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Paul Kiesel
Paul Kiesel
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AAJ Ranks UnitedHealth as One of the Worst Insurance Companies in America

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UnitedHealth has been accused of being greedy, slow in processing reimbursement payments, and giving substantial compensation to their former CEO (who faced criminal and civil charges for backdating stock options) instead of covering medical treatment costs. UnitedHealth has also used its association with AARP to increase its premiums on products aimed at seniors, which resulted in billions of dollars of profit for UnitedHealth. Now, UnitedHealth can add its inclusion to the list of the Ten Worse Insurance Companies in America, named by the American Association for Justice.

According to the American Association for Justice:

[. . .] UnitedHealth has repeatedly been accused of focusing on profits at the expense of its policyholders and their health care providers. The Nebraska Insurance Department reported a spike in complaints against the insurance giant for wrongful denials of claims and for failing to reimburse claims in a timely manner. Other state regulators have said UnitedHealth has acted improperly in denying claims. In one case, the company denied a doctor’s request for an enclosed bed to protect a four-year-old with an abnormally small head. In another case, the company rejected a request from a patient who lost 200 pounds after bariatric surgery and wanted to have flaps of excess skin removed to prevent infection.

Physicians report that UnitedHealth’s reimbursement rates are so low and delayed that patient health is being compromised. Many physicians in South Carolina have stopped accepting UnitedHealth coverage and others are forcing patients to pay up front. South Carolina is the only state that does not have a “prompt pay law,” which requires insurers to pay claims within 90 days. Texas, which has a prompt pay law, has levied $4 million in fines against UnitedHealth for late payment. 152 Regulators in Arizona fined the insurer $364,750 for illegally denying over 63,000 claims by doctors.

New York regulators and health care providers have taken an aggressive stance against UnitedHealth practices they believe to be unfair. The state Department of Health prohibited UnitedHealthcare of New York from enrolling new members until it improved practices, such as adding more customer relations staff, responding to claims faster, and updating financial reports. The American Medical Association (AMA) and the Medical Society of the State of New York sued the insurer over its reimbursement rates.

Perhaps the biggest hit to UnitedHealth will come from the lawsuits that will be filed over how the company determines what portion of a doctor or hospital bill to pay. UnitedHealth has systematically been forcing patients to pay more than they should for visits to out-of-network doctors and hospitals by intentionally “low-balling reimbursement rates.” A company called Ingenix calculates these intentionally flawed rates; however, this company is owned by UnitedHealth, which creates the potential for a conflict of interest.

The Executive of Self-Compensation

William McGuire, who became CEO of UnitedHealth in 1990, immediately began to streamline the company by cutting back on coverage for treatment he deemed unnecessary, and in order to boost and insure his overall executive compensation, by bargaining with doctors to reduce payments.

Because McGuire was able to take UnitedHealth to prosperous performance levels, he was allowed to choose when his stock options would be awarded, allowing him to backdate his options to make it appear they were issued on days when stock prices were at their lowest. This was the man who would lead UnitedHealth and its dubious business philosophy into the 21st century, who would later face criminal charges brought forth by the SEC and who would agree to give back $620 million in stock gains and retirement compensation in order to settle federal and shareholder claims.

McGuire was also the man who brokered the deal between his company and the AARP, which became one of the more, if not the most, lucrative deal for UnitedHealth during McGuire’s tenor. (UnitedHealth received $4.5 billion in premiums from AARP-branded products in 2004 alone, while the seniors’ organization pulled in $197 million in royalties and $23 million in investment income that same year; however, the partnership between the two companies would prove more advantageous for UnitedHealth and leave AARP more vulnerable in the end.)

As the business philosophies of Mr. McGuire were employed over the years, UnitedHealth found itself climbing the list of “Worst Insurance Companies in America.”