Dive Brief:
- A lawsuit filed in California on Monday accuses Cigna of using an algorithm to deny claims en masse, instead of individually reviewing each case as required by state health insurance law.
- Cigna’s software, called PxDx, was used to reject more than 300,000 requests for payment over two months in 2022. The average time taken to deny each claim was just 1.2 seconds, according to the suit.
- The payer defended the technology, arguing PxDx is a standard review similar to processes used by other payers.
Dive Insight:
Payers are facing intensifying criticism over automated claims decision processes.
Cigna specifically is in the hot seat, after a ProPublica investigation earlier this year found Cigna physicians used PxDx to instantly reject claims without opening a patient’s file, leaving patients on the hook for medical bills that, in many cases, should have been covered.
The report triggered an ongoing investigation by the House Energy and Commerce Committee, along with state and federal regulators.
The new lawsuit filed in the Eastern District of California cites ProPublica’s investigation in alleging that Cigna uses PxDx to analyze and deny claims in bulk, before sending claims to physician reviewers to approve batches of denials. Relying on the system, Cigna’s doctors reject medical claims without opening patient files, the suit alleges.
The algorithm works by flagging discrepancies between a diagnosis and what Cigna considers acceptable tests and procedures for that condition, according to the suit. PxDx does not use artificial intelligence to review claims, according to Cigna.
The suit alleges the Connecticut-based payer used the technology to “deny payment in batches of hundreds or thousands at a time.” One Cigna medical director denied 60,000 claims in a single month, according to the ProPublica report.
The speed of denials makes it impossible for claims to be reviewed individually, which violates state law, the complaint argues.
California requires medical professionals to undergo “thorough, fair and objective investigation” of claims.
Cigna “wrongfully delegated their obligation to evaluate and investigate claims to the PxDx system” and “fraudulently misled” its members into believing Cigna would individually decide their claims and pay for medically necessary procedures, the suit alleges.
The lawsuit seeking class action status proposes including every individual who bought a Cigna plan in the state in the past four years. The payer covers roughly 2.1 million members in California.
The suit was filed by two Cigna members that were both denied payment allegedly due to PxDx. One plaintiff was denied payment for an ultrasound procedure after being found at risk for ovarian cancer. The plaintiffs are seeking monetary damages, and for Cigna to stop using PxDx in claims management.
PxDx is applied on approximately 50 low-cost tests and procedures to verify codes were submitted correctly. Ultrasounds do not typically qualify for PxDx, according to the payer.
The high level of insurance claims denials is a perennial problem in healthcare, but rising evidence that companies are leaning on algorithms to automate claims denials has added a new angle to the debate.
UnitedHealthcare has also been accused of using an algorithm to routinely delay or deny claims. And a recent Stat investigation found a number of Medicare Advantage plans are leveraging AI to reject claims, conflicting with Medicare coverage rules.
Such denials can be lucrative for insurers by cutting down on the amount of claims that need to be paid. A KFF analysis cited in the lawsuit found members only appealed 0.2% of denied claims in 2021.
