Cigna hit with class action alleging it used an algorithm to reject claims

Two Cigna members have hit the insurer with a class-action lawsuit, accusing the company of using an algorithm to improperly deny scores of patient claims.

The lawsuit, filed Monday in California federal court, alleges that Cigna uses a tool called PXDX that enables its physicians to reject claims "in batches of hundreds or thousands at a time," which enables the payer to dodge the state's requirements for an individual physician review process.

Using PxDx allows the company to "instantly reject claims on medical grounds without ever opening patient files," according to the suit. The program first surfaced and garnered controversy thanks to an article from ProPublica that was published in March. ProPublica reported that across two months in 2022, the insurer rejected 300,000 claims using PxDx, with doctors spending an average of 1.2 seconds to review each.

The plaintiffs both had claims rejected through this system, according to the lawsuit, one for an ultrasound and the other for a vitamin D test.

"By engaging in this misconduct, Cigna breached its fiduciary duties, including its duty of good faith and fair dealing, because its conduct serves Cigna’s own economic self-interest and elevates Cigna’s interests above the interests of its insureds," the plaintiffs said in the lawsuit.

In a statement to Fierce Healthcare, Cigna said it could not "confirm that these individuals were impacted by PxDx at all" based on initial research. The company said that PxDx is deployed for 50 specific diagnoses where claims are often not medically necessary, such as dermabrasion, chemical peels or vitamin D tests.

"This filing appears highly questionable and seems to be based entirely on a poorly reported article that skewed the facts," the insurer said.

"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," Cigna added. "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."

Claims denials through PxDx represent about 1% of Cigna's total claims, the company said.

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. Ultrasounds would also typically not be reviewed this way, Cigna said.

Cigna says it has used the PxDx process for several years and described it as a "post-service review process" that works through software that matches the codes submitted by the physician with diagnosis codes that are considered medically necessary for a procedure under the insurer's publicly posted clinical coverage policies, the company said in a statement published to its website Thursday.

Claims that are denied can simply be re-submitted with an updated diagnosis code and automatically paid; or appealed, Cigna said. The insurer said similar versions of this process are used by the Centers for Medicare & Medicaid Services (CMS) and other health insurers.

In the suit, the plaintiffs argue the class that could join is likely "so numerous that their individual joinder herein is impracticable."

"On information and belief, members of the class number in the hundreds of thousands or millions throughout California," they said in the lawsuit.

The ProPublica article also triggered investigations on the Hill into whether Cigna and its peers are indeed deploying algorithms to deny claims for members en masse. The House Energy and Commerce Committee opened a probe into Cigna's actions in May, and the Senate Permanente Subcommittee on Investigations is digging into how insurers are using AI to deny claims in Medicare Advantage.