Cigna sues lab for billing $84M in 'phantom rates'

Cigna has sued a Virginia-based clinical laboratory for illegally waiving consumers' fees and billing the insurer instead. Cigna claims that the "fee forgiving" practice cost it $84 million, according to a lawsuit filed in the U.S. District Court in Connecticut.

The lawsuit accuses Health Diagnostic Laboratory Inc., of Richmond, Virginia, of "a fraudulent fee-forgiving scheme" in which HDL failed to bill Cigna's members for their portion of blood testing services, reported the Hartford Courant.

HDL then billed Cigna for those services at "exorbitant and unjustified 'phantom' rates." For example, instead of billing one Cigna member $649.40 for services provided, HDL charged Cigna with the entire $2,979 cost.

"HDL has developed a business model designed to game the healthcare system by submitting grossly inflated, phantom 'charges' to Cigna that do not reflect the actual amount HDL bills patients," Cigna said in the lawsuit, according to the Richmond Times-Dispatch.

Cigna alleged that HDL promises consumers that it won't collect co-payments, co-insurance or deductibles, reported Courthouse News Service. The main problem with that approach, Cigna said, is that "HDL has no incentive not to charge the plan astronomical rates, because the patients who choose to receive those services would not bear any more of the inflated cost."

The lawsuit also says HDL engaged in "other unlawful conduct," including offering providers financial incentives to refer patients to the lab for testing services. To help inflate charges that HDL could submit to insurers, HDL encouraged doctors to order "a litany of medical tests" regardless if they were needed, the lawsuit added, the Times-Dispatch noted.

To learn more:
- here's the lawsuit (subscription required)
- read the Hartford Courant article
- see the Courthouse News Service article
- check out the Richmond Times-Dispatch article

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