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Why Does My Health Insurance Suck?

July 18, 2013 1:11 PM Published by 1 Comment

20 years ago, most people didn’t know what HMOs were and the few that did expected them to be awful.

Now all we have are variation on HMOs. Who has benefitted? The Insurance companies. The public is left with fewer choices, lower quality, and less money in their pocket.

It started with a shell-game called UCR: Usual, Customary, and Reasonable

The insurance companies came up with a way to limit their exposure by determining what charges would be ‘allowed’ and what charges were excessive. Allowed amounts were based on actual fees charged by providers. Only allowed amounts would be considered. Amounts above the Allowed charges were still due to the provider but with no credit to the plans maximum out of pocket.

The job of gathering this information was left to a company called Ingenix, a subsidiary of United Healthcare. Other insurers also relied on Ingenix’s figures.

Things were working well. In-network coverage was becoming more popular AND out of network coverage was respectable and a worthy investment for those who used it.

In 2003, I noticed a disturbing trend where physician’s fees were increasing but Allowable charges were not keeping pace. The gap between what doctors were charging and what insurance companies were allowing was growing.

I appealed to the NY State Insurance Department to find out who is monitoring the UCR schedule and here is the response:




For years, the trend continued. Consumers were getting nickeled and dimed to death, and paying a higher monthly premium for the privilege.

Finally in 2009, the state of NY intervened with a lawsuit:

The lawsuit alleges that Aetna used a faulty database and underpaid claims for services delivered by out-of-network (OON) providers. According to the lawsuit, the Ingenix database that Aetna licensed to determine payment for OON services consistently understated “usual, customary and reasonable” (UCR) rates that are used as the basis for OON payment amounts – for example, 80 percent of UCR. The UCR is supposed to represent the “going rate” that health care professionals charge for their services in a particular geographic area of the country.

Aetna, United HealthCare, which owns Ingenix, and other insurers agreed in 2009 to stop using the Ingenix database pursuant to settlements with the New York Attorney General.


In 2009, United HealthCare agreed to a $350 million settlement with subscribers and providers, including psychologists, over the use of its Ingenix database.


The bulk of the $350 million was used to reimburse providers and insured’s. The rest was used to create this amazing website…too bad its 10 years too late:

In 2009, an investigation by then-New York State Attorney General Andrew Cuomo uncovered conflicts of interest in one system that health insurers used to calculate reimbursement for patients who received care from providers outside their plan’s network.


In a final screw-you to the public, Insurance companies have abandoned the now-failing UCR scheme and actually found a way to make coverage worse. Instead of using actual fee charged by providers to determine allowable fees, Insurers are now using a % of what Medicare allows. Typically the amount is 140%.

Here are the common procedures: breast removal, C section delivery, and a colonoscopy.




So why does my Health Insurance suck? Health Insurance is dead. What we have now is some ambiguous concept known as Healthcare.

I’ve been in the Insurance business for 20 years, specializing in NY small group Medical insurance. I’ve seen this downward trend year after year and I can guarantee two things for the future:  Higher Costs and Lower Quality

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This post was written by Lori Saumier

1 Comment

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