Calling for “much-needed transparency, accountability and fairness,” in consumer reimbursement for out-of-network health care, New York’s attorney general revealed details of a new, nationwide database to bring about change.

Andrew Cuomo

Attorney General Andrew Cuomo announced that a new not-for-profit company, FAIR Health Inc., and a research network headquartered at Syracuse University will develop an independent database for consumer reimbursement as well as a website for consumers to compare prices before choosing a doctor.

The initiative will be funded by nearly $100 million in settlement funds Cuomo’s office obtained from more than a dozen health insurers – including Aetna, CIGNA and WellPoint – earlier this year after they agreed to abandon use of the Ingenix database. An investigation by the attorney general’s office found that Ingenix, a subsidiary of UnitedHealthcare, manipulated rates and relied on outdated information to determine reimbursement rates.

Cuomo said that FAIR Health and the research network “will bring much-needed transparency, accountability and fairness to a broken consumer reimbursement system.

“By transforming this system for consumers nationwide, New York proves its reputation as a reform leader for the nation,” Cuomo said in a statement. “By spending almost $100 million in settlement proceeds from health insurers, this initiative will also create new jobs and contribute to the development of the upstate economy which is vital to New York.”

Cuomo’s investigation of the Ingenix database also lead to new regulations through the New York State Department of Insurance to govern health and accident insurers and health maintenance organizations that promise to reimburse consumers who go out of network based on the usual and customary rate of the service provided.

The regulation requires these providers to use an independent source for establishing usual and customary rates, as well as disclose to their members how and by whom the rates were established.

In addition to Syracuse University, the research network working on the database and website with FAIR Health consists of representatives of the State University of New York (SUNY) at Buffalo, Cornell University, the University of Rochester and SUNY Upstate Medical University. The research project will be lead by Dr. Deborah A. Freund, distinguished professor of public administration at Syracuse.

Stephen A. Warnke, Interim Chairman of the FAIR Health Board, said in a statement, that “everyone agrees that to fix our health care system, we need accurate data on what health care services actually cost and how they are priced.

“Working with Syracuse University and its upstate partners, FAIR Health fills this crucial void by promising data that will be transparent, objectively validated and broadly available both to consumers and to academic researchers,” he said.  “Its launch could not be better timed.”

The Obama Administration also added its support for the new initiative through Nancy Ann DeParle, director of the White House Office of Health Reform, who called the new initiative “an important step forward for consumers, who too often are unable to penetrate the secrecy and bureaucracy of insurance companies.

“President Obama is working with Congress to enact health insurance reform that will protect Americans against unfair insurance industry practices,” she said. “We applaud the steps taken by Attorney General Cuomo and the state of New York to give consumers the ability to make informed decisions when purchasing health insurance.”