Cigna sued for using algorithms to allegedly deny claims

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Cigna is being sued for allegedly using algorithms to deny claims.

The lawsuit, filed Monday in federal court in California, claims Cigna developed an algorithm known as PXDX to enable its doctors to automatically deny payments in batches of hundreds or thousands at a time for treatments that do not match certain preset criteria.

This is evading the legally required individual physician review process, the lawsuit said.  

A Cigna Healthcare spokesperson, responding by statement, said the vast majority of claims reviewed through PXDX are automatically paid.

"Claims declined for payment via PXDX represent less than 1% of our total volume of claims," the spokesperson said.

Also, the PXDX process does not involve algorithms, AI or machine learning, the Cigna spokesperson said. It involves a simple sorting technology that has been used for more than a decade to match up codes.  

"This filing appears highly questionable and seems to be based entirely on a poorly reported article that skewed the facts," the spokesperson said. "Based on our initial research, we cannot confirm that these individuals were impacted by PXDX at all. To be clear, Cigna uses technology to verify that the codes on some of the most common, low-cost procedures are submitted correctly based on our publicly available coverage policies, and this is done to help expedite physician reimbursement. The review takes place after patients have received treatment, so it does not result in any denials of care. If codes are submitted incorrectly, we provide clear guidance on resubmission and how to appeal. This is an industry-standard review which is similar to processes that have been used by CMS and our peers for years. Every day, our 70,000 colleagues put the customer experience at the center of everything we do."

On Monday, July 24, the U.S. District Court in the Eastern District of California said Cigna is to answer the complaint within 21 days. An initial scheduling conference is set for December 12 before District Judge Dale A. Drozd. 

Plaintiffs Suzanne Kisting-Leung and Ayesha Smiley of California brought the suit on behalf of themselves and others in their class, through the Clarkson law firm, against Cigna Corporation and Cigna Health and Life Insurance Company.

They want the payments they say are owed to them for necessary medical procedures under Cigna's health insurance policies. The plaintiffs want other financial relief, an injunction against the use of the claims handling practice and a jury trial. 

WHY THIS MATTERS

The lawsuit raises questions about claim automation processes with or without the use of algorithms enabled by AI.

The plaintiffs claim that relying on the PXDX system, Cigna's doctors instantly reject claims on medical grounds without ever opening patient files, leaving thousands of patients effectively without coverage, and with unexpected bills. 

The scope of this problem is massive, they said. Over a period of two months in 2022, Cigna doctors denied over 300,000 requests for payments using this method, spending an average of 1.2 seconds "reviewing" each request, according to the lawsuit.

"The PXDX system saves Cigna money by allowing it to deny claims it previously paid and by eliminating the labor costs associated with paying doctors and other employees for the time needed to conduct individualized, manual review for each Cigna insured," the lawsuit said. 

Cigna also utilizes the PXDX system because it knows it will not be held accountable for wrongful denials, as roughly .2% of policyholders will appeal denied claims, the plaintiffs said. The vast majority will either pay out-of-pocket costs or forgo the at-issue procedure. 

Cigna said PXDX is only used for a group of approximately 50 relatively low-cost tests and procedures that are only covered for specific diagnoses such as: dermabrasion, chemical peels, or vitamin D screenings.

"For example, there are more than 200 diagnosis codes where Vitamin D tests are shown to be medically necessary, and we automatically pay the claims when the codes match. But unless a patient has a specific diagnosis and is exhibiting seriously low levels, a Vitamin D test is not medically necessary and does not improve or change treatment recommendations, according to research by the American Board of Internal Medicine," the Cigna spokesperson said. "All other procedures are typically not subject to PXDX review. That includes procedures such as ultrasounds." 

THE LARGER TREND

The plaintiffs said their claims were rejected by Cigna using the PXDX system. 

Plaintiff Suzanne Kisting-Leung enrolled with Cigna in 2018, according to the lawsuit. On August 19, 2022, Kisting-Leung underwent a transvaginal ultrasound after being referred by her doctor due to a suspected risk of ovarian cancer. The ultrasound results revealed that she had a dermoid cyst on her left ovary. On or around October 17, 2022, Kisting-Leung received a letter from radiology informing her that Cigna denied her claim for the ultrasound procedure, stating that the procedure was not medically necessary. As a result, she was left responsible for the $198 bill, according to the lawsuit. 

Twitter: @SusanJMorse
Email the writer: SMorse@himss.org