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Ghost in the Machine: Payer Programming Auto-Denies Claims?

August 9, 2023

In May of 1999, Vice President Al Gore made a startling assertion to CNN’s Wolf Blitzer: “During my service in the U.S. Congress, I took the initiative in creating the Internet.” Wow! I guess that’s why we talk in terms of computer Al-Gor-ithms to this day (cue the “bah-dah-boom” on the snare and cymbal). Of course, regardless of the term’s origin, an algorithm is a very important component in today’s modern technology. Without it, so much of our math, science and computing power would be impossible. So, what is an algorithm, anyway? According to one definitional description, it is “a process or set of rules to be followed in calculations or other problem-solving operations, especially by a computer.” So, in one way, we can look at this as another means of describing programming.

At Coronis Health, our billing and coding system is based, in part, on a robust “rules engine,” containing thousands of rules that have been programmed into the system to prevent inappropriate or non-compliant claim submissions. It’s a set of algorithms designed to maximize precision in the billing and coding process. So, in many cases, the use of algorithms can be a positive thing. But, in recent days, one major health insurer has been accused of using its own algorithm to put a massive stop on payments.

A Spooky Situation

CBS News and other high-profile media outlets are reporting that Cigna Healthcare is being accused of using a deliberately programmed algorithm to review—and often reject—hundreds of thousands of patient health insurance claims. In a class-action lawsuit, filed in the U.S. District Court in Sacramento, plaintiffs allege that Cigna has engaged in a scheme that violates California state law, which requires that insurers conduct a “thorough, fair and objective” investigation into each patient claim. The suit contends that Cigna is instead relying on an algorithm, designated as “PXDX,” to essentially deny claims on an almost automatic and widespread scale. In utilizing this methodology, it is alleged that Cigna is able to reduce its labor costs by drastically reducing the time needed by those hired to look at each claim.

Here are some examples provided by CBS of those who claim to have been unfairly affected by Cigna’s processes:

  • One California woman with Cigna health insurance, underwent an ultrasound ordered by her doctor because of concerns about ovarian cancer. The ultrasound found a cyst on her left ovary. Cigna denied her claim for the ultrasound and a follow-up procedure, claiming neither were medically necessary, which left her on the hook for $723 in costs for the two ultrasounds.
  • Another Cigna patient in California had a vitamin D test to check for a deficiency, a procedure that was ordered by her doctor. Cigna denied her claim but didn’t provide an explanation about why the test was rejected, according to the suit.

Plaintiffs allege that Cigna’s claims review panel—made up of physicians—is able to “instantly reject claims on medical grounds without ever opening patient files, leaving thousands of patients effectively without coverage and with unexpected bills.” It’s claimed that, over a period of two months in 2022, Cigna doctors denied over 300,000 requests for payments using the PXDX algorithm, spending an average of only 1.2 seconds “reviewing” each claim.

Larger Implications

The litigation highlights what some see as the growing use of algorithms and artificial intelligence to perform tasks that were once routinely handled by human staff. In the healthcare context, one wonders whether a computer program can provide the kind of “thorough, fair and objective” analysis that a human medical professional would bring to the claim evaluation process. Is this what consumers of healthcare services can expect in the years to come—a sort of Terminator 2 approach to their medical claims?

To be fair to Cigna, the insurance giant does challenge the allegations being levied against it. In a statement to CBS News, Cigna called the lawsuit “highly questionable” and asserted:

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.

However, a ProPublica exposé on Cigna’s claims review process back in March stated the following:

Medical directors are expected to examine patient records, review coverage policies and use their expertise to decide whether to approve or deny claims, regulators said. This process helps avoid unfair denials. But the Cigna review system that blocked [the patient’s] claim bypasses those steps. “Medical directors do not see any patient records or put their medical judgment to use,” said former company employees familiar with the system. Instead, a computer does the work. A Cigna algorithm flags mismatches between diagnoses and what the company considers acceptable tests and procedures for those ailments. Company doctors then sign off on the denials in batches, according to interviews with former employees who spoke on condition of anonymity.

The result of these revelations? Patients made a federal case out of it. And who can blame them if these allegations have any basis in truth? If a major insurer did mandate such a change in policy and if hundreds of thousands of claims were automatically denied due to some arbitrary algorithm, then what is to prevent other health insurers to follow the same course? The coming ruling on this case now before a federal district court may be the decisive factor in determining whether or not the future will involve ghosts in the machines.

With best wishes,

Chris Martin
Senior Vice President—BPO

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