Dive Brief:
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A federal judge in Texas has ruled for Cigna in a lawsuit that claimed the insurance company underpaid medical claims by at least $50 million.
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U.S. District Court Judge Keith Ellison said Cigna didn't "abuse its discretion" by cutting payments to North Cypress Medical Center after finding out the hospital performed fee-forgiving for Cigna members that received out-of-network care.
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Payers like Cigna say that fee-forgiving, which is when a hospital charges less for out-of-network care than what is owed under the health insurance plan, isn't legal.
Dive Insight:
These kinds of disputes between providers and payers continue to crop up. Providers reducing patient responsibility for out-of-network care through coinsurance payments is one touch point for payers and providers. Payers, of course, would prefer members get care within their networks, so providers waiving or cutting coinsurance charges for members doesn't sit well with insurers, who say the discounts are unlawful.
The Texas issue comes because NCMC, which is not in Cigna's network, created a "prompt pay discount program." Under that policy, patients who paid out-of-network charges promptly could get discounts from the provider, which in turn bills Cigna for the full amount.
As a way to respond to fee-forgiving, Cigna created a policy of paying providers based on what they charged the patient for care.
Ellison said the payer's decision to reduce payments to out-of-network providers engaging in fee-forgiving has been consistent. Cigna offered substantial evidence to support its claim about fee-forgiving, including surveys the company sent to patients who received out-of-network care at NCMC, he said.
"Enforcing coinsurance rates for out-of-network providers and not for in-network providers is consistent with the policy of encouraging patients to seek in-network care to keep health care costs lower for the employers who fund the (Administrative Services Only plans)," Ellison wrote.
Another flash point between payers and providers is that insurers are attempting different ways to squeeze more money out of the system. That often comes at the expense of health systems. One example is Anthem, which has launched a series of cost-saving moves over the past year, which brought opposition from provider groups.
As payers continue to look for ways to save money and move more contracts to risk-based, you can expect the friction only to intensify. Health systems with already tight margins bristle at the thought of sacrificing more payments through additional risk and cost-saving policies.