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Hearing Of The Senate Commerce, Science And Transportation Committee - "Deceptive Health Insurance Industry Practices - Are Consumer Getting What They Paid For (Part One)?"

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SEN. ROCKEFELLER: Let me just, as I open this hearing, explain that there are so many committee meetings -- I mean, you know, the president is trying to remake the country on all fronts, all at once, and he's exactly right to do that. Are you ready for your question, Claire McCaskill? You are? Claire's one of the toughest questioners, Ms. Lacewell, in the entire Senate. She's brutal. Come on, get -- come on up here. Yeah, come on, come on.

SENATOR CLAIRE MCCASKILL (D-MO): (Inaudible, off mike.)

SEN. ROCKEFELLER: Now, all right --

SEN. MCCASKILL: (Inaudible, off mike) -- to your right.

SEN. ROCKEFELLER: Well, it depends which party you want to choose. (Laughter.) Are you going to get angry at me if I -- because I want to set this thing -- if I talk for a few minutes -- just two minutes over five minutes?

SEN. MCCASKILL: I'll time you. I'm teasing.

SEN. ROCKEFELLER: You're teasing?

SEN. MCCASKILL: You may talk as long as you'd like.

SEN. ROCKEFELLER: Isn't she nice?

SEN. MCCASKILL: I'm here to listen.

SEN. ROCKEFELLER: The president of the American Medical Association; where does she come from?


SEN. ROCKEFELLER: West Virginia.

SEN. MCCASKILL: Of course. Nothing but brainiacs in West Virginia.

SEN. ROCKEFELLER: That's it. Good morning, everybody. Today's hearing is the first of two hearings, which works out very well -- the setup of the two hearings -- that we're holding to look at deceptive payment practice that the health insurance industry has gotten away with for the last decade, probably longer. The victims of this deceptive practice are probably most of the people sitting in this hearing room today, along with the more than 100 million Americans who pay for health insurance coverage that allows them to go outside of their provider network for, you know, medical care.

Having the ability to get health care service outside of the network is a very important option for American consumers, and it's an option that they pay for -- and they know they're going to pay for that -- in the form of higher premiums, higher deductibles and higher coinsurance payments. Now, Dr. Jerome should be sitting here today. Dr. Mary Jerome -- she's a resident of Yonkers, New York. She's been fighting ovarian cancer since 2006. She had planned to be here, but she just can't physically make it today. But I'm still going to say something about her.

According to her testimony, Dr. Jerome received her health care coverage through a point-of-service plan, which encouraged her to get care within a provider network, but also allowed her to see out-of- network providers if she so desired and if it was necessary. So here's what she says in her testimony: "I had always been confident that paying for the out-of-network option provided peace of mind with respect to the financial burdens associated with the catastrophic medical costs."

After her cancer diagnosis, Dr. Jerome and her in-network primary care physician decided that she needed to be treated at a health care provider that was outside of her network, that one being the Sloan- Kettering Memorial Hospital in New York City. Dr. Jerome knew she was going to have to pay some portion of these costs out of her own pocket, but she also assumed, in good faith, that the treatment was going to be covered by her insurance. What we're going to learn today is that American consumers like Dr. Jerome -- people who've been paying higher premiums for the choice to see out-of-network doctors -- have not been getting what they have been paying for.

We're going to hear testimony suggesting that the health insurance industry has been systematically low-balling American consumers. And this is a very upsetting situation -- one which has been revealed in New York. And if we have to have 50 hearings for 50 states, I'll be glad to do that, too. They have been promising -- these insurance companies -- to pay a certain share of the consumer's medical bills. But they have been rigging health care charge data to avoid paying their fair share. The result is that billions in dollars in health care costs have been unfairly shifted to Dr. Jerome and millions of other American consumers like, as I said, probably many in this room.

So here's how it works: The insurance company generally promises to reimburse out-of-network medical services at what they refer to in the industry as the "usual, customary and reasonable rate" -- usually just the word usual and customary. Well, the problem is that it's been the insurance industry who's been decided what is usual, customary and reasonable -- what that means. They make that decision.

Consumers have not had any input; doctors and other health care providers have not had any input; the chairman of the American Medical Association has not had any input; only the insurance companies have been getting to decide what's reasonable, which is like letting the fox define usual, customary and reasonable in the henhouse. You understand that?

SEN. MCCASKILL: I do. We have both in Missouri -- fox and henhouse.

SEN. ROCKEFELLER: So the good news is that, thanks to a series of lawsuits and a year-long investigation by the New York attorney general's office, the insurance companies that operate in New York, including most importantly UnitedHealth Group and its medical information subsidiary, Ingenix, have been forced to change the way they do business. And Ms. Lacewell has a lot to do with that. Conclusion: Our goal for today is to get an update on how the reforms proposed in New York are being implemented and to understand how the deceptive practices uncovered in New York have been harming customers in the other 49 states.

I'm looking forward to this testimony, especially at a time when our country is going through all kinds of murderous economic situations for people to pay any kind of health insurance at all. I would finally like to note that, missing from our hearing today is one group of stakeholders who played an indispensable role in creating and perpetuating this unfair reimbursement system, but who will also play an essential role in changing it, and that is a little group called the insurance industry.

On March 9th, I invited the CEOs of UnitedHealth Group and Ingenex to testify at this hearing, because we wanted to hear their side of the story because we're always fair here. Because UnitedHealth Care (sic) told us that their CEO, Mr. Stephen Hemsley, was not available to testify today, we agreed to hold a second hearing next week. So that, we're going to do on Tuesday. That's very important for observers and for press and for members here to know that. It's perfect -- we have the good guys and then we have the other guys. (Laughter.) The good guys are today; the other -- they're going to setup next Tuesday.

So at 10:00 a.m. next Tuesday, we'll be holding a hearing during which we hope to gain a better understanding of the insurers' perspective. Now, I, at this point, usually call on the ranking member. And I don't see one. So what I would like to do is call -- is simply to ask you to do your testimony, unless any of our members would care to make a statement -- short statement -- very short statement.

SENATOR FRANK LAUTENBERG (D-NJ): (Inaudible, off mike.)

SEN. ROCKEFELLER: Yeah, because I was long.

SEN. LAUTENBERG: You're very generous to make that offer, but if I could -- (inaudible, off mike) -- kind of an offer. So I will take advantage, for a moment, of the chairman's latitude with allowing just a short statement. Mr. Chairman, as I'm sure you mentioned New Jersey, across the country, people are working harder than ever, still struggling to get by. And the worst thing to do is to have -- to be caught in the middle of the scheme, for them, for the individual that permits the insurance companies to siphon off more of the profit than they're entitled to, and they do pretty well in that health provider business.

And so we're pleased to have you here. We've got terrible problems in the state of New Jersey -- 2000-2007, premiums in New Jersey are over 71 percent, while workers' earnings increased 15 percent. So health care costs in New Jersey -- seeing a doctor and getting prescription people -- people needs grew 50 percent from '99 to 2008. So we're pleased that you chose to have this hearing, Mr. Chairman, and that we have a chance to learn more about it from people who are directly involved. And we thank you for being here. Thank you.

SEN. ROCKEFELLER: Thanks, Senator Lautenberg. Any other statements?

MR. : (Inaudible, off mike.)

SEN. ROCKEFELLER: But I like that. But the first one is Ms. Linda Lacewell, and this is her title: She is counsel for economic and social justice and head of the Healthcare Industry Taskforce, and she knows her business very, very well. Obviously, as I indicated, Dr. Mary Jerome could not be here. Dr. Nancy Nielsen, president of the American Medical Association, with the incredible fortune of having been born in Elkins, West Virginia. And Mr. Chuck Bell, program director for the Consumer's Union.

So we look forward to your statements, starting with you, Ms. Lacewell.

LINDA LACEWELL: Thank you very much, Mr. Chairman. Thank you to the committee for inviting me here today with respect to this hearing. It's a pleasure to be here and it is my privilege to represent the attorney general of the state of New York, Andrew Cuomo, at this hearing. For the past year, the attorney general in New York has been conducting an industry-wide investigation with respect to the insurance industry concerning a scheme that is truly, in our view, staggering in scope and impact, affecting -- as the chairman noted -- over 100 million Americans around the country.

That is one in three people in this country, a scheme run by the nation's largest health insurers, as we found, which left working families across the country wrongly stuck with at least hundreds of millions of dollars in unreimbursed medical expenses, a scheme that ran for at least 10 years and one that is finally coming to an end.

The attorney general is the people's lawyer and seeks to be responsive to their concerns. As a result of that, he travels the state of New York and learns what the issues are of concern to the people. And, time and again, the primary concern raised by the people in the state of New York is health care and health care costs and whether or not they're getting the benefit of their health insurance.

A key concern raised by them with respect to health care is reimbursement for what is known as out-of-network medical costs. About 70 percent of insured Americans have a plan that allows them to choose their own doctor outside of the network of insured, outside the network that insurers have put together by contract with their doctor. These consumers, it's important to note, do pay more; they pay a higher premium that costs them more money for this right to go out of network.

And that balance, that bargain is an important one two insurers met, and they choose to pay more for the right to go out of network because it is fair to say that health care can be a matter of life and death; and choosing a doctor is a critical issue in that regard. Under these out-of-network plans, in exchange for the higher premium, the insurer typically promises to pay a substantial portion of the anticipated cost, which they refer to as a usual and customary rate.

Frequently the insurer says, I will pay 80 percent of what the usual and customary rate is. And that is understood to mean in the industry -- to mean the prevailing rate the doctors charge when they have not negotiated a lower rate with the insurer on a network basis. And this is a critical consumer issue, because in the out-of-network setting, when the insurer does not reimburse the entire bill to the consumer, it is the consumer who is responsible to the doctor to pay the balance of the bill, which would not ordinarily be the case in an in-network setting.

So our investigation sought to determine why the reimbursement rates to consumers were so low, who was determining the rates and how and whether in fact these rates were fair or not fair. We therefore surveyed health insurers operating in the state of New York, which includes some of the largest insurers in the country that operate in New York -- UnitedHealth Group, Aetna, Cigna, Wellpoint, which is the largest in the country -- and time and again we receive the same answer: When we determine these rates, we are relying on this independent company known as Ingenix.

We then went to Ingenix and said, how are you determining these rates; and time and again from Ingenix we received the same answer: Well, we collect fee information, billing information from insurers around the country, the largest insurers that there are: United, Aetna, Cigna, Wellpoint and everybody else. We take all their data, we put it in a database, we mix it up and we issue these fee information schedules that go to the industry to determine usual and customary rate.

The natural question then became, who is Ingenix, and on that question when you look behind the curtain of this oracle of usual and customary rates, one finds UnitedHealth Group, the second-largest health insurer in the United States -- because Ingenix is a wholly owned subsidiary of United Health Group -- making this essentially a closed loop system of the health insurance industry, collecting the information among itself, pulling the information together, all relying on the same rate information, a system that is impenetrable to the consumer.

The attorney general found and health insurers have since acknowledged that there are conflicts of interest here; a picture of conflicts of interests from top to bottom because each of the health insurers has a reimbursement obligation towards the consumer and therefore has an interest in keeping the reimbursement rate low. So if the rates are being determined and agreed upon essentially by the insurers, and the database is based on their product, there is a significant danger to consumers of underpayment. And our investigation found that in fact, Ingenix did lead to underpayments.

The other problem that we found with this system is that Ingenix has been essentially a black box to consumers, who do not know, first of all, that it is the insurance industry determining what these rates are. And second, they don't know how to challenge the rates and they are almost never given by the industry an opportunity to do so.

It is important to note, as the chairman did, that although this issue may sound technical, it affects almost everyone in the country and it has a human impact, as demonstrated by the story of Mary Jerome, referred to by the chairman, who was stuck with tens of thousands of dollars of unanticipated medical costs at a time when she was fighting not only for her health, but for her life.

Having identified this problem the attorney general set about to determine an appropriate reform, and when the problem is framed, the answer becomes simple and clear to note, and that is, there must be an independent system that does not have the conflicts of interest that currently exist. There should be a database that is independent, we feel it should be run by a not-for-profit company associated with a university which has an interest in the database being accurate because it will also be used for academic research; and the system should be reformed in that way.

And also it is critical that consumers across the country get some transparency into their reimbursement rates so that they know ahead of time, what their costs are going to be, what their out-of- pocket expense is going to be before they shop for a doctor. And in that regard it is the attorney general's goal that there be a Web site ultimately available to consumers where they can go to find out in their area what their reimbursement rates are likely to be for various medical services.

UnitedHealth Group and Ingenix have agreed to sign on to these reforms, and we had commended them for that, and we continue to do so. When the new database is ready, they will shut down the existing Ingenix database. They are funding the new independent not for profit with 50 million dollars and the rest of the industry, like dominos, has quickly followed suit.

And we have now collected about $95 million to institute these reforms. We are also working closely with the New York State Department of Insurance to make these reforms permanent, and we believe there is a need for new regulation to end once and for all the conflicts of interests that derailed the existing system and to bring new rigor and transparency so that this problem can never happen again.

The attorney general strongly believes that states are a laboratory for reforms and advancements in many areas including health care and we hope that the new regulation will serve as a model for the nation so that the goals of accuracy, transparency and fairness in out-of-network reimbursement for consumers like Mary Jerome can be met. Thank you.


DR. NANCY NIELSEN: Good morning, Chairman Rockefeller, members of the committee. I'm Dr. Nancy Nielsen. I'm originally from West Virginia as you heard. And I now live in Buffalo and I am a practicing internist and also president of the American Medical Association. Thank you very much for inviting me here today to testify about this important issue.

We have been involved in this issue for nearly a decade. You have already heard how it worked, that the database was used to determine usual customary and reasonable fees that insurers paid when a patient when out of network. And the patients, as you've also heard, paid extra for the privilege of going out of network.

There have been, as you heard from Ms. Lacewell, two precedent- setting settlements by Untied: one with the AMA and the other with Attorney General Cuomo. And therefore this abuse is being addressed. My comments will focus on the AMA's lawsuit and its implications for physicians and patients.

You might wonder why a doctor would not belong to a network and why people would have to go out of network. Patients understand that all physicians are not part of every network either because the payer sometimes restricts the network deliberately or because the physician decides that the fee schedule is not adequate or that the hoops that they have to jump through are not worth it to get the care that their patient needs or the administrative burdens are too high or there are simply no benefit to taking a discounted rate when there is no volume that is going to follow.

So there are lots of reasons why physicians sometimes do not join networks. And you've also heard from Ms. Lacewell how it works; there is usually a percentage that the insurer agrees to pay for the out-of- network charge. And the patients believe, the consumer believes, that the insurer will pay that percentage of what the doctor charges.

What actually happens, as you've heard, is that it's the insurers themselves, through the Ingenix database, that are actually lowering the amount and deciding what is, quote, "allowed." That is a rude awakening for patients like Dr. Mary Jerome.

It's also very harmful to physicians and the harm is not just financial; this drives a stake in the heart of the doctor-patient relationship because if you're a patient and you're told that X is the usual customary and reasonable and your doctor charged Y, what is your assumption? That it is an unreasonable charge, and that is unfair and that has damaged the doctor-patient relationship throughout this country, not just in New York.

In the year 2000, the AMA and the medical societies of the state of Missouri and New York filed suit against United on this issue exactly; it lay aborning in the courts for many years, despite the best efforts, until the attorney general took it on. And we are very pleased that the consumers and the doctors worked together with the attorney general's office. They did the groundbreaking work, got the information that no one else was able to get.

How did the database lower those fees? Let me just give you quickly four ways: First they deleted higher chargers and any charges with cases that had complications. They included outdated information, discounted rates and even charges from non-physicians. They failed to collect relevant information about the site of service, the length of training, the physician qualifications and when there was no data available in an area, they derived some.

Those were the ways that the flaws occurred, the conflicts of interest you have heard described quite readily both by the chairman and by Ms. Lacewell. Ultimately, to be fair, United recognized the importance of restoring its relationship with patients and physicians and is settling its court battle with the AMA.

It agreed to pay $350 million, the largest settlement against any insurer in this country, to compensate under-reimbursed patients and physicians and to transfer this UCR database from Ingenix to the new not-for-profit entity. These settlements will help make sure that patients understand what they're being promised when they purchase an out-of-network service, what their obligation will be and what the obligation of their insurer will be. We urge Congress to ensure that everyone, including federal workers, who may have also been shortchanged through these out-of-network benefits, to receive reasonable compensation.

We also urge you to pursue payment transparency because the transparency of the health industry for payments and for other things is in everyone's best interest: patients, doctors and the country as a whole. Thank you very much, Mr. Chairman.

SEN. ROCKEFELLER: Thank you, Dr. Nielsen. Mr. Bell.

CHUCK BELL: Mr. Chairman, members of the committee, thanks very much for the opportunity to testify on consumer reimbursement for health care services. Consumers Union is the non-profit, independent publisher of Consumer Reports magazine, with a circulation of 8 million readers both print and online. And we regularly poll our readership and the public about key consumer issues and the high cost of health care consistently ranks among their top concerns.

I work in Consumers Union's advocacy and public policy division in the New York office where I've represented Consumer Union's position on health care issues for the last 19 years in the Northeastern states on issues relating health insurance, prescription drugs, patient safety and restructuring of non-profit health plans in hospitals.

I think, as all of us are painfully aware, health insurance costs for employers are going up at a very steep rate. But in addition to that, they are going up a lot for consumers too, and consumers are having to dig a lot deeper to pay for health care. The average employee contribution for company-provided health insurance has increased more than 120 percent since 2000. And for consumers- and employer- provided plans, average out-of-pockets costs for deductibles, co-payments for drugs and co-insurance for physician and hospital visits have also risen 115 percent since 2000.

So this is the context, and in the midst of this escalating crisis of out-of-pocket costs, consumers have been struggling with a gravely flawed out-of-network reimbursement system which has been described here today. And the scale of the issue is huge: Over 110 million Americans, roughly one in three consumers, are covered by health insurance plans which provide an out-of-network option. And that includes about 70 percent of people who have employer- sponsored coverage.

So as the national organization that represents consumers, we emphatically agree with Attorney General Cuomo's conclusion that the structure of the out-of-network reimbursement system is broken. We believe that it needs to be rebuilt from the ground up so that consumers will be assured of being reimbursed fairly and that there will be appropriate public oversight and accountability for collection of data regarding physician and provider charges.

This investigation, as you've heard, has exposed the swamp of financial shenanigans and has now reached a critical juncture. We believe that we need coordinated action by state and federal policy- makers and regulators to help consolidate the investigation's games and ensure that the new database for calculating out of network charges will be broadly used across the entire marketplace. Some of the implications of the investigation that we think are important are the following: First, we think that regulators need to hold insurance companies accountable to their contractual promises on an ongoing basis. Consumers clearly have the right to expect that their health- insurance policies will pay the bills that they are legally obligated to pay. Everyone can easily agree that insurance companies should not engage in deceptive and unfair practices against consumers.

But there's nothing automatic about that process. It takes sustained effort and political will to achieve the vigorous comprehensive enforcement of state and federal insurance and consumer protection laws and regulations. And in this case the technical nature of the subject matter and the obscure veiled nature of the Ingenix database resulted in a persisting rip-off it took far too many years to reign in.

Attorney General Cuomo, to his great credit, plunged in and as soon as he learned about the problem he drove hard to get a consumer- friendly solution. But I think this case raises some troubling questions about why financial rip-offs like this one persist in the marketplace for so many years without effective intervention at the state or federal level. Why didn't the alarms go off earlier about these unfair practices?

So we believe that oversight of the insurance industry can be tightened up at the state level by more intervention by attorneys general insurance commissioners and by establishing independent offices of insurance consumer advocates. Second, we think consumers do need a trusted system that they can rely on to ensure that the UCR rates will be calculated for out-of-network reimbursements and that they will be accurate and up to date.

We believe the independent databases proposed by Attorney General Cuomo will have great benefits and give consumers a fix on what their reimbursements will be. We believe also that the insurance regulation that's being proposed in the state of New York to apply to all insurers in our state and basically encourage them to use an independent source for this data will be a very popular regulation and will be quickly adopted, but it still begs the question: Consumers need protection across the entire country on these issues and we really hope that the regulation will be adopted as a model by the NAIC or perhaps the federal government could set some minimum standards in this area.

We also would note that Attorney General Cuomo has done a fabulous job in lying up some of the largest insurers in the country to support the settlements. But there are still many other insurance companies around the country, particularly state and regional companies that used data from the Ingenix databases who do not have operations in New York State and have not been reached by this investigation.

So they have not necessarily haltered their use of the Ingenix database or notified consumers of its shortcomings; and so we would therefore urge the Senate Commerce Committee to investigate the nature and extent of the use of the Ingenix databases by other health insurance companies throughout the U.S. and to seek possible remedies or solutions for halting this practice.

The New York investigations suggest that tens of millions of consumers have been directly hurt by industry practices that led to the under-payment of their health-insurance bills. And at this point nobody can say for sure exactly how much consumers were underpaid as a result of the broken out-of-network reimbursement system. But we believe that the financial damage sustained by consumers is clearly very substantial; we know it runs at least into the hundreds of millions of dollars.

Finally, for the health care system to function effectively, we need strong ongoing financial accountability and oversight. We believe that this important reform of the out-of-network system prefigures much larger changes that we need to make as a country to ensure transparency and accountability in the health care system. Consumers need more and better information about the cost of medical procedures and treatments and their therapeutic benefits to ensure that we're getting good value for the precious dollars that we spend.

Mr. Chairman and members of the committee, thank you very much for your efforts to assure appropriate federal oversight of consumer reimbursement issues. We look very much to working with you to shape solutions in this area and to help transform the health care system in the United States. Thanks very much for considering our views.

SEN. ROCKEFELLER: Thank you very much, Mr. Bell. I should have said at the beginning that all statements are automatically included in the record. So you just sort of gave yours, but if you had something written it goes in, Dr. Nielsen. That's our practice.

Ms. Lacewell, I'd like to start with you. In January, your office issued a report that discussed some of the findings from your investigation. In your report on page 20, there is a table, which I believe people have now before them. Do they not? And I would like to ask you about it.

It's a table that lays out the Ingenix reimbursement rates for out-of-network doctor visits in Erie County, where you live, right? And I'd like to give you a copy as you now have one. The first column contains the various billing codes that doctor cover -- that cover doctor visits and they're simply -- don't get too hung up on them. They just say what was the -- what was being treated, what was the subject at hand.

And the second column presents the range of usual and customary reimbursements as calculated by Ingenix. Now, here's where it gets interesting. It's my understanding, Ms. Lacewell, that you and your staff went back and gathered the insurance claims data for Erie County -- just Erie County -- and performed your own calculation of the prevailing wages for doctor visits in areas, is that correct?

LINDA LACEWELL: Yes, that's correct, Mr. Chairman.

SEN. ROCKEFELLER: The third and fourth columns of the chart show that the numbers that you came up with indicate that the insurance industry's reimbursement rate, as calculated by Ingenix, were anywhere from 10 to 25 percent lower than what the doctors were actually charging their patients in this area, is that correct?

MS. LACEWELL: Yes, sir, that's correct.

SEN. ROCKEFELLER: So let's take an example from this table. If a doctor in Buffalo is charging $84 for an office visit but the insurance company is only paying $74 for that visit, consumers get stuck paying the $10 balance themselves, right?

MS. LACEWELL: That's right.

SEN. ROCKEFELLER: Ten dollars doesn't sound like a lot of money, but if you have a lot of -- you know, if you just have a lot of doctor visits and you multiple this throughout the population, it escalates rapidly in the millions or hundreds of millions of dollars. And the customers are paying it out of their own pockets and they shouldn't be. So, Ms. Lacewell, correct me if I'm wrong here, but doesn't this table show that families in Erie County are being stuck with the millions of dollars of health care cost that should be paid for by the insurance companies?

MS. LACEWELL: Yes, Mr. Chairman. That's exactly what it shows.

SEN. ROCKEFELLER: How did the health insurance companies react when you show them this data -- your data?

MS. LACEWELL: They settled.


SEN. ROCKEFELLER: But what did they do before they settled? I mean, people don't just sort of settle on the spot.

MS. LACEWELL: That's right, Mr. Chairman. The reason that we conducted this analysis is because many of the insurers said to us, well, you say it's a conflict of interest. It's hypothetical. Show me the database is wrong. Show me I owe money. So we collected billing information and put this together and demonstrated to them that there was a difference in what they were paying based on Ingenix. And for insurers that didn't have a clear window themselves into the Ingenix data, it was actually useful for them because some seemed more inclined to settle if they could be shown this kind of information. And for others who were more obstinate, it sort of left them less of a choice in our view. But they did not have any explanation. I mean, they said, well, if there were errors in the database that were leading to under-reimbursement, they're just errors; there's no intent. And our response was that the error was always in favor of the insurer and against the consumer.

SEN. ROCKEFELLER: Wouldn't sometimes they just cut the 50 percent right off the top?

MS. LACEWELL: They would cut a percentage off the top, which is important because if you're talking about a prevailing rate, it's what most doctors charge. So if you throw out charges at the high end, that's going depressed the reimbursement rate.

SEN. ROCKEFELLER: Now let me turn to you, Dr. Nielsen. You're from Buffalo. You practiced medicine there for many years. Are you surprised to learn that the insurance companies' industry reimbursement rates for visits for your community are 10 to 25 percent lower than the actual market rate?

DR. NIELSEN: We were surprise to know exactly how low because you might wonder why we didn't do what the attorney general's office did and collect that data. And it's very clear; it's because of concerns about antitrust enforcement. Doctors are not allowed to talk to other doctors about fees. It does sound crazy.

So we knew that the underpayment was occurring. That's why we filed this lawsuit back in 2000. We didn't know the magnitude of it. We knew it from the doctors who came forward, but the pervasive nature of it is amazing. And if you look, if you look at the numbers, those numbers correlate very well with another suit that was settled in the state of New Jersey with Health Net. And there, it appears that on exactly the same issue, the Ingenix database underpayment in the rigging and the numbers, the amounts of underpayment was, in the settlement, estimated to be between 14 and 28 percent. And that lines up very well with this third column that you're seeing.

SEN. ROCKEFELLER: My final point before going to Senator McCaskill is that, you know, make what comparisons you want but Erie County, New York, any county, West Virginia, you find a lot of parallels. A lot of people trying make it, not being able to make it, insufficient health insurance, every $10 counts. Every $25 counts. You add them up; it makes an enormous amount of difference. The thing that's hardest to understand about this practice is that the insurance companies, had they behaved as they should have, would have still been making an enormous amount of money, is that correct?

MS. LACEWELL: That's correct.

SEN. ROCKEFELLER: I think it is inexcusable. I'm glad this practice has been exposed and that we're being able to correct. Now, I have one final question for you. You settled and it became very reasonable because you said, like dominoes, everybody else began to do that. Now, you're going to have to prove that to me because I don't know why you didn't go after them for fraud -- or maybe you did and that's why they settled.

MS. LACEWELL: Well, we alleged to them -- and we had to threaten to sue some of them under our consumer fraud and deceptive practices statutes and we gave them the option of litigating and defending against a fraud lawsuit or signing onto the reforms practice and stepping away from this deceptive system and moving toward a new system of reform. And the insurers that operate in the state of New York chose to join onto reforms.

SEN. ROCKEFELLER: That's what's important to me, is that you were prepared to go the fraud route and they knew it.

MS. LACEWELL: That's right.

SEN. ROCKEFELLER: All right, thank you. Senator McCaskill.

SEN. MCCASKILL: First, let me say for the record I'm a big fan of Andrew Cuomo and I don't mean by the comments I'm about to make that I want to diminish his accomplishment as a crusader on behalf of consumers. But I think it's important to point out for the record that this journey began with a lawsuit that was filed. And I find it a little ironic that the Missouri Medical Association, the AMA, turned to America's trial lawyers to right a wrong as it related to the way they were being reimbursed because, generally, when I'm speaking to the members of the Missouri Medical Association, they're explaining to me that Missouri's trial lawyers are nothing short of Satan and that they are the evil that has cast such problems upon the practice of medicine that it makes it impossible for doctors to do their work.

So I wanted the record to show that the AMA turned, in fact, to a class action lawsuit handled by trial lawyers. And the reason that it had not been settled by the time Andrew Cuomo took office, some seven years after the lawsuit had been filed, was because the defendants in that lawsuit refused to acknowledge the proof that those trial lawyers were willing to show the court and they were delaying and delaying and bumping up the cost of that lawsuit for United Healthcare and for defendants in that lawsuit.

And had United Healthcare taken cognizance of the facts that those trial lawyers had brought to court and immediately capitulated and admitted that they had this collusive system of data that was flawed, we wouldn't have had to rely on Andrew Cuomo to come to the rescue. Dr. Nielsen.

DR. NIELSEN: You bet. (Chuckles.) We don't hate all lawyers. We just haven't had remarkable luck with the trial bar, as you know. The issue here was the facts -- unearthing the facts -- and having enough persuasive muscle to make sure that the flawed database was exposed and it took the muscle of the people's lawyer. And so it did take a lawyer. It took the people's lawyer. We are grateful for that. We are also grateful for the help that we had from the attorneys and sometimes things lie aborning in the courts because of other reasons other than the skill of the attorneys.

SEN. MCCASKILL: I think that's -- you know, I appreciate that and I don't mean to, you know, to pick on you. But I do think it's important to note that even the American Medical Association, when they need a justice to be addressed, turn to America's trial lawyers to try to get into court and fix a problem.

And that's why America's trial lawyers are so important to our system of justice in this country and I just wanted to just point that out.

Now, let me ask you, Dr. Nielsen, do the doctors generally agree to take the reduced rate for the out-of-network payment from the consumer? And is this different than payment one that the consumer is generally going on the line for or is there a general -- I know there have been times in my life that I believe that my doctors have taken a reduced rate for an out-of-service medical charge -- out-of-network, I mean.

DR. NIELSEN: Some do. They don't have to, of course. What should happen is a patient going out of network should have access to the information as to what they will pay just as you heard from the consumer, the patient, who was unable to be here today. She thought she knew what she was going to owe. She knew what the charge was.


DR. NIELSEN: The problem wasn't the charge. The problem was the amount of reimbursement from the insurer, which left her holding the rest. Some doctors do negotiate lower fees when the patient is left holding the bag. Some do not. Some give uncompensated care, as you know.


DR. NIELSEN: Seventy percent of doctors give uncompensated care to patients who have no insurance. But this is different. This is a situation of a promise made and a contract between a health-insurance plan and a consumer and the promise wasn't kept.

SEN. MCCASKILL: How does the UCR rate compare to the Medicare rate, generally speaking? Can you speak to that? Can any of the witnesses speak to that? How far off is the Medicare rate for reimbursement to doctors from the UCR rate that this data -- the phony data was supporting?

MS. LACEWELL: Senator, we did look at that issue and we found that typically the Medicare rate is much lower. And, of course, we believe this is one of the reasons why insurers charge a higher premium for the structure of this out-of-network system because the insurer is saying, it's going to cost me more; I'm going to pass on a little more of the cost to you.

And we think it's important that the consumer get the benefit of that bargain because if the insurers take in a little bit more, they shouldn't be holding on to that and not complying with their obligations.

SEN. MCCASKILL: Well, and once again, that fact underlies our desperate need for health care reform in this country because if the Medicare rate is even lower than the UCR rate that we now know was artificially too low, then therein you see all kinds of the incentives in the system to try to game it in order for doctors to come out whole at the end of the day. So I think that's important.

One final question: Was there any evidence of collusion that you all saw between these insurance companies as this data company was bought by United Healthcare? Did all the other insurance companies know that this now becoming their -- that they were going to own this and it wasn't going to be independent and it wasn't going to be audited or there wasn't going to be any oversight of it?

MS. LACEWELL: We believed that the insurers that used the Ingenix system were aware of Ingenix's relationship with United Health Group and they were aware that once Ingenix and United bought up the competitors that there was nothing else in the marketplace. And we believe that they were content with that because it was a system that worked for all of them collectively. You know, it was the consumers who were not aware of this.

SEN. MCCASKILL: Okay, thank you. Thank you, Mr. Chairman.

SEN. ROCKEFELLER: Thank you, Senator McCaskill. Senator Udall to be followed by Senator Lautenberg.

SENATOR MARK UDALL (D-NM): Thank you, Chairman Rockefeller, and I want to congratulate you for holding this hearing today. I think it's a very important topic that you're highlighting. It impacts my state of New Mexico and I'd like to also say that the senator of Missouri, I think, raised a very interesting question here, the AMA hiring trial lawyers to bring justice to a situation. And I hope that that portends a rapprochement or something like that between the trial lawyers and the AMA so that you can step forward and offer proposals for reasonable reform in the malpractice area. This is an exciting opportunity, I think, here for you.

But, Dr. Nielsen, the double harm you cite in your testimony where the patient actually ends up paying more than the fees outlined in her network of benefits speaks to a current situation in my home state of New Mexico. Recently industry interests have pushed for the right to form exclusive PPOs, something New Mexico's medical society opposes. In terms of timely access of health care, do exclusive PPO plans pose another kind of double-harm threat for consumers? And in your estimation is the push for exclusive PPOs cause for concern given the attorney general's findings from the United Healthcare settlement?

DR. NIELSEN: You'll need to educate me about what's happening in New Mexico because when you say an exclusive PPO, are you talking about a restricted network?

SEN. UDALL: That's right.

DR. NIELSEN: That is not new. That is not new. That has been around a long time. They've been done under the HMO umbrella. They've been done under -- even a point of service sometimes has an exclusive extended network.

The problem there is that the balance of power between an insurer and a physician -- there is no comparison between the imbalance of power, particularly if that insurer is one of the large ones that services many employers in that state. We saw this in Nevada, for example, when one company bought up another health insurance company.

So it is a problem because then sometimes insurers say to the doctors, take it or leave it. It's then up to the doctor to either take it or leave it. And if they feel that the volume of number of patients that they would see would justify the discount, then they make an informed decision to accept and be part of that network and that's a fair negotiation. The problem of unfairness comes when the doctor does not have the ability to say no because they would lose their entire practice.

SEN. UDALL: Now, the settlement agreements in these two cases are great first steps to reigning in managed care's ad hoc cost containment strategies. Is the case precedent set by the AMA's example enough going forward? How do you see the federal government best addressing the conflict of interest questions raised by these two cases?

DR. NIELSEN: I think your hearing is a remarkable first step. I want to be sure that there -- that it's clear that there are basically two parts to the kinds of settlements and that's really very important. The settlements that you heard described by Ms. Lacewell that the attorney general negotiated were essentially fixing this database, ceasing and desisting using the flawed database and going to a new unbiased database going forward. But the other part is the settlement that United Healthcare has reached with the AMA and the other medical societies and that's really very important. It's different. That's reparation for the past action.

So United has solved both of those from their standpoint. There are three others that we are helping to come to that conclusion by filing lawsuits. The most recent one was against Well Point yesterday. So Aetna, Cigna and WellPoint have not yet reached a settlement on reparations, whereas United has. We think that everyone needs to understand this. What the federal government will do, what the jurisdiction of the federal government is compared to state laws. I -- that's beyond my expertise as a physician, so I would have to turn to Mr. Chairman and ask, what is the role of the federal government here?

SEN. UDALL: Well, I'm not sure you're allowed to ask the chairman a question but I'll defer to our distinguished chairman here.

SEN. ROCKEFELLER: You have 13, 12 seconds left.

SEN. UDALL: I'm going to yield, Mr. Chairman.



SEN. ROCKEFELLER: I know. (Laughter.) That's why I'm offering you 12 -- now 10 seconds. (Laughter.) All right, Senator Lautenberg, thank you very much.

SEN. LAUTENBERG: Thank you very much, Mr. Chairman and it's great idea to hold this hearing and learn from what experienced people like our witnesses here know something about. And when you see that -- though I think that you did mention that -- Dr. Nielsen -- that the agreement with United Healthcare is still waiting formal approval by the federal court, is that right?

DR. NIELSEN: That's correct, Mr. Senator and that is going to be happening and we believe that that had happens next week, the first hearing.

SEN. LAUTENBERG: And the area of discussion is about $350 million dollars, is that --

DR. NIELSEN: That's correct.

SEN. LAUTENBERG: Three hundred and fifty million dollars. It's outrageous. You know, a scam is a scam is a scam, whether or not it's a street thug or a well-dressed corporate executive. That's been an interest of mine for a long time. I'm on the board of the Columbia University School of Business and I was able to grant them a chair some eight years ago. And my subject, and I led one of America's great companies for 30 years, is business ethics. And we don't have that sprinkled in our dialogue often enough.

Ms. Lacewell, last summer the federal court -- and I think the chairman touched on this -- approved a settlement with the New Jersey insurer, as you know, and detailed significant problems with the insurance companies underpaying patients. Now, your investigation found similar problems with the insurance companies operating in New York. What can be done to stop these companies across the country that are engaged in similar practices but are not included in the New Jersey and New York settlements? Do you have any recommendations on -- I know it's outside of your direct province. What do you think?

MS. LACEWELL: Senator, obviously it's a very important question. The attorney general finds that transparency, bringing light to a problem, has a very powerful effect, which is why, as Dr. Nielsen has noted a few times, this hearing is important because if the problem is in the shadows, probably no one will do anything about it, but when light is brought to the problem and the problem is articulate with detail and with proof and with vigor, the insurance companies really could not dispute that this was a real problem. And once it was brought out into the light of day it became really too much for them to bear, and when you get the first to settle, and Ingenix being at the center of the problem, that generates a momentum of its own.

SEN. LAUTENBERG: So you're saying they must pursue it, helped by the knowledge that you've established in the state of New York. And when we look at the chart we see this breach of conduct throughout, and despite what we heard before we can berate the activities of attorneys in trying to resolve these issues. So -- I have a daughter who is one of them.

Mr. Bell, there are nine states plus D.C. that allow health insurance companies to deny coverage to women buying insurance on their own because they have been victims of domestic violence, and I've written law protecting victims of domestic violence from having to live with a gun-carrying spousal abuser. How can insurance companies justify the denials of coverage? It's my understanding that typically pregnancies are not covered in their health care costs, so, A, if that's true, B, isn't that discrimination against women also?

MR. BELL: Yes, I agree that that's a pretty shocking finding. I think that these issues were recently investigated by the National Women's Law Center that did a report called "Nowhere to Turn," where they looked at how flawed the individual insurance market is for women who are seeking coverage. The found in many states women have a very difficult time purchasing maternity coverage. In some cases the out- of-pockets were enormous, even if they were successful in securing it. And I think actually the situation is even worse than that in the sense that the individual insurance market is really a deeply flawed market, not only for across gender lines but for people who are older and sicker or who have chronic illnesses and disabilities. There's all types of problems that consumer have getting access to affordable coverage in the individual market.

And so we would favor efforts to give consumers other options to get coverage, frankly. I mean, giving them a choice of enrolling in a public plan like Medicare or putting them into a larger pool. In states like New York we have community rating, which broadly spreads the risks out across the entire marketplace. It gets rid of some of those discrimination issues but we still have affordability issues for younger people, so clearly that's not a panacea.

But I think that this is a very important question. It could be addressed by tighter state oversight. I mean, why are the states permitting insurance companies to operate in those fashion in those states? And so I think we need much more consumer-oriented oversight and enforcements. And we're certainly happy that we have it in New York. We'd like to see it strengthened there as well and strengthened in other states.

SEN. LAUTENBERG: Yeah, if you're a card player, in the vernacular it's good to know the deck is fixed. In the case of Ingenix, the deck was fixed, and that was kind of the reference that the companies were using -- quite unfair. Thank you, Mr. Chairman.

SEN. ROCKEFELLER: Thank you, Senator Lautenberg. Senator Begich, to be followed by Senator Klobuchar.

SENATOR MARK BEGICH (D-AK): Thank you very much, Mr. Chairman. Thank you all for being here today and giving your presentation. If I can ask -- I want ask just some general question about the status of kind of what's next with the lawsuit and then some policy questions generally. But now that it's in the process of settlement, where do you see the timetable in regards to the database development and available for the public?

MS. LACEWELL: Senator, the attorney general has estimated about six months as an aggressive timetable to get the not-for-profit up and running and have an initial database that can be available to the nation. And when that happens, Ingenix will close its database to the nation, so insurers who have not yet signed on to the reform are going to need someplace to go, and we hope they'll be there.

SEN. BEGICH: Sure, but it will be, you think, six months or a little bit longer?

MS. LACEWELL: Yeah, possibly a little bit longer, that's right.

SEN. BEGICH: And then how do you give access to that database for those that may not have Internet access or computer access? I know that may be difficult to think about from New York but I'm from Alaska and we have some very small, remote communities that do not even have access to broadband or dialup,

MS. LACEWELL: That's a very important question. One of the things that we're looking at with respect to the proposed regulation in New York with the Department of Insurance is requiring insurers to tell the insured upon request what the amount of reimbursement will be, and to do it before they seek the medical treatment from an out- of-network physician. And so whatever means of communication that is available to the member would entitle them to that information.

SEN. BEGICH: And would the database also have information, if you access it and you want to protest the fees, or whatever the right term is, it will show them how to do that?

MS. LACEWELL: We do -- Senator, we do want to include some consumer education efforts there, and we also hope that the amount of money that we've collected will enable us to embark on some of those efforts with some of those funds.

SEN. BEGICH: And then I guess all of the -- you know, as you know, the Congress is working and the president is working on a massive health care reform.

Do you see within that reform some sort of process or nationwide approach to this as now you have done through your New York efforts? I don't know who the right person to ask is?

DR. NIELSEN: Let me take a first crack at it. We're privileged to have been part of that discussion and we look forward to being part of the discussion, both within the Senate and the House. So absolutely what you've seen is something that needs to be corrected. What you've heard about the preexisting conditions, not allowing a patient to get insurance, let along afford it, not even get it, those are issues that concern us deeply and have for years, and we are on the brink, we think, of some very meaningful health system reform that will help all Americans.

SEN. BEGICH: I recognize the meeting with Senator Baucus last week in regards to the issue of those that can't get insurance now and how that can be fixed, but I guess I'm kind of honing in on the permanency of the database, how do you make sure it's reviewed, how do you make sure it's consistent, and that everyone has to participate. I mean, that's, I guess, my -- have you or any of you proposed ideas to some of the leads in this area of health care, Senator Kennedy, Senator Baucus and others? If not -- it's not a trick question -- if not, then would you do that and would you do that in timely manner?

DR. NIELSEN: Well, it's going to be transparent, so anybody who has an out-of-network bill, that would be submitted -- that amount would be submitted to the database and there would be no incentive to alter that database. So it should be transparent to all. It would be available to consumers, to physicians, to health plans. So I guess we're hoping that the transparency will be what we need.

SEN. BEGICH: I guess I want to make sure -- you've done it through a lawsuit but to make sure it's codified from a national perspective. That's what I'm trying to get to. In other words, it's great that you've done it through a lawsuit and in your own way, but we're about to do massive health care reform. Is there a way to ensure that we don't have to go through this process again, and then to regulate it to a certain extent, because you're right, it should be transparent but I think 10 years ago some people might say it should have been transparent, so --

MS. LACEWELL: That's right, Senator, and in New York we're seeking to make those reforms permanent through a regulation in the state of New York, and Attorney General Cuomo would be more than happy to cooperate and facilitate other efforts that could be applied nationwide or, you know, as part of the federal program.

SEN. BEGICH: Can I just -- my time is out but can I encourage you to talk to the attorney general and see if he would submit some information at least to Senator Baucus, Senator Kennedy and myself? I mean, they're doing the legislation but I have a real interest in this issue.

MS. LACEWELL: Absolutely.

SEN. BEGICH: Thank you very much.

SENATOR AMY KLOBUCHAR (D-MN): Thank you very much. Am I next, Chairman?

SEN. ROCKEFELLER: You are next, thank you.

SEN. KLOBUCHAR: I jumped ahead. Thank you, all of you, for being here and for your work. And just to clarify this, a little bit of what Senator Begich was doing, so is UnitedHealth care the only company that's settled now of these lawsuits?

MS. LACEWELL: With respect to the attorney general's efforts, UnitedHealth Group and Ingenix were the first, and that was important since Ingenix was at the center of the problem, and then all the other large national insurers that operate in the state of New York -- Aetna, Cigna, WellPoint, and large regional insurers that operate in New York -- have all signed on to settlements to move away from Ingenix and to use the new system. There are of course West Coast- based national insurers that don't operate in New York that at this point we were not able to reach, but the new database is available to any insurer that wants to explore using it.

SEN. KLOBUCHAR: So the lawsuit involved, as you discussed, some righting of the past wrongs and then also looking forward, which I appreciate, so that this database, paid for by the UnitedHealth care settlement money is used then for other people that aren't even on their -- that weren't even customers of theirs.

MS. LACEWELL: That's right, Senator.

SEN. KLOBUCHAR: Okay. And so the other thing that I wanted to ask about was, Dr. Nielsen, in your testimony you reference the American Medical Association's National Health Insurer Report Card and AMA's announcement that the major health insurers' Medicare was included -- and, as you know, Medicare has been discussed here as the largest purchaser of health care services. And while it appears that Medicare adheres strictly to a contract rate, we also know that there are issues with those rates, and in fact Mayo Clinic just came out -- one of the most efficient health care providers in the country -- came out to say that they lost $765 million in 2008 for Medicare patients. What do you think needs to be done for health care reform with this reimbursement rate?

DR. NIELSEN: Let me quote Dr. Denny Cortese, who is the CEO of the Mayo, who actually --

SEN. KLOBUCHAR: Who we both know.

DR. NIELSEN: -- who we both know, who was quoted in yesterday's New York Times, and he said, "Medicare has systematically been underpaying for services." And he goes on to say, "If more patients are enrolled in a Medicare-like program," he predicted, "your very best providers will go out of business or stop seeing patients covered by the government plan." We can't let that happen. I mean, the Mayo obviously is a model of efficiency as well as expertise.

So I think everyone knows -- and there isn't anybody in the Senate who doesn't know the problem with physician payments, and we will be back talking about it toward the end of this year as well. So it really is a problem. We have to -- this is a safety net program for our elderly and we really must make sure that it's fiscally responsible and sustainable.

SEN. KLOBUCHAR: Thank you. And the other thing Denny Cortese has focused on is the fact that if we're going to make it sustainable we have to make it as efficient as possible, and one of the things that has most struck me is this geographic disparity issue. And I know it's hard when you're representing a national group, but an independent study out of Dartmouth showed that if the rest of the hospitals in the country simply used the protocol that the Mayo Clinic uses in the last four years of a chronically ill patient's life where the quality ratings are incredibly high -- if we want to save money, Mr. Chairman, $50 billion every four years in taxpayer money.

So as we talk about these rates and the Medicare rates and the good work that you've done here, I just think we cannot neglect this issue of making sure, as we look at reform, that these are offered in the most efficient way. And I think people will be shocked to know that in fact the highest quality often comes from states with the lowest costs. Is that not correct?

DR. NIELSEN: That is correct. And in fact, in the White House summit on health care reform, that issue was addressed and I was addressed and I was asked directly by Nancy-Ann DeParle, you know, what is your profession going to do, looking at the geographic variation? It's an appropriate question that actually was originally addressed by Senator Baucus. They are both right to ask that. Our profession is very concerned about that.

In our experience, the biggest variations occur when there is not clear-cut path for the one right thing to do --


DR. NIELSEN: -- such as beta blockers after a heart attack or aspirin in the way to the hospital. So we really need very quickly to make sure that we generate the evidence that we need to see what is absolutely necessary and that we promulgate it. And we will be your partners in that regard.

SEN. KLOBUCHAR: Thank you. It often seems that also this team, the medical team idea, the -- what do you call it -- the medical home or what they do at Mayo or in many of our more rural areas where you have a primary physician and then you have a team that works with that is where you often find the lower rates, I think.

So thank you very much.

SEN. ROCKEFELLER: Thank you, Senator Klobuchar, and then Senator Pryor and then Senator Snowe.

SENATOR MARK PRYOR (D-AZ): Thank you, Mr. Chairman. Let me ask you, if I may -- Ms. Lacewell, if I can start with you -- if a consumer, "John Q. Public," called his or her insurance company and asked them to explain what "usual, customary and reasonable" reimbursement rate means, what kind of answer would they get?

MS. LACEWELL: Well, Senator, that's an excellent question. Assuming the consumer can get through on the telephone, which is another big complaint that we get, in our experience the people who answer the phones are really not trained to answer that question and would simply refer the consumer to their written materials, which vary from plan to plan and from area to area. And we took a look at the written materials and they are frequently -- they're simply unintelligible.

And we met then with in-house counsel for a number of these large health insurance companies and we pointed them to the page and said, what does this mean? What are you saying here when you go on paragraph after paragraph, the maximum allowable rates and all this other legal jargon and five different ways that they may compute it? And when pressed, it was amazing. They sometimes said, I really don't know; I can't explain it to you. So even in-house counsel couldn't explain it, so I don't think the customer reps could either.

SEN. PRYOR: Dr. Nielsen, let me ask you the same question. If a doctor calls and asks, you know, what does usual, customary and reasonable mean, what do they tell the doctor?

DR. NIELSEN: Well, they would tell the -- Senator, they would tell the doctor the same gobbledygook, but when it gets down to the real question, which is -- from the doctor, and this happened many, many times before the lawsuit was filed in 2000 -- they said, how -- the doctor would say, how in the world did you really calculate that in this area? And the answer was always, it's proprietary.

SEN. PRYOR: Okay. Let me follow up on that with you, Ms. Lacewell, if I can, and that is, you've spent a lot of time on this subject in dealing with this issue, and I appreciate that. In all of your time and all your efforts there, were you able to find any written material that was available to anyone outside the insurance company about how these usual and customary rates were calculated?

MS. LACEWELL: No, we were not.

SEN. PRYOR: So in other words, even if a customer said, or a consumer said, a policyholder, send me something in writing so I can understand this, there's nothing that you've ever found that's gone outside of the insurance company to tell you how that works?

MS. LACEWELL: No, that's right.

SEN. PRYOR: And also, in terms in disclosure to policyholders, did the insurance companies ever disclose about the sources of information and the company that we -- Ingenix, and whether -- who owns that and how that's set up? Have they ever -- did they ever disclose that to consumers as far as you can tell?

MS. LACEWELL: Senator, another excellent question. Not only did the insurers not disclose Ingenix was doing this or that Ingenix was part of the health insurance industry, they frequently affirmatively misstated how they were determining this by either referring to entities that used to do it because they hadn't updated their materials, or by saying we rely on, you know, independent data and things that really misled consumers who were reading that language.

SEN. PRYOR: Okay. Mr. Bell, I don't want to leave you out of this conversation so let me ask you, if "John Q. Policyholder" is trying to get information from their insurance company so they understand how their policy works and, when they pay their premiums, what they're actually going to have covered, and their insurance company sort of stonewalls them, you get an 800 number, maybe you get someone who doesn't know what they're talking about or some gobbledygook you can't read, what can a consumer do to get that basic information about how their particular insurance policy works?

MR. BELL: Well, we certainly encourage people to seek outside help and particularly to contact their state's insurance departments or the attorney general in their state. And, in our state, we have a health care bureau at the attorney general's office that serves as a great early-warning system for all kinds of consumer complaints and problems.

But in the case of this issue, I mean, I think our overall takeaway is that the consumer was really in a fog about how the charges were calculated. It was hard to go up against the word of the insurance company. I've seen some Web sites of insurance departments around the country where they basically said, we can't help you with this; you know, we don't regulate this practice; you're basically on your own.

So the consumer wasn't sure if the doctor was charging too much, as Dr. Nielsen mentioned, or whether the insurance company was underpaying. And it just persisted for many, many years like that. So my experience is just that people -- often, their eyes glaze over when it comes to insurance and they just feel like they can't dig into it. And I'm sure that that happened many, many times with these types of billing underpayments.

SEN. PRYOR: Mr. Chairman, I just have one quick follow-up on that. In our state, our state insurance department and insurance commissioner, he or she has a team of sort of consumer helpers there, a hotline or something that you can call and talk to them about this, and I think they try to be helpful, but also understand that a lot of insurance departments around the country, they have this other mission, and that is they want to provide a good business climate for insurance companies so they'll have a lot of insurance companies doing business in their state. Do you think there's an inherent conflict there?

MR. BELL: There is a long-standing tension between, sort of, the role of the insurance department to promote the financial help and solvency of companies, because clearly they don't want companies to go out of business. And that is often considered to be job one, is to look out for that, and so sometimes consumer-protection issues -- they both get less emphasis, but also could sometimes conflict with that mission.

And that's why we think it's useful to have -- to establish an independent unit, such as an independent office of consumer advocate, as Texas and some other states have done, to ensure that there is someplace in the government that really is working just for the consumer. Just like we have units that intervene on utility-rate hearings, you know, why not have similar counter-bureaucracies or counter, you know, public counsel that would work on behalf of the consumer?

SEN. PRYOR: Thank you, Mr. Chairman.

SEN. ROCKEFELLER: Thank you, Senator Pryor. Senator Snowe.

SENATOR OLYMPIA SNOWE (R-ME): Thank you, Mr. Chairman. Well, one of the things that we're learning today is that millions of Americans who required health care services were at the mercy of a small medical data company called Ingenix, and produced these tables, these usual and customary rates that were accepted as gospel truth in the industry. If Ingenix said your doctor was charging you above the going market rate, then you had no choice but to pay. I mean, you're simply out of luck, because Ingenix always got the last word, it appeared.

But it looks like the reality was that the data was all smoke and mirrors. For example, Ingenix's data is based on actual provider charges, the actual amount that doctors were charging the patients. So let me ask you, Dr. Nielsen, did Ingenix ever call you or your organization to collect the fees that the doctors were charging their patients?

DR. NIELSEN: Let me make sure, Senator, that I've understood your question. Did they ever call the AMA to --

SEN. SNOWE: Correct.

DR. NIELSEN: -- to find out what the fees were?


DR. NIELSEN: We are prohibited from collecting that information because of antitrust concerns.

SEN. SNOWE: Okay. So the medical data came to the insurance, but the medical data that came from the insurance company, is that correct? I mean, that's --

DR. NIELSEN: The medical data came from individual physicians who submitted their claims. So they got the information. The actual claims went in. It's what they did with it thereafter that's the issue.

SEN. SNOWE: But this medical-charged data came from the insurance company or specifically from the physician?

DR. NIELSEN: Came from the physician to the insurer, or -- either through the patient or directly to the insurer, and then the insurer decided what they would pay and the patient was left with the rest.

SEN. SNOWE: So what we're discovering today is that obviously, all of the information wasn't turned over to Ingenix, and, you know, the health -- the insurance companies would throw out some of their higher-cost charges so that the rates would be much lower, is that correct?

DR. NIELSEN: That's correct, and in the written testimony, we go through the various ways in which that was done.

SEN. SNOWE: Okay. So you've been trained as a doctor and as a medical researcher, so maybe you can answer this question. Statistical experts looked at this Ingenix database, have concluded that it is a convenient sample of medical charges, not a representative sample of medical charges. Can you explain that difference between the two?

DR. NIELSEN: Yes, it's a pretty simple difference. If it's representative, the individual doing the sampling works very hard to make sure that it accurately represents the full range. A convenient sample is left to the person doing the sampling to decide how to do the sample, and it's a very big difference.

SEN. SNOWE: It's a big difference in terms -- because they don't analyze the data.


SEN. SNOWE: Obviously, in this instance -- in these instances, they did not analyze what was -- you know, but --

DR. NIELSEN: What was inconvenient.

SEN. SNOWE: What was inconvenient. So obviously, it was a very convenient sample for the insurance company, but a raw deal for consumers. They underestimated the real charges and consumers obviously paid billions of dollars out of their own pockets that clearly the insurance company should have been paying. Ms. Lacewell, I understand that part of the settlement that you reached with the insurance companies is to set up a new independent database to estimate the usual and customary data charges. Can you tell us how this new database will be better than the old one?

MS. LACEWELL: Yes, Senator. What we intend to do is have a qualified university be involved with an independent not-for-profit that will create the new database, and what we have looked to here are the incentives. So where the incentives we found with a database being run by the health-insurance industry, that has an obligation to reimburse, was to skew it downward. We feel that with a not-for- profit company that is independent from the industry and that is associated with a university that will do academic research based on the database and therefore has an incentive in it being accurate, that we will be moving the system out of conflicts and into independence and more accuracy.

SEN. SNOWE: And when is this system going to be established?

MS. LACEWELL: We anticipate it will take, on the aggressive side, about six months.

SEN. SNOWE: Ms. Lacewell, on the out-of-network premium increase, and -- in your investigation, these procedures -- did you find any justification for insurers to charge customers going on a network a higher -- for higher prices than were charged the providers who were given the same -- given the in-network rate? I mean, they weren't charged anymore but yet the customer going outside of the network was charged a higher premium?

MS. LACEWELL: Yes, Senator, I think the theoretical justification by the insurer is, the insurer has not been able to negotiate a lower rate with the doctor and therefore is going to have to pay more. And so they're passing on some of that cost to the consumer. The problem, of course, lies when the insurer does not keep their promise to make sure that the balance of the economic cost is fair, based on that promise.

SEN. SNOWE: What about balanced billing, which is another issue that, you know, that unfortunately too many individuals are having to pay because of an underpaid insurance, so the doctor goes directly to the patient to recover those charges. Now, in California they have, you know, prohibited this practice. What's your, what's your evaluation of it? Is it unfair to allow balanced billing?

MS. LACEWELL: Senator, what we have found, at least in New York, is that balanced billing is allowed when the patient is out-of- network, has gone out of network, because there's no contract between the doctor and the insurer. So the doctor doesn't look to the insurer, they look to the patient. In other, more ordinary circumstances involving in-network, it's generally prohibited because the doctor must look to the insurer. The reason that this is such a huge consumer issue is because balanced billing is typically allowed, and that it is the consumer who is then stuck in between the doctor and the insurer and is the one who has to pay the cost.

MS. SNOWE: But generally, that's a practice that occurs in- network and not in -- not under any other circumstance.

MS. LACEWELL: Generally, we find balanced billing being allowed and occurring out-of-network. When it happens in-network, it's frequently illegal.

MS. SNOWE: Okay, so generally illegal --

MS. LACEWELL: That's right.

MS. SNOWE: -- in that case, but it's out-of-network that is -- is more conventional practice.

MS. LACEWELL: That's right, Senator.

MS. SNOWE: Thank you. Well, let me just make another point, Mr. Chairman. You know, the Government Accountability Report came out recently at the request of Senator Bond, Senator Durbin and Lincoln and myself, and it's even more troubling to see what's happening here, because there's very little competition in the insurance market.

And based on studies that, you know, I requested back in 2005, and to compare that study to the results of the study that was released last week, that the combined market share, the five largest insurance companies now controls 75 percent of the market in the 34 of the 39 states that we surveyed, and more than 90 percent in 23 of these states. So it tells you that there is a, you know, dramatic, you know, direction towards less competition, if any, in many of the states across this country.

So when you see -- combine it with all of these deeply troubling practices, I think it really is an enormous burden to consumers all across this country, because there's virtually nowhere to go with respect to competitive -- competition in the health-insurance industry. There are no options, essentially, in many of these states, as, you know, indicated by this report. Thank you, thank you, Mr. Chairman.

SEN. ROCKEFELLER: Thank you, Senator Snowe. This is kind of a -- what I would call an investigative hearing, and the first of two, so we're trying to lay predicates, which is why we're trying to establish a base from you all, not just ask you questions, to give you a chance to talk about all kinds of things. Dr. Nielsen, you bring up an issue in your testimony that I want to talk about a little bit more. You say that when the insurance industry uses those Ingenix numbers to reimburse a doctor or other health-care providers, they just look at the service delivered but not the person who delivered the service. Is that correct?

DR. NIELSEN: That's correct.

SEN. ROCKEFELLER: So let me give you an example and ask you to comment on it. Say a patient with a heart problem goes to see a doctor to discuss the results of an EKG and an electrocardiogram test. The patient could go into see his general practitioner and discuss test results or he could make an appointment, or she, with a board- certified cardiologist who is a chair, for example, of a cardiology department at a major university. Now, let me tell you -- ask if I have this right: Ingenix doesn't make any adjustment for the fact that a board-certified heart surgeon might charge more for this service than a general practitioner. There is one code for this service, listed on here, and everybody who performs it gets reimbursed at exactly the same rate. Is that correct?

DR. NIELSEN: That's our understanding, Senator Rockefeller, and it's even worse than that. It may be that the service was rendered by a non-physician, so those fees were also mixed into this mix.


DR. NIELSEN: So you're absolutely right.

SEN. ROCKEFELLER: But a non-physician could do an EKG?

DR. NIELSEN: They can.

SEN. ROCKEFELLER: What kind of non-physician?

DR. NIELSEN: Nurse practitioner, physician assistant.

SEN. ROCKEFELLER: I got a healthy respect for physician assistants, but your point is still --

DR. NIELSEN: So do we, so do we, and --

SEN. ROCKEFELLER: I mean, in a place like West Virginia, we --

DR. NIELSEN: A place like New York, too.


DR. NIELSEN: We value members of the health care team, and there are many. That really isn't the issue. The issue is, this is America and when a patient elects to go out-of-network, they need to know where they're going, what the charge is going to be, and they have a right to ask for that. They also have a right to know what they're going to be reimbursed from their insurer. That really is the issue. It -- to do anything different is to, essentially, price-fix. We don't do that anywhere else within our economy.

SEN. ROCKEFELLER: I want to come back to that in a minute. So anyway, Ingenix only collects service-code data and it doesn't collect data on who was delivering the service; the so-called "modifier data" is available, but Ingenix does not use it.

DR. NIELSEN: That's correct. It's not that it isn't collected. It would be on the claim; it is not used. It's what happens after the claim gets there that's the problem.

SEN. ROCKEFELLER: It might be part of what's cut off the top, yeah.

DR. NIELSEN: Correct.

SEN. ROCKEFELLER: I can see what the problem would be with this system. It's an apples and oranges comparison; you could be a cardiologist whose charges are reasonable compared to other cardiologists with the same level of training, but if you compare your charges to when general practitioners charge to read an EKG, all of the sudden, your charges look excessive. Dr. Nielsen, do you know why Ingenix and the insurance industry do not collect information about provider's experience or qualifications when they calculate the usual and customary?

DR. NIELSEN: I guess you would have to ask them why they did all the things that they did that did not represent the actually charges. I don't know the answer to that.

SEN. ROCKEFELLER: Well, we're going to. Can you explain to us why the American Medical Association believes that insurers need to consider the experience and expertise of the person delivering the service?

DR. NIELSEN: Sure, sure. Where do you want me to -- where do you want me to start? Where do you want me to start?

SEN. ROCKEFELLER: (Inaudible, cross talk.)

DR. NIELSEN: There is -- I'm an internist. I'm an internist. I also have a subspecialty in infectious diseases. I read EKGs. I have billed for the reading of an EKG. If there was a complication on that EKG that I wasn't certain that I could interpret, I would certainly send the patient to the best cardiologist or electrophysiologist I could find. And that person would be entitled to charge for their expertise, for their years of training beyond what I have.

SEN. ROCKEFELLER: Okay, I appreciate that response, but next week there's going to be an insurance executive sitting right where you are. And let me give you a preview of what they're going to say. They're going to say that usual and customary rate services serve to restrain doctors from overcharging the patients. Higher doctor bills are good for doctors, but not for everybody else. So how do you respond to their argument?

DR. NIELSEN: I'm warming up the chair here. I hope it's still warm --

SEN. ROCKEFELLER: You can come back.

DR. NIELSEN: -- by the time, by the time he gets here. The American Medical Association has strong ethical policy prohibiting excessive charging. The insurance industry would like you to believe that what they did, this scheme, kept costs down. It didn't. What it did is it passed costs on to patients. That's the problem. They got the profits that they planned; the patients got stuck with the bill. That's the issue, don't let them kid you.

SEN. ROCKEFELLER: With your forbearance, Senator Begich, one, just one more quick question. You mentioned earlier about not being able to do some things because of collusion. It's a very interesting word in American law and practices of all sort. After 9/11, the first bill that the Congress passed was to allow -- make it legal for the Central Intelligence Agency and the FBI to talk to each other. They were not allowed to share information or to talk to each other about any case, even though one might have information that bore directly on what another -- the other was doing.

You know, the FBI arrested, the CIA surveilled and the twain shall never meet. And I think we paid a terrible price for that, in terms of national security over many, many years. WE changed that law, as I say, that was the first thing we passed. Where do you -- if you can't find out something -- and I'm not a lawyer, so I don't know, you know, how collusion, good collusion, bad collusion, allowable collusion, unallowable collusion, but where does collusion -- where do you think the collusion laws are misplaced?

DR. NIELSEN: I'm not a lawyer either. We do use them when we have to go to court, but we also take care of them when they get sick. So I -- we are very -- we have been very concerned over the years about what has been a pretty aggressive interpretation by the federal government of antitrust regulation. We have not -- against physicians. That's a very important thing to understand. We have not seen similar antitrust enforcement actions against insurers.

You heard Senator Snowe describe the consolidation of the health- insurance market, to the point of real market control without enforcement action. So doctors are afraid of enforcement action. There is one thing that will help. The new database with the transparency of out-of-network charges, that will be transparent to all. It will be available to everyone. A doctor can find that out as well, and that avoids the collusion allegation, I believe. I'm not sure I can answer it any better than that, Senator Rockefeller.

SEN. ROCKEFELLER: No, you did a good job. Dr. Lacewell -- I mean, Ms. Lacewell.

MS. LACEWELL: Yes, sir. Two comments on the anticipated position of the insurance industry about overcharging by doctors.

One is, we're a consumer-advocacy organization, and what we have endeavored to do is to make sure that the promise made by the insurer is kept. And the promise is, we will reimburse you based on what doctors typically charge, not on what they should have charged, in the view of the insurer.

And the insurer extracts that higher premium based on that promise, and if they think that that particular arrangement is not satisfactory for them economically, then what they ought to do is to change what they promise and not break the promise that they've made. In addition, the attorney general believes that to the extent that there are inefficiencies in the market for health-care charges or health care services, transparency will be a good thing.

So this is Ingenix database that kept everything in the dark and didn't allow anybody to know what the rates were going to be, or the reimbursement rates were going to be, we think for the insurers, actually it did more harm than good. And to bring to light what doctors are charging in various parts of the country for various kinds of services we believe will bring efficiencies and competition to the market and therefore be a good thing in that regard

SEN. ROCKEFELLER: Thank you, thank you, Senator Begich. It's your turn.

SEN. BEGICH: I'll be very brief. I just have a -- I want to do a little follow-up there, and it was an interesting question the chairman asked you in regards to -- AMA medical folks in regards to excess charges. How do you, in your code of conduct, how do you monitor that if you can't talk to each other?

DR. NIELSEN: It's not easy. It's not easy. I will tell you that this is a problem. I have it with me. I anticipated that the issue might come up so I brought the ethical policy with me. I have it here somewhere.

SEN. BEGICH: That's okay. I recognize that that's --

DR. NIELSEN: Let me tell you what we used to do because, in the old days, before there was this aggressive antitrust enforcement concern, what we used to do is county medical societies used to be able to sanction doctors who charged excessively. And how did they know? Because a patient would complain to the ethics committee.

We can't do that anymore. It's really very difficult to figure what should be charged. Now, if someone is totally gouging a patient, what's the most important thing that happens? The patient figures that out, leaves the doctor, tells everybody they know, and they all know a lot, and the doctor's reputation is ruined. The problems is that's what happened with the Ingenix database and the doctor didn't gouge them. But if the doctor was charging excessively, patients figured that out, they switch doctors, and they tell everybody they know.

SEN. BEGICH: And on the information database, it was interesting to hear a discussion of how -- when the information is put in -- or the future -- let's talk about the future; not the past -- when the new database is established, who determines -- is it all of the data going in, and then it's just calculated from that, or is it a selective batching that's done? I'm just trying understand that detail.

MS. LACEWELL: Yes, Senator, what we anticipate is that qualified people from the university who are experts in these areas will make independent decisions about what kinds of information should go into the database, what the sources of that information should be, and how it should be collected, audited -- which, by the way, Ingenix did not audit its data either -- but what kinds of protocols and sampling are appropriate. We want independent experts to do that and to make those decisions independently with an incentive that they're getting it right.

SEN. BEGICH: So they'll set some protocol process that then they'll adhere to throughout the database collection.

MS. LACEWELL: That's exactly right.

SEN. BEGICH: Do you think that -- anyone of you can answer this, or hopefully all of you might have a comment on this -- do you think, again, in health care reform that we should require all health insurance companies to submit data if there's a protocol set up for a database? Require them all. In other words, you talked about the East coast ones. I mean, we have Blue Cross -- huge -- controls a sizable amount of our market, had huge adjustments last year, 25 percent. That is why our city is self-insured now.

MS. LACEWELL: Right. The attorney general would certainly like to see all insurers contribute data as they can. Now, within New York State, we have some smaller not-for-profit local upstate insurers and so it might be a burden. But --

SEN. BEGICH: So with some limitations, would you think some of the larger ones -- would it make sense to require them to do this?

MS. LACEWELL: Yes, it would, and it would help bring rigor to the database.

SEN. BEGICH: Do the other two, do you agree with that?


SEN. BEGICH: And do you think that's something that we should think about with our health care reform legislation?


SEN. BEGICH: That's all, Mr. Chairman. I appreciate it.

SEN. ROCKEFELLER: It's going to be a large of legislation.

SEN. BEGICH: Yeah. You know, it's a big issue. (Chuckles.)

SEN. ROCKEFELLER: It's interesting, you know, that -- and this is a side comment on my part -- but I think the president chose to take on everything -- you know, climate change, energy, education, health care, banks, housing, and do it all at once. And I happen -- you know, I happen to think that's the right way to do it, and then people talk about, you know, climate change is just an absolutely huge subject, one in which I'm confronting in West Virginia to unhappy reviews, but nevertheless, West Virginia has the most to gain by acting well, and the most to lose by continuing practices that have taken place for over a hundred years.

So I mean, this is a big risk we're taking, and never has there been so much asked of the Congress. And so Senator Begich's question is very interesting because, you know, we had a two-hour meeting yesterday -- so-called board of directors of health care reform, which I think is an obscene title to give to what we should just say nine senators on a bipartisan basis.

And, you know, there are a lot of people that don't want health care reform. They don't necessarily want it because they don't want the president to get credit for it. They don't want it because they have -- it's so typically the case. I mean, as you found this morning, we started the discussion on the broad health care reform, and immediately somebody pounced right on trial lawyers. Well, until we get the trial lawyer thing we can't -- obviously can't talk about health care reform.

So it's going to be incredibly complicated, and it's going to take time, but it's going to be worth it because I think all of these things have to work in tandem. And I left out education. All of these things have to work in tandem at the same time. If we don't do climate change, what the heck difference does it make what our national debt is to our great-grandchildren? I mean, they're going to be under water and won't be thinking about that very much. I mean, it's a very interesting time, and your contributions here are huge.

I just want to wrap up with a couple of points. What I think we've learned today is that the -- there's a reality-based prevailing market price for medical services. And then there is a fictional UCR rate used by the insurance companies. Thanks to Attorney General Cuomo, and you, and others, we know that the insurance industry's reimbursement rates were systematically lower than reality in New York, in some cases by 25, 30 percent.

Now, Ms. Lacewell, if I want to find out if the people in my state of West Virginia, which doesn't have the resources of your attorney general's office, or maybe the vigor of your attorney general's office, if I wanted to find out if people were getting underpaid in the same way that your consumers in New York were, how would I figure that out?

MS. LACEWELL: Well, Senator, the way that we did it was we subpoenaed two sets of information. One, we subpoenaed the rate information coming out of Ingenix with a particular medical code and for particular zip codes. And then we went to the insurance companies and we subpoenaed -- that operated in those areas -- and subpoenaed them for the medical bills they had received from doctors for the same services in the same areas. So we had sort of Ingenix and mini- Ingenix -- back Ingenix, good Ingenix, and then we could compare the two, and we did that through an economist. It seems to me that with subpoena power that could be replicated anywhere.

SEN. ROCKEFELLER: Do you know we've added that on in this committee?

MS. LACEWELL: So I have heard.

SEN. ROCKEFELLER: We've never had it before. And it's wonderful. I mean -- actually it wasn't Olympia Snowe but her colleague from Vermont and Senator Levin mentioned to the EPA who had been refusing to give information for a long time, they just mentioned, well, okay, then we'll come subpoenas. The next day they had all of the information. So it's just not havening it, but it's just saying it sometimes will get you your results.

MS. LACEWELL: That's right.


DR. NIELSEN: Could I just make a suggestion and maybe ask Linda Lacewell to comment on it. It is now clear by view of the settlements that the Ingenix database was flawed. And it's pretty clear the range by which the underpayment occurred. So I wonder, Senator Rockefeller, if you could simply go to the insurers, the health insurers who operate in your state and say to them, how many out-of-network claims did you pay, and what were they, and then extrapolate that. And I don't know if that's statistically something that could be done without hiring -- because we know the flaw.

SEN. ROCKEFELLER: And that's the point. Obviously that could be done, but for example, insurance commissioners in states like ours are always -- you know, there's no money for them -- there's never enough money doing the -- (inaudible) -- basically keep up with keeping their shots running. That could also be true in attorney general's offices. You know, they have -- the attorney generals spend a lot of time on the road, but they don't really have the resources to do the kind of deep investigative research, which we're trying to do here to lay the predicate for the meeting on Thursday. We're going to do a lot of that on behalf of consumers because we think this committee ought to relate to consumers as well as railroads and airplanes. So that's a problem.

MS. LACEWELL: And, Mr. Chairman, it seems to me that the attorney general's investigation has created enough doubt about the integrity of this database that it is incumbent upon any insurer to demonstrate how they think that what they're using is accurate because they're promising to pay based on a certain kind of rate. And we've demonstrated, as Dr. Nielsen indicated, that the database is defective, that it does result in under-reimbursement, at least in some areas that we've affirmatively proven. And so the burden really ought to be on these other insurers to demonstrate to the country.

SEN. ROCKEFELLER: Well, this is in effect what you meant by the domino effect.

MS. LACEWELL: That's right.

SEN. ROCKEFELLER: Okay, final -- the final thing has already been asked I think by somebody else, and that is, why didn't we get to all of this earlier? I'll ask that to you, Mr. Bell. Why didn't we get at this problem earlier? I mean, people have -- we're talking about hundreds of millions of dollars. They settled for 350, 325, whatever it was and they're probably thrilled to do that, and they're still making a ton of money. And there's many, many others out there, and one of them you just sued yesterday. They have lots and lots of money. And, you know, you can -- you know, you can -- there's always ways to avoid these things, and we seemed to have avoided them pretty well up until New York took these steps.

MR. BELL: Senator, I think it partly goes back to the resource question that you just mentioned, is that the -- as we discussed earlier, the insurance commissioners have a primary mission of assuring financial safety and soundness. A lot of them don't have sufficient resources, and sometimes they don't have the orientation or the inclination to aggressively pursue an investigation like this one.

So what I hope will come out of this is that -- a lesson for the country that when you get it right, when somebody steps up and exposes a financial abuse, that's something that consumers are very concerned about and they are going to support solutions that create greater accountability and transparency.

And so we've said a lot of nice things about Attorney General Cuomo because he's done an excellent job for consumers. And just as the plaintiffs did in these lawsuits by challenging this practice -- and I think that they also have a role -- there's a role for private rights of action to bring accountability in some cases where public officials are unable to act. So I think a heightened sense of more resources for regulators and more inclination to go after consumer problems is something that we absolutely need.

SEN. ROCKEFELLER: But you know what, it's also a question of zeal, isn't it. You know, I was a governor for eight years, and the last appointment that I made was the insurance commissioner. Now, I don't know why that was, but it was a fact. And I had a very, very hard time trying to find anybody in a small state with a small salary for that position who would be willing to take that position. And as a result, I got a good person, but the energy level wasn't perhaps as high as I would have hoped.

And I think that part of what motivates the attorney general of New York, and you, Ms. Lacewell, is that you are zealous on this. I mean, you're going to get to the -- you seek malevolence, you relish malevolence. You want to expose it and it you want to correct it. And it's just -- it's all very interesting to me. And I just -- I thank you very much for being here.

MS. LACEWELL: Thanks, Senator.

SEN. ROCKEFELLER: I think we have laid a predicate for next Tuesday. I think we should all be here. Maybe we can video stream it to you all.

MS. LACEWELL: That would be great.

SEN. ROCKEFELLER: Thank you so much. This hearing is adjourned. And, Senator Begich, did you have any other questions? Okay. Thanks so much.

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