February 5, 2009

Aetna Found Underpaying Claims

Print More

Aetna, the company with which Cornell contracts for student health insurance, will reimburse both active and former Cornell students more than $155,000 in faulty health insurance claims, University officials said yesterday. This sum represents only a portion of the more than $5 million in claims that the company will pay to over 73,000 students at over 200 colleges nationwide as part of an agreement announced Tuesday by New York State Attorney General Andrew Cuomo.
Between 1998 and April 1, 2008, Aetna Student Health mishandled 4,114 insurance claims filed by 1,626 Cornell students, according to University Press Relations Officer Joe Schwartz. During this period, the company reimbursed students for less money than they were entitled to, Cuomo’s office said in a statement.
Cornell is one of 20 colleges in N.Y. affected by the inaccurately processed claims.
Aetna plans to reimburse Cornell students a total of $155,091.67, which averages to about $37 per claim or $95 per student. Aetna plans on reaching out to current and former students by sending letters regarding each claim to help determine whether payment is due, Schwartz said.
“Health insurers must honor the promises they make to reimburse consumers fairly,” Cuomo stated in a press release. “Here, students were particularly vulnerable to being cheated because they placed their trust in health care plans sponsored by their colleges.”
Cuomo said that the miscalculated insurance claims had “shortchanged students and doctors across the nation.”
According to Cuomo’s statement, the agreement comes after an investigation into Aetna Student Health, a subsidiary of the Aetna insurance company, and their use of outdated reimbursement rates for out-of-network health care claims. The out-dated schedules, supplied by Ingenix, Inc. database, resulted in thousands of students being paid less than they were actually entitled to in reimbursements.
“The affected claims represent only 3 percent of the overall Chickering [Aetna Student Health] claims volume,” Aetna spokesperson Cynthia Michener stated in an e-mail yesterday. “The claim miscalculations were caused by Chickering’s use of old data tables, which was not consistent with Aetna’s practice to refresh the data twice a year.”
Cuomo’s office learned of the reimbursement issue after launching an investigation in February 2008 that centered on Ingenix, the nation’s largest provider of healthcare billing information. The investigation looked into the unfair out-of-network care costs that health insurers bill to customers. Cuomo’s office uncovered that Aetna Student Health, formerly known as Chickering Student Health, failed to properly reimburse student health insurance claims over the 10-year period.
In addition to the reimbursements, under the agreement, the claims processing system will be updated with new market rate schedules within 30 days of receiving the rates and provide certification of the act. Aetna will also hire a third party examiner to review compliance and training procedures and offer improvements when needed. Lastly, Aetna will provide all employees and subsidiaries with proper training on reporting compliance issues.
According to Schwartz, Cornell had not had a problem with Aetna before this incident.
“Cornell continually evaluates its relationship with Aetna through a competitive bid process whereby Aetna competes with other insurance companies,” Schwartz said.
Schwartz said that it is too early to know if this news will impact the University’s relationship with Aetna the next time it solicits bids for health insurance companies. He said that the Student Advisory Committee that makes recommendations regarding student health insurance has not yet convened.
Tommy Bruce, vice president of University Communications, said in a statement yesterday that Cornell “applauds” the Cuomo for securing the agreement with Aetna to reimburse students.
Aetna has also set up a hot line for students with questions about the agreement and reimbursements: (866) 805-7643.

From the archives:
Parties Disagree Over Sage Policy, Feb. 7, 1979
Letter: Ailing Health Services, Feb. 16, 1979