Health insurer Aetna agrees to reimburse students for undervalued claims

Health insurer Aetna Inc will pay more than $5 million to reimburse students for medical claims and resolve an investigation by New York State, the attorney general's office said on Monday.

Attorney General Andrew Cuomo's office said it found that Aetna Student Health underpaid at least $5.1 million in student health insurance claims nationwide between 1998 and 1 April 2008. About 73,000 students at more than 200 colleges - including 20 New York schools - weren't properly reimbursed for out-of-network care, according to a settlement with the company.

"Students were particularly vulnerable to being cheated because they placed their trust in health care plans sponsored by their colleges," Cuomo said in a written statement. He says Aetna's subsidiary, Aetna Student Health, used an outdated reimbursement rate to pay students and doctors.

The investigation covered payments for care between 1998 and 2008. Under the agreement, the Hartford, Connecticut-based insurer will also update the claims processing system for students.

"Aetna learned that Chickering, an independently operated subsidiary, had underpaid some student health claims from providers who were not part of its network," said Cynthia Michener, an Aetna spokeswoman. "The affected claims represent only 3 per cent of the overall Chickering claim volume."

The miscalculations were caused by Chickering using old data tables, but the company has since corrected the process, Michener said.

More than $2 million of the claims were from nearly 21,000 students in New York. Aetna will pay students, or in some cases, their doctors, more than $5.1 million for underpayments, plus interest and penalties calculated under governing state law. Late payments in New York are subject to 12 percent interest.

Aetna also agreed to hire an independent examiner to monitor the company's compliance and training procedures. All Aetna employees will receive improved training on reimbursement obligations.

Last month, UnitedHealth Group Inc agreed to a settlement with Cuomo's office after an investigation into the independence of its database used to set reimbursement rates for patients' medical bills.

The settlement calls for UnitedHealth to shut down its Ingenix medical billing information service and pay $50 million to finance a new independent database to determine market rates for health-care procedures. (See: Biggest US health insurer UnitedHealth agrees to settle class-action lawsuit for $400 million)

Aetna also has agreed to pay $20 million to help establish that database. The agreement over student claims concerns the use of outdated schedules from the Ingenix databases, Cuomo's office said.