Aetna to refund students over out-of-date reimbursement rates

Nick Rees Feb. 3, 2009, 11:00am

Andrew Cuomo (D)

NEW YORK (Legal Newsline) - The nation's third largest health insurer has agreed to reimburse more than 73,000 students at more than 200 colleges for claims involving out-of-network care.

Aetna will pay more than $5 million, plus interest and penalties, to the students, following an agreement with New York Attorney General Andrew Cuomo.

The agreement ends the attorney general's investigation into the use of outdated reimbursement rate schedules from Ingenix, Inc., a subsidiary of UnitedHealth Group, Inc., used by Aetna Student Health, a subsidiary of Aetna, which set reimbursement rates.

The out-of-date schedules had lower reimbursement rates than students were entitled to, resulting in students and doctors being shortchanged, the attorney general's office said.

Between 1998 and April 1, 2008, Aetna Student Health was found to have underpaid in excess of $5.1 million in student health insurance claims. More than $2 million of the claims were from 21,000 students attending college in the state of New York.

"Health insurers must honor the promises they make to reimburse consumers fairly. Here, students were particularly vulnerable to being cheated because they placed their trust in health care plans sponsored by their colleges," Cuomo said. "Aetna Student Health broke that trust. I commend Aetna for correcting this problem, committing to pay restitution, interest and penalties to the affected students, and taking steps to ensure this does not occur again."

Aetna has also agreed to update Aetna Student Health's claims processing system within 30 days from receiving new market rate schedules and annually certify when it is done. In addition, Aetna will hire an independent third party examiner whose job will be to review compliance and training procedures.

"We are very pleased that Aetna has agreed to refund $5 million to students who were shortchanged on their health insurance claims," Charles Bell, programs director for Consumers Union, said. "This national settlement also establishes strong consumer protections to ensure that students will be fairly reimbursed when they use out-of-network medical services in the future."

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