reasonable and customary charges for certain procedures were substantially higher than the insurance companies had been allowing. According to an October 28, 2009 NY Times article written by Reed Abelson, Mr. Cuomo’s investigation found that the industry database’s determination of “reasonable and customary” had been fostering unfairly low assessment of the actual prevailing fees,with the results being that for more than a decade, consumers were being shortchanged by hundreds of millions of dollars. In large part, this is because the existing database , used by the entire insurance industry, had been operated by Ingenix, which was owned by one of the large insurance companies(UnitedHealth/Oxford). Exposing and putting a stop to this s obvious conflict of interest will go a very long way to establishing fair pricing for services for both the patient and the provider. Consumers’ reimbursements “will actually go up now because the reimbursements were artificially deflated,” said Mr. Cuomo.

The settlement, not only with United HealthCare, but other insurers including Aetna, Cigna and WellPoint means that the insurance industry will all stop using this currently database as soon as a new one is created. The new database will be created by a new nonprofit company, called FAIR, for Fair and Independent Research. Syracuse University will lead the research network along with SUNY at Buffalo, Cornell University, University of Rochester and SUNY Upstate Medical University. The new network hopes to establish fair pricing in determining how much insurance companies should reimburse for “reasonable and customary”, as well as to increase availability to consumers, information about how much their own providers were charging for services, compared with other local providers. Consumers will now be able to check a new Web site to see what an insurer was likely to pay before they went to an out-of-network provider. As part of the settlement, the insurance industry will have to pay about $100 million to help finance the new company, but will have absolutely no input in how the company is run or the recommendations they make.

Nancy-Ann DeParle, director of the White House Office of Health Reform, was quoted as saying “This is an important step forward for consumers, who too often are unable to penetrate the secrecy and bureaucracy of insurance companies.” This is also the first step in the right direction toward stopping the “de-valuing“ of medical services, including therapy services by the insurance industry.
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