Why Jefferson Health Went Out of Network with Cigna

The health system has taken the contract dispute public while the two sides continue negotiations.

Jefferson Health took the bold step of going out of network with Cigna with the aim of strengthening its position with the payer.

The Philadelphia-based hospital operator is hoping that the potential loss of Cigna's commercial members will be offset by more favorable reimbursement rates in the long term if a new contract agreement can be reached.

Though Jefferson and Cigna split after more than 20 years together, they said that they will continue to negotiate.

Both sides, however, have criticized each other for the impasse. In announcing the split, Jefferson argued that it made the decision due to Cigna's reimbursement rates increasing by around 3% since 2020, compared to the hospital wage index going up by 20% over that period.

"Over the past five years, inflationary pressures have significantly increased the costs of healthcare related to labor, medical supplies, and operations," Edmund Pribitkin, MD, chief physician executive and president of Jefferson Medical Group, said in a video statement. "Cigna's reimbursement rates for commercial members have failed to keep pace with these economic realities, making it difficult to sustain high-quality care."

Cigna pushed back against the claims, with a spokesperson saying that "Jefferson Health chose to leave our network due to their unreasonable rate hike demands that would raise health costs for the people we serve. Almost all our employer clients' benefits plans are self-funded, which means any increase in cost of care is paid directly by local employers, their employees and their families."

In the meantime, emergency care at Jefferson remains in-network for all Cigna members, while some patients my qualify for programs to maintain in-network benefits.

By going public with the dispute and dropping Cigna, Jefferson is hoping to leverage public opinion against the insurer—a strategy some providers have employed to wrestle back some negotiating power.

Pribitkin and the announcement on Jefferson's website encouraged Cigna members to contact the payer directly to advocate for in-network access.

Sometimes, providers drop insurers with little desire of negotiating a new deal because the contracts are too onerous. That's particularly the case with Medicare Advantage plans, which more and more providers have recently shed to absolve themselves of the financial and operational challenges that come with the private program.

The strategy isn't without its drawbacks, such as isolating a segment of patients and losing revenue. It is, however, one of the few avenues providers can pursue to potentially balance the scales in the dynamic with payers.