By ALLISSA KLINE
Business First

One of the nation's largest health-care providers will pay $50 million as part of a settlement reached with the New York state attorney general's office amid an investigation of out-of-network reimbursement rates.

The money from UnitedHealth Group Inc., which operates a customer-service center in Tonawanda, will be used to form an independent database of billing information that will help decide reimbursement rates for consumers who use out-of-network services. Until now, rates were determined by Ingenix Inc., a subsidiary of the health insurer that used erroneous data to figure out how much money consumers should be repaid, the AG's office said.

Ingenix will be shut down as part of the settlement. The new independent database will be operated by a not-yet-determined nonprofit agency, which will own the database and make all decisions about reimbursement rates for United consumers.

"Our agreement with United removes the conflicts of interest that have been inherent in the consumer-reimbursement system," state Attorney General Andrew Cuomo said in a statement. "This has been an industry-wide problem, and it demands an industry-wide reform."

Minnesota-based United has a small market share in Western New York, partly because it does not have an agreement with Kaleida Health that would expand the number of providers in its network. In 2007, the insurer was warned by the AG's office that its physician-ranking program could confuse consumers.

Cuomo announced the investigation in February 2008. Some of the nation's largest health insurers received subpoenas, including CIGNA, Aetna Inc. and WellPoint/Empire BlueCross BlueShield.

Other terms of the settlement:

• A Web site will be created by the nonprofit agency for consumers to find out, in advance, how much they will be reimbursed for out-of-network services.

• The database will include rate information for health insurers.

• The database will be used by the nonprofit agency as a resource for improving health care.