The Biggest Insurance Scheme of All Time?

UnitedHealth Group, one of the country’s largest insurers, settled what may be one of the largest health insurance schemes of all time on Tuesdayafter allegedly cheating sick patients out of hundreds of millions of dollars. And it probably would not have happened without Mary Jerome, an advanced-stage ovarian cancer patient who finally just said “enough” after getting hit with $46,000 in medical bills – even though she had top-notch insurance coverage.

>>Click here to read about United's class-action settlement days later

Jerome blew the whistle when her provider, Oxford, a subsidiary of UnitedHealth, refused to pay her medical costs. She wrote letters to just about everyone she could think of, including New York State attorney general Andrew Cuomo, who took up the fight on her behalf. In the course of digging into the case, investigators found that Jerome was not an anomaly and Americans have been “under-reimbursed to the tune of at least hundreds of millions of dollars.”

Here’s how it works: when you go out of network for anything – from a doctor’s visit to surgery – Oxford Insurance, and its parent UnitedHealth, only cover what they deem “usual, customary and reasonable” expenses. The rest you have to pay out of pocket. So how do they determine what is reasonable? They tell customers it’s based on “independent research from across the healthcare industry” when in fact, according to investigators, the insurance companies themselves actually decide what’s reasonable. Attorney General Cuomo found that in Jerome’s case those “usual, customary and reasonable” rates were being determined by a company called Ingenix – a supposedly independent firm – that is actually owned by, you guessed it, UnitedHealth. Cuomo contends that they were manipulating the numbers so insurance companies pay less and patients pay more.

UnitedHealth Group, in a statement, responds:

“We respectfully disagree with the New York Attorney General’s findings that we manipulated data … [or that our ownership of Ingenix was a conflict of interest] .. We agreed to his settlement because it was an effective way to address any perceived conflict of interest.”

In Tuesday’s settlement, UnitedHealth and Oxford agreed to overhaul how they reimburse patients and will pay $50 million to create a truly independent group to set rates, so patients like Mary Jerome will get the coverage they paid for.

This story, according to Lisa Takeuchi Cullen of our Money Desk, puts a spotlight on the hundreds of millions of Americans who are insured and still can get ripped off. We spend so much time talking about the 47 million uninsured Americans but this shows that no one is safe from healthcare companies that are more worried about their bottom line than your health.

Fortunately, there is a small but growing industry of medical billing advocates who exist to help you parse the arcane and obscure from your medical and hospital bills and make sure you aren’t being overly charged or under-reimbursed. Norah Johnson, one such advocate and founder of Medical expense Review & Recovery, explains that health insurance companies make money by denying claims. But you can appeal right to the companies because the costs of the claims are often negotiable. If it doesn’t work, consider getting to know the consumer affairs representative in your state attorney general’s office, who is more likely to take up these sorts of cases on consumers’ behalf. If you’re simply too sick or stressed to also handle all the costs, medical billing advocates are there to help – but it’s your responsibility to reach out to them.

>>Web Extra: Norah Johnson explains what other insurance traps to watch out for

And if your insurance provider is UnitedHealth Group and you’re worried about being taken for a ride like Mary Jerome, you can rest a little easier knowing that a wave of class action lawsuits have already arisen to make sure all consumers are protected – and you are automatically a part of them just by way of being a UnitedHealth customer.