From the AP story this morning:
More than 70 percent of workers who get health care through their employers are enrolled in plans that allow them to go out of network, according to the Kaiser Family Foundation. Typically, those plans will pay a set percentage, say 70 percent, for an out-of-network visit.
But unknown to many consumers, when patients go out of network, their plan doesn't actually pay 70 percent of the doctor's visit cost. It pays 70 percent of what it determines is the "usual, customary and reasonable" cost for the procedure or doctor's visit in question.
Insurance companies determine that cost themselves, and there's scant regulation or oversight of how they do it.
In the case of UnitedHealth and Ingenix, they were allegedly manipulating claims data so that the "usual, customary and reasonable" costs they used were lower than they should have been, leaving patients to pay more. [State Attorney General Andrew] Cuomo's office said Ingenix was understating the market rate for doctor's visits across New York state by 10 percent to 28 percent.
It occurs to me, on reading this story, that one of the big problems with "health care" is that the pricing is almost never made available to the consumer until after the services are delivered. Sometimes well after. This is a problem almost unique to medical services. If I go to a store, the cost of the items on the shelves are right there. If I call a plumber, he'll almost certainly provide an estimate of what it will cost to fix whatever problem he's facing. But if I visit a doctor, the prices are never advertised. Dentistry is a partial exception to this generalization, but doctors tend to do what they do, and the patient doesn't find out what the price is until he gets the bill. This makes price competition in the medical business difficult, which probably increases prices.
And while I'm at it, why is it that doctor's warrant their work. If I purchase something that doesn't perform it's advertised function, I can almost always take it back for an exchange or a refund. But try asking a doctor the terms of his warranty and see what reaction you get.