By Chad Bray
Of DOW JONES NEWSWIRES
NEW YORK -(Dow Jones)- New York Attorney General Andrew Cuomo on Tuesday announced the creation of a new not-for-profit company to help establish an independent database to help determine the rates that health insurers pay doctors and hospitals out of their networks.
The company, to be called Fair Health Inc., is an outgrowth of Cuomo's probe into a controversial database that was maintained by UnitedHealth Group Inc.'s (UNH) Ingenix unit and used by the industry to determine the "usual and customary" rates for medical procedures in an area.
Fair Health will work with a group of upstate New York research universities and will use nearly $100 million in settlement moneys to develop the new database, Cuomo said. The schools are Syracuse University, the State University of New York at Buffalo, Cornell University, the University of Rochester and SUNY Upstate Medical University.
The company also will maintain a Web site that allows consumers to check out-of-network reimbursement rates for potential procedures, Cuomo said.
"When you go to the doctor's office, there will be no surprises," Cuomo said.
Creation of the not-for-profit company was unveiled at a press conference at Syracuse University Tuesday.
Research for the new database will be centered at Syracuse University's Maxwell School and its School of Information Studies, Cuomo said.
The attorney general had alleged that the Ingenix database skewed the "usual and customary" rates in an area downward through faulty data collection, poor pooling procedures and lack of audits, thus forcing consumers to pay more out of their own pockets for health care.
In January, UnitedHealth agreed in a pact with Cuomo's office to shut down the Ingenix database and pay $50 million to establish a nonprofit group to run the new database.
Cuomo has reached agreements with health insurers who serve New York state to provide about $100 million to establish a nonprofit group to run the database, including WellPoint Inc. (WLP), Aetna Inc. (AET) and Cigna Corp. (CI).
Last year, Cuomo threatened to sue UnitedHealth over the database and issued subpoenas to a number of health-insurance companies that use it, including Aetna, Cigna and WellPoint's Empire Blue Cross Blue Shield.
-By Chad Bray, Dow Jones Newswires; 212-227-2017; chad.bray@dowjones.com