The health insurer's PXDX system rejected coverage for "hundreds or thousands [of claims] at a time," the lawsuit states.
Cigna is on the wrong end of a class action lawsuit that alleges the payer improperly denied members' claims through an algorithm.
The lawsuit was filed in the Eastern District of California by two Cigna members who claim they were both denied payment due to Cigna's PXDX algorithm—one plaintiff was rejected for an ultrasound and the other was denied for a vitamin D test.
According to the lawsuit, PXDX allows doctors to automatically reject payments "in batches of hundreds or thousands at a time," enabling Cigna to bypass the legally-required individual physician review process.
"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 lawsuit states. "The scope of this problem is massive."
PXDX first came under fire in a ProPublicaarticle in March, which reported Cigna denied 300,000 requests for payments over two months in 2022 through the algorithm, spending an average of just 1.2 seconds reviewing each case. One Cigna doctor denied roughly 60,000 claims in a single month, according to the report.
The ProPublica article set off an investigation by the House Energy and Commerce Committee into Cigna's actions, as well as a probe by the Senate Permanent Subcommittee on Investigations into the use of algorithms to deny claims in Medicare Advantage.
In response to the recent lawsuit, a Cigna spokesperson said in a statement: "PXDX is a simple tool to accelerate physician payments that has been grossly mischaracterized in the press. The facts speak for themselves, and we will continue to set the record straight."
Further, Cigna hit back with a post on their website in which it detailed its claims review process, saying: "A recent media story riddled with factual errors and gross mischaracterizations may lead to a misunderstanding and distorted view of a simple process used by Cigna Healthcare and other health insurers to expedite payments to physicians and other providers. We are committed to being transparent about our policies and practices, and we are proud of the work our medical directors and other clinical experts do every day to help patients get the care they need and achieve value for both patients and their health plans."
The lawsuit also alleges that Cigna can utilize PXDX because it knows only a small fraction of members appeal denied claims, highlighting a Kaiser Family Foundation report that revealed only 0.2% of all denied claims by health insurers were appealed in 2021.
The case with Cigna raises more questions about the use of automation in claims processing. With AI's presence continuing to grow, the downside of implementing such technology has the potential to negatively affect patients and members.
Researchers synthesized individual studies to review the impacts of private equity ownership across healthcare settings.
Private equity ownership in healthcare more often than not negatively affects quality of care and costs to patients or payers, according to analysis published in The BMJ.
With private equity ownership accelerating across healthcare settings in recent years, researchers attempted to measure the impact by systematically reviewing and synthesizing 55 individual studies between 2000 and 2023.
Of the 27 studies that assessed quality, 12 found harmful impacts, three found beneficial impacts, nine found mixed impacts, and three were neutral.
When it came to measuring costs to patients or payers, researchers observed the most consistent pattern across all the impacts. Of the 12 studies examined, nine showed increased costs, three found no differences, and zero showed lowered costs.
Studies on health outcomes, meanwhile, produced no definitive conclusions, researchers said. Of the eight studies used, two found beneficial impacts, three found harmful impacts, and three were neutral.
Though arguments in favor of private equity ownership point to firms improving the acquired company's value through operational and financial changes, researchers stated that these changes often result in increased costs to patients and payers.
"The fact that no consistently positive effects of PE in healthcare were identified also provides an evidentiary basis to remain cautious about claims that PE ownership is a self-evident benefit to healthcare provision," the authors wrote.
The analysis also found a "noticeable influx" of private equity ownership in the past 10 to 15 years, with nursing homes the most common setting for growth. That was following by dermatology, ophthalmology, hospital settings, and general physician groups.
A recent report by the American Hospital Association revealed that private equity makes up the overwhelming majority of physician acquisition at 65%, ahead of physician groups (14%), insurers (11%) and hospitals and health systems (4%).
The full effects of private equity ownership, however, may not be known for some time, researchers of the study published in The BMJ stated.
Even though the analysis only captures a short time before and after private equity ownership, "the current body of evidence is robust enough to confirm that PE ownership is a consequential and increasingly prominent element in healthcare, warranting surveillance, reporting, and possibly increased regulation."
New analysis of low value care in the state looks at utilization and how it affected spending.
Coloradans received almost two million unnecessary healthcare services in 2021 which cost patients and payers approximately $134 million, according to a new report by the Center for Improving Value in Health Care (CIVHC).
Researchers examined claims from the Colorado All Payer Claims Database from 2017 to 2021 and used Milliman's MedInsight Health Waste Calculator to evaluate potentially low value services.
Of the 58 services analyzed, inappropriate opioid prescribing was at the top of the list for spending, accounting for 36% of all low value spending at $48 million.
That was followed by screening for Vitamin D deficiency at $12.4 million, prostate cancer screening at $6.6 million, imaging test for eye disease at $6.2 million, and coronary angiographies to assess risk in asymptomatic patients at $6 million.
"This most recent analysis puts crucial information into the hands of the people who need it most," Kristin Paulson, president and CEO of CIVHC, said in the press release. "Understanding the most frequent low value services occurring in Colorado and how much they cost can help health insurance companies, providers, and patients work together to improve care and lower costs."
The low value services evaluated cost $70 per instance on average, but some services like proton beam therapy for prostate cancer can cost almost $19,000 per procedure, the report stated.
Among payers, Medicaid and Child Health Plan Plus have the highest percent of spending on low value care, while top services by spending vary across payer type.
The report highlights that provider-focused and patient education interventions, as well as multi-stakeholder collaborations, have shown to have positive results to reduce low value care in other states.
"Initiatives are most effective when each unique low value care service is evaluated individually based on the patient diagnosis and history, patient expectations regarding treatment, and payment incentives," the report said.
A report by the Office of Inspector General (OIG) finds Medicaid managed care members may not be receiving all medically necessary services.
Medicaid managed care organizations (MCOs) denied one out of every eight prior authorization requests in 2019 and lack oversight of denials in most states, according to a report by OIG.
The HHS watchdog conducted the review after receiving a congressional request to gauge whether MCOs are properly providing services to their enrollees.
"In recent years, allegations have surfaced that some MCOs inappropriately delayed or denied care for thousands of people enrolled in Medicaid, including patients who needed treatment for cancer and cardiac conditions, elderly patients, and patients with disabilities who needed in-home care and medical devices," the report stated.
Researchers evaluated the seven MCO parent companies with the largest number of enrollees in comprehensive, risk-based MCOs across all states. In total, the companies operated 115 MCOs in 37 states, consisting of 29.8 million enrollees in 2019.
In addition to collecting data on prior authorization denials, OIG also surveyed State Medicaid agency officials to determine oversight of MCO prior authorization denials and appeals.
Of the 115 MCOs reviewed, 12 had prior authorization denial rates greater than 25%, twice the overall rate.
Even though denial rates were high, the report found that most State Medicaid agencies did not routinely review those rates and many did not collect and monitor data on these decisions.
"The absence of robust oversight of MCO decisions on prior authorization requests presents a limitation that can allow inappropriate denials to go undetected in Medicaid managed care," OIG wrote.
The report highlights how oversight of denials by private health plans is different in Medicare Advantage, which has a yearly review of a sample of denials by CMS and requires health plans to report standardized data on denials and appeals.
"These differences in oversight and access to external medical reviews between the two programs raise concerns about health equity and access to care for Medicaid managed care enrollees," the report said.
To improve access to care for Medicaid manage care enrollees, as well as bolster oversight, OIG recommended CMS do the following:
Require states to review the appropriateness of a sample of MCO prior authorization denials regularly.
Require states to collect data on MCO prior authorization decisions.
Issue guidance to states on the use of MCO prior authorization data for oversight.
Require states to implement automatic external medical reviews of upheld MCO prior authorization denials.
Work with states to identify and correct MCOs that may be issuing inappropriate prior authorization denials.
OIG said that CMS concurred with the fifth recommendation, but did not concur with the first four.
The payer saw "encouraging" signs that Medicaid members losing coverage are transitioning into Affordable Care Act (ACA) exchange plans.
Elevance Health charged forward in the second quarter by positing $1.9 billion in profits, despite dealing with a drain in Medicaid membership due to the redeterminations process.
In the company's second quarter earnings report, the payer said it lost 135,000 Medicaid beneficiaries, but managed a net income increase of 13.2% on revenue growth of 12.7% year-over-year to $43.4 billion.
As a whole, Elevance's medical membership increased 938,000 year-over-year to 48 million, driven largely by growth in Medicaid, BlueCard, ACA health plans, and Medicare Advantage members.
"Our solid execution and continued progress of our strategy to become a lifetime trusted health partner resulted in strong second quarter and first half results," Elevance president and CEO Gail Boudreaux said in a press release. "Our focused efforts to optimize our mature businesses, invest in high-growth opportunities, and accelerate our growth through Carelon to meet the whole health needs of consumers positions us well for the rest of 2023 and beyond."
To tackle Medicaid eligibility redeterminations, Boudreaux said in an earnings call that the payer has contacted more than 1.5 million of its Medicaid members to help them renew their coverage or enroll in forms of coverage.
One of those forms of coverage is ACA plans, which Boudreaux identified as a landing point for many members shifting from Medicaid.
"Transitions of coverage are not typically immediate, but emerging data points suggest consumers using Medicaid are starting to transition onto ACA exchange plans," Boudreaux said on the call. "It's still early in the process, and our expectations for coverage transitions remain unchanged. Our deep local roots and diversified product portfolio positions us uniquely well to meet consumers' needs, regardless of age or socioeconomic status."
John Gallina, Elevance executive vice president and CFO, stated on the earnings call that the company expects 40% to 45% of new Medicaid beneficiaries added during the public health emergency will stay on Medicaid by the end of the initial redetermination cycle. Meanwhile, 20% to 25% are expected to end up on employer-sponsored plans, with another 20% to 25% ending up in an individual ACA plan.
New polls reveal patients, nurses, and physicians face issues due to health insurance policies and practices.
Commercial health insurer policies create care barriers for patients, administrative burden for nurses and physicians, and high healthcare costs, according to surveys by Morning Consult for the American Hospital Association.
The polls included samples of 1,502 adults, 500 nurses, and 500 physicians between December 2022 and April 2023.
More than three out of five patients (62%) said they have had care delayed because of their insurer in the past two years, with 43% of those patients reporting their health worsened as a result.
When it comes to determining what care they receive, patients overwhelmingly (83%) prefer their provider decides, rather than their insurer.
Most nurses (84%) also said insurance administrative policies delay patient care, while 74% said it reduces the quality of care and 63% said it interferes with a patient being transferred to the right care setting.
Of the physicians surveyed, more than 80% said insurers affect their ability to practice medicine.
Further, 84% of physicians said insurer policies make it difficult to operate a solo practice and 56% of nurses reported their job satisfaction has decreased because of insurance administrative requirements.
"These surveys bear out what we've heard for years — certain insurance companies' policies and practices are reducing health care access and making it more difficult for our already overwhelmed clinicians to provide care," AHA president and CEO Rick Pollack said in a press release. "Health insurance should be a bridge to medical care, not a barrier to it for patients. If policymakers are serious about expanding access and addressing the health care workforce crisis, then we must hold insurance companies accountable for these harmful practices."
Another survey, by Kaiser Family Foundation, also found that most insured adults experience problems when using their insurance.
More than half (58%) of respondents reported experiencing issues with their insurance in the past 12 months, with problems ranging from denied claims to prior authorization hold-ups.
New study analyzes differences in characteristics between beneficiaries as they're transitioning from commercial to Medicare coverage at 65.
MA enrollees have less money and are more susceptible to social risk factors than traditional Medicare members, according to a new white paper by Harvard Medical School and Inovalon.
The study attempted to examine the factors that influence enrollment in MA or fee-for-service (FFS) Medicare at the critical point when beneficiaries are transitioning from commercial to Medicare coverage at the age of 65.
Researchers utilized Inovalon's dataset, which accounts for approximately 30% of the privately-insured population in a given year, as well as a CMS dataset containing the medical and pharmacy insurance claims for all Medicare beneficiaries enrolled in FFS and enrollment data covering all Medicare beneficiaries enrolled in FFS and MA. The third dataset used was Acxiom's files that track social determinants of health (SDOH).
The sample of beneficiaries included those who turned 65 between 2015 and 2019, were enrolled in Medicare within three months of turning 65, were in the same plan for at least 12 months, were not also enrolled in Medicaid or a commercial plan at the same time, and were enrolled in an employer-sponsored health plan for all 12 months before turning 65. With those limitations, the final sample consisted of 180,087 enrollees in FFS and 25,470 beneficiaries in MA at age 65.
What the study uncovered was significant differences in socioeconomic characteristics between MA and Medicare enrollees. The average income of Medicare enrollees was found to be $85,085, compared to $76,720 for those in MA. When it came to net worth, MA enrollees were 74.2% of the average of Medicare enrollees. The divide was consistent with the difference in location—35.5% of Medicare enrollees live in a neighborhood with incomes above $100,000, while that's the case for only 23.8% of MA enrollees.
Further findings included that MA enrollees are twice as likely to be non-white and much more likely to be Black, Hispanic, or Asian. Meanwhile, MA enrollees were 50% more likely to have been enrolled in an HMO plan right before turning 65.
"Historically, it has been challenging to document differences in beneficiaries who enroll in Medicare Advantage versus traditional Medicare at age 65," Christie Teigland, vice president of Research Science and Advanced Analytics at Inovalon, said in a press release. "Our study provides a better understanding of the core customer segments of Medicare Advantage and which beneficiaries are most likely to enroll in which coverage type. This information can help health plans better tailor and target their products to enhance member recruitment and retention and better plan for future resource needs."
As MA continues to grow and overtake Medicare as the primary plan choice for seniors, it's necessary for lawmakers to better understand the MA population to ensure the private program is serving beneficiaries the best it can.
Michael Chernew, health economist and professor at Harvard Medical School and overseer of the study, said: "The findings provide new resources for policymakers and healthcare administrators to improve the delivery of value-based care programs, address health inequities, and improve health outcomes for all beneficiaries."
That's what Interwell is striving for by setting the standard in value-based kidney care through its network of physicians and strategic partnerships, including Providence Health Plan and Oak Street Health.
Sepucha recently joined the HealthLeaders podcast to detail how the kidney care management company is serving an in-need population and furthering value-based care efforts, as well as offering insight into where value-based care is heading and how payers and providers can find middle ground on payment models.
This transcript has been edited for clarity and brevity.
HealthLeaders: Can you tell me about the value-based model Interwell Health uses and how that was identified?
Sepucha: There's long been a desire to move upstream to identify patients earlier and to engage in their care. That fundamentally is what Interwell Health is all about. So if you start with that as the fundamental precept of designing the ideal value-based care model for kidney patients, what that requires then is a multi-model approach to engage patients. We believe that the physician has to be the center point of that. We at Interwell have our own clinicians. We engage directly with patients, with nurses, dieticians, and social workers, but we also exist to support the independent practicing physician. For us, it's about supporting the patient, helping them engage them in their own care, and to do that, you have to be able to touch them where and when they need it most.
HL: How has the partnership with Providence Health Plan been vital to the value-based care effort?
Sepucha: We partner with large networks of nephrologists by making sure that they have the same economic interest as we do so we share savings with the physicians. By working together, if we're able to improve the health outcomes for our patients, as well as drive down costs, then we collectively share in that. The relationship with Providence is exactly like this. And the fun thing for me is there are different pairs across the country, all approaching the problem in slightly different ways, all with different needs for their own geographies and membership. So we're able to be very creative in how we contract with our plans, whether that's Providence or some of the national players. We can take absolute full risk and sub-capitated arrangement or do a shared savings arrangement. There's a bunch of different ways we can contract all to try and make this as easy as possible for payers to finally give their kidney membership access to the merits and benefits of value-based care.
Bobby Sepucha, CEO, Interwell Health.
HL: What has the partnership with Oak Street Health achieved in terms of expanding primary care?
Sepucha: Our collaboration with Oak Street to create this new joint venture called OakWell, for us is really the next foray and the future in vanguard of where kidney care is going to go. We're going to start out small. We're going to start in a few markets and bring Oak Street primary care docs into the dialysis clinic and have them round with our patients. Over time, the idea is to then go upstream so that we at Interwell and nephrology partners can be kind of the kidney care extenders for the primary care patients who are perhaps earlier stage in their in their progression of kidney care.
If you take a big step back, the advent of value-based care across primary care and across all these specialties is unbelievably exciting. It's one of the most exciting things to happen in American healthcare in decades. But I think we all have an obligation that if we are not able to figure out how to coordinate, then we risk sort of reinforcing the siloization of healthcare. And that of course would be a massive opportunity missed.
HL: How do view the landscape right now for value-based care and where do you see it going both in the short and long term?
Sepucha: Kidney care is still very much in the nascent stages of moving towards value. If you put a calendar on it, I'd say we're probably five to seven years behind primary care in terms of moving towards real fulsome risk. But the pace of change here is rapidly accelerating and all those plans who used to focus on dialysis rate are now pushing Interwell and other providers into more fulsome risk, sub-capitated risk, which is terrific. That's the exact right thing to do.
I think the biggest challenge for us as a society and a system is ensuring that we don't do these things independently. I joke around, but it's only half-joking, I think one of the worst places in the world is being at a health plan and trying to make sense of all these different point solutions that they've signed up in the last several years. How do you make them all talk to each other? I think that's the next stage of where this needs to go in terms of making this all work more effectively and more efficiently.
HL: What kind of approach or mindset does it take for providers and payers to find that sweet spot of a payment model?
Sepucha: Mindset is actually a great way of framing it. It's working in collaboration and viewing this as a partnership. We are not at the point, nor can I imagine getting to a point in the near term of walking into a health plan and saying, 'Here's the off-the-shelf contract, sign here.' This is a consultative arrangement. This is trying to understand what this specific population that this health plan is serving. What are their challenges? How has the plan been managing this population, if it's been managing it at all? For a lot of these plans, it's not about making a profit, it's about losing less money. That's a really important distinction. For us, it's about understanding where the plans are. It's is about understanding the unique characteristics of the geography that we're going to serve, the systems that are in place, the healthcare systems that are caring for these patients. Because if you don't understand that at the outset, you're going to fail.
HL: What are some of the financial or operational challenges that you're experiencing right now and what are some strategies that you're using to address them?
Sepucha: Through the lens of labor, a lot of ink has been spilled and a lot of people have talked about the labor shortage that's plagued American healthcare particularly, with respect to skilled nursing. We've had the good fortune of having an awful lot of candidates, incredibly impressive, high-quality candidates apply. But then you have to help them understand what this new clinical model is like, how to engage patients differently, how to engage physician practices differently. And that just requires an awful lot of change management. For us, it's basic operational blocking and tackling. It's making sure we have the clinicians in place, making sure they're trained staff and ready to go, making sure they understand the unique aspects of the geography and the patients they're serving. That's our laser focus because it begins and ends for us in terms of how you engage the patients.
The proposed rule by CMS is the remedy to payment rates the Supreme Court deemed unlawful.
CMS announced it will pay eligible hospitals $9 billion in a lump sum payment under a proposed remedy for the 340B payment rates—a decision hospital groups expressed satisfaction with.
The federal agency estimates that from 2018 through approximately the third quarter of 2022, certain 340B providers received $10.5 billion less in 340B drug payments than they would have without the policy.
In June 2022, the Supreme Court unanimously ruled against the 340B payment rates, considering them unlawful because HHS failed to conduct survey of hospitals' acquisition costs.
However, CMS stated that affected 340B providers have already received from Medicare and beneficiaries $1.5 billion of the $10.5 billion that would otherwise be owed. The remaining $9 billion for claims will go to 340B hospitals that were paid less due to the policy.
The American Hospital Association (AHA) said it was "extremely pleased" with the remedy.
Rick Pollack, AHA president and CEO, said in a statement: "We are especially gratified that HHS agreed with the AHA's position that these hospitals must be promptly repaid in full with a single lump-sum. At the same time, the AHA is disappointed that HHS has chosen to recoup funds from other hospitals that cannot afford additional Medicare payment cuts, including rural sole community, cancer and children’s hospitals that were initially exempted from HHS' illegal policy. We will continue to review the proposal closely and look forward to providing comments."
Meanwhile, America's Essential Hospitals also voiced their satisfaction with the proposal, but took issue with the budget neutrality portion of the rule.
Bruce Siegel, president and CEO of America's Essential Hospitals, said in a statement: "Essential hospitals still face heavy financial pressures from high labor costs and other challenges from the pandemic, and these payments are urgently needed to help these hospitals meet the needs of their patients and communities. We urge the Centers for Medicare & Medicaid Services to expedite the release of the reimbursements.
"We are disappointed the remedy payments would include no interest and be budget neutral. The administration’s plan to cut non–drug payments to hospitals to achieve budget neutrality unnecessarily blunts the impact of the remedy by ensuring years of future underpayments."
New research adds to the concern over quality improvement in the private program.
Rather than informing beneficiaries or encouraging Medicare Advantage (MA) organizations to improve quality, the quality bonus program (QBP) is significantly contributing to overpayment in the MA system, according to a report by the Urban Institute.
The QBP was established by the Affordable Care Act as part of several MA reforms that were meant to reduce payments to MAOs, but lawmakers have expressed concern that the program is doing the opposite.
For the report, researchers analyzed the 2023 MA star ratings data and related MA enrollment data to better understand the QBP's role in the MA payment system and how star ratings are scored.
The findings show that, after weighting, about two-thirds of a contract's star rating is determined by beneficiary experience with care and MA administrative effectiveness. However, measures of beneficiary experiences do not allow for meaningful distinctions across MA contracts and administrative effectiveness measures do not target important deficiencies.
Further, the star rating system and QBP suffered from issues such as score inflation resulting in overly generous bonuses, limitations in underlying data sets that don't allow for measures focused on beneficiaries with serious illness, and performance that is not measured at the plan or local level.
"In short, the QBP is a windfall for insurers that does not provide valuable information to beneficiaries or protect them from poor performance," the report stated.
MedPAC, which has been vocal about the QBP being flawed, suggested a replacement for the program that would rely on a small set of population health measures to determine MA plan quality at the local level, as well as assess rewards and penalties to make it budget neutral.
Urban Institute researchers feel the replacement has merit, but stated that reforms should focus on protecting beneficiaries from poor plan administration.
"Problems with MA contract administration are well documented, and CMS could drive real improvement in beneficiaries' access to care under MA with a system of rewards and penalties focused on areas of concern like network adequacy, access to postacute care, prior authorization denials, disenrollment among high-need beneficiaries, and serious illness care," the report said.
Additionally, researchers posit that reforms focusing on performance should allow for exceptional MA contracts to receive bonuses and serve as models for other MAOs, while low-performing contracts should be assessed penalties.
"The effectiveness and excessive rewards of the MA QBP should be part of ongoing discussions to improve the longevity of the Medicare trust fund," the report concluded.
