Inside the dark world of health insurance companies – and the 1.2 seconds it takes them to deny claims

When Megan Rothbauer suffered a heart attack at work in Wisconsin, she was rushed to the hospital by ambulance.

Given the medical emergency – 30-year-old Mrs Rothbauer would end up spending 10 days in a medically induced coma – she was rushed to a nearby hospital.

It turned out to be an expensive decision.

The nearest hospital was “out of network”, leaving Ms. Rothbauer with a bill of $52,531.92 for her care.

If the ambulance had driven three more blocks to Meriter Hospital in Madison, the bill would have been $1,500.

“I was unconscious. I couldn’t get up and say, ‘Hey, take me to the next hospital’,” he told WISC TV.

“It was the nearest hospital to where I had my event, so the ambulance took me there. There is nothing wrong with them.”

Although the hospital reduced the bill by 90 percent, the incident exposed the costly complexity of America’s health care system where patients found themselves denied credit, despite paying huge premiums, because of their policy’s poor writing.

In many cases the reasons for refusal depend on whether the insurer accepts that the treatment is necessary and that decision is increasingly being made by artificial intelligence instead of the doctor.

It leads to the denial of supply at the industry standard. Much of the work is outsourced, with the largest operator being EviCore, which is used by insurance companies serving around 100 million people.

According to ProPublica, a non-profit investigative organization, it uses AI to review – and in many cases reject – doctors’ requests for pre-authorization, a guarantee to pay for treatment.

Critics call it “denying dollars” to the business, and some contracts offer incentives to reduce spending.

The controversy over the denial of access to news was brought to the fore by the shooting of UnitedHealthcare CEO Brian Thompson in Manhattan.

Although no official explanation has been given for the murder, the charges left in the letters – “deny”, “defend” and “discharge” – are thought to refer to tactics the insurance industry is accused of using to avoid paying out.

Statistics compiled by ValuePenguin, a consumer research site, found that UnitedHealthcare denied one in three claims last year, nearly twice the industry average.

‘Illegal system’

Cigna, the fourth largest health insurance company in the US, rejected 18 percent of its claims. It is being sued in a California class action lawsuit over its denial of multiple acquisitions.

According to the document, Cigna used “an illegal system to systematically, unfairly and automatically deny the insured, the review of individual doctors regarding the claims guaranteed to them by California law and, finally, the payments for the necessary medical procedures that they owe under Cigna’s health insurances”.

In response to the document, Cigna said the lawsuit “appears to be highly dubious and appears to be based entirely on a misreported article that misrepresents the facts”.

It added: “Cigna uses technology to ensure that codes for some of the most common, low-cost procedures are correctly submitted based on our publicly available policies, and this is done to help speed up physician reimbursement.

“Reviews happen after patients receive medication, so it does not result in them being denied care.” If codes have been sent incorrectly, we provide clear guidance on resending and how to appeal.”

Often, insurers will deny claims on the basis that the treatment is not necessary – despite the opinion of the patient’s doctor.

According to the California lawsuit, the medical review is done by a computer instead of another doctor.

An algorithm is used to deny claims

At the heart of the operation was PXDX, an algorithm developed by Cigna that enabled the company’s doctors to “automatically reject payments in batches of hundreds or thousands at a time”.

The system says that claims are rejected without opening files, “leaving thousands of patients effectively without coverage and unexpected bills”.

In just two months in 2022, Cigna doctors allegedly rejected more than 300,000 payment requests, spending 1.2 seconds “reviewing” each request.

The company has also been accused of using the PXDX system knowing that only about 2 percent would object to the denial.

“I think they’re all using AI to cut costs,” Glenn Danas of the Clarkson Law Firm, who represents patients, told The Telegraph.

“Our position is not that AI has no role in the insurance industry, but that it should be used responsibly and not in a way that does not take the position of a doctor or individual review.”

There are huge financial incentives to use AI, not only in reducing fees but in saving on labor.

“It is also possible that they save money for people who do not bother to appeal,” said Mr. Danas.

Another major insurer, Anthem, ran into trouble with plans that were supposed to limit reimbursements for anesthesia during medical procedures.

It plans to refuse payment for anesthesia if it exceeds the illegal time limit, regardless of whether the operation is still in progress.

‘Surprising behavior’

One angry anesthetist asked if he would have to stop mid-surgery, or leave the patient facing crippling medical bills.

“This is the latest in a long line of appalling behavior by health insurance companies seeking to increase their profits at the expense of patients and physicians who provide critical care,” said Donald Arnold, president of the American Society of Anaesthesiologists.

“It’s an embezzlement by Anthem, designed to take advantage of the commitment anesthesiologists make thousands of times each day to provide their patients with exceptional, comprehensive and safe anesthesia care.”

A hymn came down.

“Based on the response received and the misinterpretation of our policy change, it is clear that our communication regarding this policy was not clear, and as such, we have decided not to proceed with this policy change,” the statement said.

KFF, a nonprofit health policy research, polling and news organization, found that six out of ten Americans have experienced problems when trying to apply for their insurance.

They may have had their applications denied, experienced delays in obtaining pre-authorization for treatment, or found that their approved network of doctors and hospitals was inadequate.

Worst off are those who got their insurance from their employer, or the marketplace established by Obamacare.

The Telegraph has contacted Cigna, Anthem, EviCore and AHIP, the health insurance trade association, for comment.

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