Is United Healthcare Overcharging for Out-of-Network Services?

NY State Attorney General Andrew Cuomo is going after United Healthcare for allegedly overcharging patients that receive out-of-network services.

An interesting question is raised here.

The principles are as follows:

1.  You get healthcare at a better rate via a group.

2.  The better rate is possible because the actuarial risk is shared across more people (and more premium dollars).  In addition, the rate is possible because the in-network folks have agreed to accept certain rates and to abide by certain guidelines.

3.  Out-of-network services, thus, take advantage of the concessions made by others.  The costs are higher precisely because they are unmanaged.

4.  Excessive out-of-network utilization makes it impossible for the health plan (government or private) to keep premiums low and affordable.  It also makes it difficult to recruit physicians to be in-network providers.

So, the deal is this.  Cuomo alleges that the health plans are charging patients the difference between the out-of-network cost and the "usual and customary" costs, and that by understating these "usual and customary" costs, is overcharging patients.

If I were on the health plan side of this, I'd be wondering whether he really cared about affordability.

From a patient perspective, I'd just want to things to be transparent...what's the cost if I use an OON provider?  

I personally don't have a problem with penalties for OON utilization.  If you rape the system, then you should pay up to offset the pain you inflict on the rest of us.

But if the penalties are over-stated in order to build in a % profit margin, then I've got a huge problem.