UnitedHealth Group Inc. will close much-criticized databases health insurers use to set payment rates and help launch one to settle a fraud investigation, which could help millions of patients pay less for "out-of-network" care.

The health insurer has agreed to pay $50 million to establish the new database, which will be run by a nonprofit organization such as a university, according to a deal ironed out with the New York Attorney General's Office.

The new database will replace two run by UnitedHealth's Ingenix Inc. subsidiary that are used to determine "usual and customary" payment rates for care patients who seek outside their insurance network.

Insurers often promise to cover as much as 80 percent of these rates for claims from providers outside their network, according to the Attorney General's Office.

But an investigation found that insurers using the Ingenix databases underpaid anywhere from 10 to 28 percent for certain claims in New York state. Consumers often saw the difference in their bills.

Attorney General Andrew Cuomo said Tuesday the databases were riddled with conflicts of interest. He noted that many health plans across the country use Ingenix data to determine usual and customary rates.

Ingenix, in turn, receives its data from those insurers. He called that system a "closed loop" that left out consumers.

UnitedHealth officials noted that Ingenix provides data for insurers but does not calculate reimbursement rates. They also said that information is just one tool insurers can use to calculate out-of-network reimbursement. Others include Medicare-based reimbursement rates.

UnitedHealth regrets that conflicts of interest "were inherent" in the databases, said spokesman Mitch Zamoff. The new database will include a Web site that allows consumers to learn in advance how much they may be reimbursed for common out-of-network services in their area.

Cuomo said he hopes to have the new database running in six months, but he concedes that may be an optimistic time frame. Until then, insurers will continue to use Ingenix.

The attorney general said the new database will affect everyone who uses an out-of-network care provider.

American Medical Association President Nancy Nielsen said insurers can drive a wedge between doctors and patients when they underpay medical bills.

"Now the data will be reliable, people will know what they're getting, and it will be clear and transparent," she said.

The agreement, which was announced Tuesday, seems to be a "pretty clear admission of invalidity" of the Ingenix system, said Barry Epstein, an attorney involved in four lawsuits still pending in federal courts over Ingenix data.

"There's no doubt that it needed replacement," Epstein said.

Epstein also represented plaintiffs in a federal court case resolved last summer. In that case, California-based insurer Health Net Inc. agreed to pay $215 million to patients who received low reimbursement for out-of-network claims.

Cuomo's office announced its investigation into the database last year and subpoenaed several insurance companies. The attorney general said Tuesday the Ingenix agreement was a "linchpin" for changing the health care system.