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  • Writer's pictureDr. Lloyd

Your (Healthcare) Insurance Has DENIED Your Request for Approval

Updated: Aug 7, 2023

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One doctor denying 120,000 insurance claims in two months, each denial averaging 1.2 seconds; another denying 80,000 claims? So says a 2023 California class action complaint against Cigna Health Insurance. ProPublica first reported another 100,000 denials in that same two months, summing to 300,000 claims for medical care. Forbes, STAT and CNN then reported the same story.

Cigna already had a 2022 case filed against them by the New York State Department of Justice (DOJ) alleging that false codes were used to increase Medicare Advantage payments to Cigna.

Denial of a claim by your healthcare insurance company is not new. In my role as Chief Medical Officer of a Harvard teaching hospital, I encountered denials frequently, which took a lot of time to modify, if at all. Inflating claims sent to Medicare (Medicaid as well) was a practice generally avoided for ethical reasons and because of the risk of a federal audit. Both denials and up-coding serve to boost the profits of healthcare insurance companies.

The 2023 case underscores the magnitude and methods by which Cigna, a for-profit insurance company, “allegedly” denied approval of medical claims for payment to hospitals and doctors: profits trumped patients.

The California Case (2023).

While neither case has been settled (in or out of court), these are not “nuisance” claims. ProPublica first reported on the massive, lightning speed denials: How Cigna Saves Millions by Having Its Doctors Reject Claims Without Reading Them.

Cigna’s indifference in their review of healthcare claims was voluminous. No human could review claims of this magnitude in a matter of hours, and no human did, at all, so says the California claim.

Instead, a Cigna Artificial Intelligence (AI) program analyzed 300,000 healthcare claims to determine if they met Cigna’s “medical necessity” standards. The AI results were electronically sent to Cigna employed claims review doctors who automatically signed off on the denial, spending no time actually reviewing any claims, or even questioning the deluge of denials.

As each AI batch of “determinations” arrived in the doctors’ digital mailboxes, a doctor spent on average 1.2 seconds approving the AI determined denial of a claim, which seems like what would be the time needed to open the batch on a computer, deny the claims in bulk, and send them on for the company to deny any payment for the service delivered or sought.

Ask a question and you won’t get much of an answer.

If you ask a health insurance company how they make their claims decisions, you will almost always get a stock answer: “Sorry, this is proprietary information,” or “we followed customary standards of care.” “Customary” according to who? These dodges are meant to keep decision rules and payment information secret. Why? To avoid review by medical professionals, who could expose that there were too many denials, which should be reversed, thereby cutting into their profits or competitive edge. The method for medically determining what an insurer will pay is kept hidden from medical professionals and the public. Are we talking about the Formula for Coca-Cola or, in this case, potentially grave decisions about what care a person needs and can receive?

There were two plaintiffs representing the class action. One had a suspected ovarian cancer who was referred for an Ultrasound. The other Cigna subscriber had taken a lab test ordered by her doctor, where denial resulted in no payment for the test.

When payment for a healthcare service is denied, the doctor, hospital, and/or patient is left to decide whether to pursue doctor ordered services, knowing they will have to be paid ‘out-of-pocket’ – by the patient or provider of the service.

Contesting insurance company denials, of course, is a huge time and effort deterrent to doctors, hospitals, and patients. The odds for achieving a reversal is not good, because the “house” (the insurer) makes the rules.

Fraud and violation of reasonable standards.

The California suit alleges that Cigna’s actions violated the law, as unfair and fraudulent business practices.

The suit also alleges that Cigna’s methods for denial violate the state’s insurance code, which requires using a “reasonable standard” for judging claims. Good luck with that one since endless efforts (which I have been part of) have unsuccessfully tried to establish professionally established and publicly available review standards. Fighting an insurer about their methods for making medical determinations is agonizing, like trying to climb a greased pole. It is one of the reasons doctors hate their jobs.

To add insult to injury, Cigna (and other healthcare giants) states, they are “only denying payment,” not treatment, which is up to the patient or provider to decide to pursue – and pay for, I would add. Costs that could be to the tune of hundreds, thousands (or more) of dollars. Who were the corporate “spin doctors” who cooked up the idea that not paying was fine, because the patient (or hospital or doctor) could do what they want?

I saw approvals denied many times when I was the chief medical officer of a Harvard teaching hospital. I was part of a number of professional organizations’ efforts to end the use of arbitrary and secret methods of approving (or denying) payment for medical care. It was time spent in a worthy but never successful endeavor.

The practice of wholesale, blind denials of care reminds me of when, in a film or TV show, a bad guy is about to shoot another guy to death and says, “it’s not personal, it’s business.”

The New York Case.

I know that Medicare (and Medicaid) often pay a fraction of the bill submitted by a doctor or hospital. I have seen this many times as a hospital executive and when Medicare covers the costs of my personal medical care.

But that does not mean the answer to underpaid medical services is to “up-code.” Payments may be low, but inflating insurance claims and playing “catch me if you can” to extract more money from the federal government is illegal and subject to paralyzing audits and financial punishments, which we can infer was no deterrent in this case, and I venture to say many others.

The New York case was filed by the United States Attorney for the Southern District of New York. A US attorney’s office is the real deal, meant to represent the interests of the public (that’s you and me). This civil lawsuit was for healthcare fraud by Cigna Corporation and its portfolio Medicare Advantage Organizations. The suit seeks damages and penalties for Cigna’s submissions of “…false and invalid patient diagnosis codes to artificially inflate the payments.” Inflating claims was allegedly done clandestinely and with intent. Trying to “steal” money from the federal government is a bad idea with serious consequences if proven true.

The corporatization of American Healthcare.

89% of Cigna’s stock is held by institutional investors. The top ten are private equity corporations, with Blackrock being the largest investor.

We are talking about corporate behaviors far greater and more insidious than those of health insurance corporations. We are seeing the corporatization of American healthcare. Control over medical decisions and services now resides in the elite C-suites of for-profit investors.

The citizens of the USA are restive. Access to medical and mental health care in this country is for ____ (expletive): Try to get an appointment with a primary care physician. The quality of medical care is sinking: American longevity is surpassed by many of the world’s developed countries; maternal death rates are tragically high; opioid overdoses and deaths continue to rise, as does suicide; and the gaps in services between the very rich and a vast US population of lesser means, as well as people of color or those living in poverty, has become as evident as the Grand Canyon.

Decades ago, I wrote that US healthcare costs had become unsupportable, and we were not getting our money’s worth. I was right, but off by decades, with no end in sight. Hope is there, buried beneath the rubble of healthcare, where it can be found and relentlessly pursued (1,2).

1. Caught In The Crosshairs Of American Healthcare, Sederer, L, Greenleaf Book Group, 2024, in press.

2. The Commercial Determinants of Health, Maami, N, Petticrew, M, Galea, S (Eds), Oxford University Press, 2023.

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