Cuomo's Next Target: Big Healthcare Fraud

More...

By Azi Paybarah

February 13, 2008 | 1:03 p.m

Andrew Cuomo announced he’s conducting a major investigation of the healthcare industry that could explain why healthcare costs are so expensive.

According to Cuomo’s office, insurers have low-balled the cost of medical treatment, pushing off a majority of the expenses to customers. The companies being investigated include UnitedHealth Group, Ingenix and others.

Here’s an example of how the scheme worked, according to a public statement from Cuomo’s office:

United insurers knew most simple doctor visits cost $200, but claimed to
their members the typical rate was only $77. The insurers then applied
the contractual reimbursement rate of 80%, covering only $62 for a $200
bill, and leaving the patient to cover the $138 balance.
Politically, the high cost of health care has been perennial target for politicians during campaigns, although the follow-through has usually been found wanting. During the 2006 governor’s race, the promising of reining in “waste, fraud and abuse” was used to buttress Eliot Spitzer, and to some extent, Tom Suozzi’s financial proposals.

The political problem in realizing those theoretical savings is that what a candidate calls “waste” may be a union's bread-and-butter. (See Spitzer’s fight with SEUI local 1199.)

Here, Cuomo seems to have chosen his badguy wisely.