Health insurers have forced consumers to pay billions of dollars in medical bills that the insurers themselves should have paid, according to a report released yesterday by the staff of the Senate Commerce Committee.

    The report was part of a multi-pronged assault on the credibility of private insurers by Commerce Committee Chairman John D. Rockefeller IV (D-W.Va.). It came at a time when Rockefeller, President Obama and others are seeking to offer a public alternative to private health plans as part of broad health-care reform legislation. Health insurers are doing everything they can to block the public option.

    At a committee hearing yesterday, three health-care specialists testified that insurers go to great lengths to avoid responsibility for sick people, use deliberately incomprehensible documents to misle?d consumers about their benefits, and sell "junk" policies that do not cover needed care. Rockefeller said he was exploring "why consumers get such a raw deal from their insurance companies."

    The star witness at the hearing was a former public relations executive for major health insurers whose testimony boiled down to this: Don't trust the insurers.

    "The industry and its backers are using fear tactics, as they did in 1994, to tar a transparent and accountable -- publicly accountable -- health-care option," said Wendell Potter, who until early last year was vice president for corporate communications at the big insurer Cigna.

    Potter said he worries "that the industry's charm offensive, which is the most visible part of duplicitous and well-financed PR and lobbying campaigns, may well shape reform in a way that benefits Wall Street far more than average Americans."

    Insurers make paperwork confusing because "they realize that people will just simply give up and not pursue it" if they think they have been shortchanged, Potter said.

    Sen. Mike Johanns (R-Neb.) questioned the government's ability to make matters clearer, saying federal regulation of mortgage disclosures has made the documents that borrowers encounter in real estate transactions "hopelessly complicated."

    Potter's successor as spokesman for Cigna said the company strongly disagrees "with the suggestion that, motivated by profits, the insurance industry has deliberately attempted to confuse or unfairly treat covered individuals."

    "At CIGNA we are committed to improving the current system," spokesman Chris Curran said by e-mail.

    The report released yesterday alleges that insurers have systematically underpaid for out-of-network care. The issue had been brought to light previously in litigation, committee hearings and other investigations, including a probe by New York Attorney General Andrew M. Cuomo. But as politicians and interests groups clash over the current effort to overhaul the nation's health-care system, it took on new relevance.

    Cuomo described it last year as "a scheme by health insurers to defraud consumers by manipulating reimbursement rates."

    Many Americans pay higher premiums for the freedom to go outside an insurer's network of doctors and hospitals. When they do, insurers typically pay a percentage of what they call the "usual and customary" rates for the services. How insurers determine the usual rates had long been opaque to consumers and difficult if not impossible for them to challenge.

    As it turns out, insurers typically used numbers from Ingenix, a wholly owned subsidiary of the big insurer UnitedHealth Group. Ingenix had an incentive to produce benchmarks that low-balled usual and customary rates and shifted costs from insurers to their customers, the report said.

    Ingenix got its data from the same insurers that bought its benchmark information, the report said. Insurers that contributed information to Ingenix often "scrubbed" their data to remove high charges, and Ingenix further manipulated the numbers, removing valid high charges from its calculations, the report said.

    Cuomo found that insurers under-reimbursed New York consumers by up to 28 percent, the report said. A dozen insurers have reached settlements agreeing to change their practices; UnitedHealth agreed to the largest payment, $50 million, to help a nonprofit organization set up a new database to replace Ingenix.

    In March testimony to Rockefeller's committee, UnitedHealth chief executive Stephen J. Hemsley said UnitedHealth stands by "the integrity of the Ingenix data."

    Ingenix performed an important function, Hemsley said, because paying whatever doctors charge "is simply not economically tenable."

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