Payers Finally Facing Scrutiny for Denying Coverage

In February of this year, we covered the issues of inequity and administrative barriers patients face when seeking medically necessary care, especially when that care is for chronic or complex conditions. The blog followed ProPublica’s review of Christopher McNaughton’s trials (quite literally – there was a lawsuit) and tribulations with United Healthcare’s refusal of coverage. The situation highlighted how the payer had never intended to cover McNaughton’s care, regardless of necessity, and shopped “appeals” doctors in order to avoid finding his care was “medically necessary” and therefore required to be covered.

The ProPublica article was published some two years after United Healthcare (UHC) had floated instituting a policy of retroactive review and denial of emergency room care – the scheme went something along the lines of “if we think you didn’t really need to go to the ER, we’ll make you pay the whole bill yourself.” The tactic was roundly shouted down by advocates and providers as dangerous. Afterall, a payor reviewing documents rather than actually serving in an emergency room is never going to grasp the details of certain situations – like the unique symptoms women face when having a heart attack. Eventually UHC pressed the pause button and after some jockeying back and forth between the payer and the American Hospital Association, UHC said the entity wouldn’t enact the policy. Turns out, that might not have been an honest assertation according to a lawsuit issued by the U.S. Department of Labor (DOL). To be clear, the payer entity that’s targeted in the suit is a third-party administrator within UHC’s subsidiary – called UMR – but arguing that nuance isn’t going to matter to a patient who had their care claim unjustly denied.

The lawsuit asserts that UMR denied “thousands” of urine drug screenings and emergency room visits and violated the Affordable Care Act’s “prudent layperson” standard. That standard requires that payers reviewing claims consider how the average patient might approach concerns or symptoms they’re experiencing, not a medical professional. Now, there’s a thing about when these denials took place, 2015 to 2018, means UHC’s proposed policy of retroactive denial might have been an improvement over their previous policy of denying every urinalysis claim. Which is just…wild. Further, the suit alleges that UHC wouldn’t clearly tell doctors what additional information they needed during appeals processes – which sounds strikingly related to McNaught’s troubles with the payer.

DOL wants UHC to review all denied claims and adopt new policies which wouldn’t result in what amounts to an automatic denial process. And it’s not unheard of. In 2020, a judge in California found another UHC subsidiary automatically denied coverage of care to patients seeking to use their mental health and substance use treatment benefits and ordered some 67,000 claims to be re-reviewed and new processing policies to be adopted.

Similarly, Cigna is coming under scrutiny. A class action lawsuit filed in California is alleging Cigna denied some 300,000 claims in just two months last year. The absolutely bonkers part about that is Cigna used an algorithm that spent just 1.2 seconds on each claims review before sending them off to doctors to sign them – meaning those claims might not have ever actually been seen by human eyes in what amounts to an automatic denial process. Cigna, for its part, decided its public facing comment would be to call ProPublica’s coverage of their denial process “poorly written”. All that despite the House found ProPublica’s investigation worthwhile enough to drag Cigna in front of the Energy and Commerce Committee for a hearing on the legality of these denials. Mike Kreidler, the insurance commissioner for Washington characterized Cigna’s operation as an “abhorrent” practice “to routinely deny just to enhance the bottom line.”

All of this coming just weeks after the Office of Inspector General released a report on how Medicaid managed care organizations (MCOs) are utilizing prior authorizations processes and denial of care in an abusive fashion, harming the poorest patients in the country and with little oversight by the states contracting these MCOs. Among those listed with a prior authorization denial rate higher than 25% was United Healthcare. And none of that touching that more and more providers are contracted by UHC, meaning those denials were denials of care in which their own providers had decided what was medically necessary.

The scrutiny of payors coming by way of lawsuits is welcomed but advocates and policymakers shouldn’t wait for judges to determine the scope of harm patients are experiencing. We need to seek a statutory and regulatory reigning-in of these run-away practices bilking our healthcare systems at the expense of patient health. And we need to do it now.