In Sacramento, California, a federal lawsuit has been brought against health insurance giant Cigna, accusing the company of using a computer algorithm to automatically deny hundreds of thousands of patient claims without proper individual examination, as mandated by California law.
The class-action lawsuit, filed in federal court in Sacramento, alleges that Cigna Corp. and Cigna Health and Life Insurance Co. rejected over 300,000 payment claims within a two-month period last year.
According to the lawsuit, Cigna employed an algorithm known as PXDX, which stands for “procedure-to-diagnosis,” to determine whether the claims met specific requirements. Shockingly, the average time spent on each claim review was just 1.2 seconds. Subsequently, large batches of these claims were sent to doctors who approved the denials without thorough evaluation.
As per the lawsuit, Cigna’s utilization of the PXDX system involves instant rejections of claims on medical grounds without even reviewing patient files. This practice has left numerous patients without coverage and facing unexpected medical bills.
The lawsuit alleges that Cigna has engaged in an “illegal scheme to systematically, wrongfully and automatically” deny its members’ claims to avoid paying for necessary medical procedures. Cigna, a Connecticut-based company, has approximately 18 million members across the United States, with over 2 million in California.
The legal action was initiated on behalf of two Cigna members in Placer and San Diego counties. These individuals were compelled to pay for medical tests after Cigna denied their claims.
According to the lawsuit, Cigna’s actions are in violation of California’s requirement for conducting “thorough, fair, and objective” investigations into submitted medical expense bills. The plaintiffs are seeking unspecified damages and a jury trial to address these alleged violations.
The lawsuit further asserts that Cigna employs the PXDX system because it believes it will not be held responsible for wrongful denials, given that only a small fraction of policyholders tend to appeal against denied claims.
Cigna Healthcare has responded to the lawsuit, stating that it finds the claims made against them to be highly questionable and based on a poorly reported article that distorted the facts.
According to the company, the process in question is designed to accelerate payments to physicians for common and relatively inexpensive procedures. They assert that this process follows an industry-standard review, which has been utilized by other insurers for many years.
Cigna explains that they employ technology to verify the accuracy of procedure codes for common, low-cost medical services, ensuring they align with the company’s publicly available coverage policies. This verification process aids in expediting reimbursement to healthcare providers. Importantly, the review occurs after patients have received the necessary treatment, ensuring there are no denials of care as a result of this procedure.
The company clarifies that if any codes are submitted incorrectly, they provide clear guidance to the healthcare providers on how to resubmit the claims and how to navigate the appeals process. The statement seems to suggest that the intention behind using the PXDX system is to streamline the reimbursement process and to ensure that physicians are fairly and promptly compensated for their services.