Cigna sued for using software to deny healthcare insurance claims

It's just some if-then statements, no AI here, insurer sniffs

Cigna has been sued in California based on allegations the US healthcare insurer unlawfully reviewed insurance claims using automated systems rather than relying on humans.

Under America's healthcare system, such as it is, a medical patient typically sees a doctor and receives diagnosis and possibly treatment. The physician (or patient) submits a bill for the procedure to the patient's insurance company. If the billing wasn't pre-approved, the insurer must determine whether to pay for what was done or to refuse the claim, leaving the medical provider to bill the patient.

California's insurance regulations state, "Every insurer shall conduct and diligently pursue a thorough, fair and objective investigation and shall not persist in seeking information not reasonably required for or material to the resolution of a claim dispute."

But the lawsuit, filed on Monday in federal court in eastern Cali on behalf of plaintiffs Ayesha Smiley and Suzanne Kisting-Leung, argues Cigna's claim reviews were not "thorough," "fair," nor "objective" because the company supposedly made claim determinations by computer without conducting any investigation.

The complaint [PDF] contends that Cigna's PXDX system "employs an algorithm to identify discrepancies between diagnoses and what the Cigna defendants consider acceptable tests and procedures for those ailments and automatically deny claims on those bases."

The gripe is that Cigna "used the PXDX system to review, process, and deny insured claims without the medical director’s review." The plaintiffs are unhappy Cigna, as alleged, relied too heavily on this software.

Clarkson Law Firm, which filed the case, said in a media statement that, "Cigna’s algorithmic review process trades patient care for profit, allowing the provider to eliminate the cost of necessary review by doctors and qualified professionals and instead rely on impersonal, illegal review by an almost completely automated algorithm."

It's not an AI!

Cigna, which provides health coverage for 18 million Americans, insists that position is not accurate.

"This filing appears highly questionable and seems to be based entirely on a poorly reported article that skewed the facts," a spokesperson claimed, referring to a ProPublica probe earlier this year that challenged the use of PXDX.

"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."

Cigna also disputed the lawsuit's characterization of PXDX – short for "procedure to diagnosis" – as an "algorithm." The insurer's spinner who corresponded with The Register emphasized that the focus of the lawsuit is not artificial intelligence nor algorithms.

The biz's bumf about PXDX states, "The review involves simple sorting technology that has been used for more than a decade – it matches up codes, and does not involve algorithms, artificial intelligence, or machine learning."

The algorithm, it's suggested, is not much more than boolean true-false evaluation. Which is still an algorithm but perhaps not what people in general think when they hear the word "algorithm" in this era of machine learning and recommendation engines.

PXDX, as described by Cigna, is a system for checking whether the codes associated with specific diagnoses match the codes associated with covered treatments:

The post-service review process works through software that matches the codes submitted by the physician with diagnosis codes that are considered medically necessary for a procedure under Cigna's publicly posted clinical coverage policies. If there is a match between the codes, we pay the claim automatically.

If there is not a match, the claim goes to one of our board-certified medical directors for review. Medical directors have access to all the information submitted by the physician on the claim when making their determination. They receive batches of no more than 50 claims to review at a time.

Cigna insists it relies on PXDX only for about 50 low-cost tests and procedures, and that it does not profit by using PXDX as savings from lower medical costs get passed on to clients in the form of lower premiums or expanded benefits.

Californians are entitled to a thorough and fair review of their healthcare insurance claims

Yet it is the batch claim review – automation rather than algorithm – that is central to the lawsuit. The complaint states that PXDX 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."

It cites figures from the ProPublica investigation indicating that during a two-month period last year, Cigna used PXDX to deny over 300,000 requests for payment, "spending an average of just 1.2 seconds 'reviewing' each request."

The issue then is whether the efficiency afforded by PXDX automation is compatible with California's requirement for a "thorough," "fair," and "objective" claim review.

"Californians are entitled to a thorough and fair review of their healthcare insurance claims," said Shireen Clarkson, partner at Clarkson Law Firm, in a statement.

"By replacing licensed doctors with an unchecked algorithm, Cigna is not only breaking the law, but is supplanting experienced workers' jobs' and sacrificing patient care to cut costs." ®

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