kaisernetwork.org – Feb. 4, 2009.

New York state Attorney General Andrew Cuomo (D) on Monday said Aetna will pay $5.1 million to settle charges that it underpaid thousands of members and physicians for out-of-network medical costs, the New York Daily News reports (Blain, New York Daily News, 2/3). The allegations involve reimbursements for 73,000 claims made by college students enrolled in the Aetna Student Health plan, formerly known as Chickering Student Health, between 1998 and April 1, 2008. Students were enrolled in the plan at more than 200 colleges across the U.S. Click title to read more…

According to an investigation by Cuomo’s office, the insurer reimbursed physicians at what it considered the reasonable and customary rate, but physicians who were charged more than that amount could bill students for the balance. Under the agreement, Aetna will reimburse students who paid such a balance. In cases that did not involve balance billing, Aetna will reimburse the physician. The company said the underpayments averaged $25 nationwide.

The inaccurate payment data used by Aetna came from the databases of Ingenix, a UnitedHealth Group unit (Levick, Hartford Courant, 2/3). Aetna spokesperson Cynthia Michener said the affected claims represented 3% of claims received by the student plan (AP/New York Times, 2/3). The underpayments were caused by outdated data tables, Michener said, noting that the company’s practice is to update such tables twice per year. Aetna acquired Chickering in 2003. She added that the issue has been corrected and that the insurer is reprocessing past claims affected by the error (Bray, Dow Jones, 2/2).

Aetna last month agreed to pay $20 million to settle Cuomo’s investigation into underpayments related to Ingenix. The $20 million, along with money from UnitedHealth and other insurers, will be used to create a new database (Hartford Courant, 2/3).

Cuomo said, “Health insurers must honor the promise they make to reimburse consumers fairly,” adding, “Here, students were particularly vulnerable to being cheated because they placed their trust in health care plans sponsored by their colleges. Aetna Student Health broke that trust” (Dow Jones, 2/2).