Policy changes in the CIGNA settlement

By Legal and Regulatory Affairs Staff

October 11, 2005 -- As part of a nationwide class action lawsuit involving 12 of the largest managed care organizations in the United States, CIGNA is making numerous policy improvements to benefit health professionals who treat CIGNA subscribers. This summary document highlights some of the policy changes that are most relevant for practicing psychologists. For more information about the settlement, read “Psychologists Get Nearly $2.2 Million in CIGNA Settlement Payouts.”

Note: The policy changes fill 53 pages of the CIGNA settlement agreement (in the Florida managed care class action litigation). We have attempted to select some of the policy changes that are most relevant to psychologists and simplify them for non-lawyers (however, by doing so we are not providing legal advice). References to the sections and pages of the agreement itself are provided for each provision discussed, in case you would like to read the full details of a particular provision.

Medical Necessity

  • Provider contracts. CIGNA will revise the definition of “Medical Necessity” in its provider contracts to consider the perspective of a “provider exercising prudent clinical judgment,” and to consider the views of APA (and other relevant healthcare specialty societies), as well as the views of clinicians practicing in the relevant field. However, this provision will not apply if the state in which the contract applies has its own statutory definition of medical necessity with which CIGNA must comply. [Section 7.16., see also additional definition elements for mental health at Section 7.33.a at p. 78]

  • Clinical guidelines. In developing its clinical guidelines that are relevant with respect to the Covered Services in a plan, CIGNA will also take into account the recommendations and views of APA, other healthcare specialty societies and clinicians practicing in the relevant field. CIGNA will post its medical necessity clinical guidelines, along with a list of resources used to develop those guidelines. [Section 7.16.b and 7.16.a.2 at p. 57]

  • Withdrawal of medical necessity certification. Once the company certifies that care is medically necessary, it may not subsequently withdraw that determination, absent evidence of fraud or material inaccuracies in the information originally provided. [Section 7.25 at p. 68]

  • Review & transparency. If a patient or psychologist challenges a medical necessity determination, there will be a two-step internal review process. After that review process, if the medical necessity of the service or procedure is still denied, the psychologist or patient can proceed to external review by an outside review organization. A patient or provider may elect external review within 180 days from the date of the final appeals decision by CIGNA. The costs of the external review will be borne by CIGNA. [Section 7.11 at p. 45-47] CIGNA will post on its website the number of medical necessity challenges sent to the medical necessity external review organization each year and the percentage that are upheld or overturned. [Section 7.16.a.2 at p. 57]

Prompt payment and interest

  • Interest. CIGNA will pay 6% simple interest on claims that are processed and finalized for payment more than 30 days after submission of all necessary info. If applicable state law or regulation requires a different interest rate, however, CIGNA will pay that required rate. In addition, this provision does not apply to claims processed on older claims processing systems which at the time of the settlement handled 5% of the company’s fee for service claims. [Section 7.18b at p. 59-60]

  • Notice of missing information. CIGNA will give next business day notice to the psychologist if it needs additional information to process a claim, including an explanation of the additional information needed. If the company receives no response from the psychologist, it will send written reminders at 30 days and 60 days and will deny the claim if there is no response after 90 days. This provision also does not apply to claims processed on older claims processing systems described in the previous bullet point. [Section 7.7 at 35]

Transparency, panel, payment amount, contract and other issues

  • General transparency. CIGNA has agreed to place on its website and update various information about the company’s claims administration and procedures (other than what is mentioned above), including anticipated changes in certain fee schedules, claim forms, procedures for appealing denials, any claim “bundling” policies with significant impact, and procedures for obtaining fee schedule information. [Section 7.2 at p. 27-33] (“Bundling” occurs when a provider bills different CPT codes on the same day for the same patient and the insurer determines that it will only reimburse one or some of those CPT codes.)

  • Phantom panels/Corrections to provider listings. CIGNA will update its provider panels listing to correct or delete erroneous information, based on information from providers, within 20 business days. [Section 7.27 at p. 68-69]

  • Overpayments to providers. The company will take actions to reduce the amount of overpayments to providers. CIGNA will not initiate proceedings to recover those overpayments more than a year after the initial payment (absent evidence of fraud or intentional misconduct, or a request from a self-insured plan). CIGNA will also provide 30 days written notice to providers if it plans to seek an overpayment recovery. [Section 7.22 at p. 66]

  • 90-day notice of adverse changes in provider contract, unless a shorter time is required to comply with changes in applicable law. However, a provider who objects to the change must give 30 days notice of his/her intention to terminate his/her contract, with termination effective at the end of the 90-day notice period. [Section 7.6 at p. 34-35]

  • “Reasonable and customary” charges. The company will disclose the data used as the basis for “reasonable and customary” charges if an out of network provider disputes those charges through the company’s internal dispute resolution procedures. [7.14.c at 56] In addition, the company will identify on its website any databases it licenses from third parties in order to determine “reasonable and customary charges” billed in the medical community. [Section 7.2.a.2.(l) at 30]

  • Provider Advisory Committee. The committee will discuss issues of nationwide scope. The committee will have five members, one of whom will be a psychologist selected by plaintiffs’ counsel (see below). We are hopeful that this committee will have more impact than most provider advisory panels because of what the company has agreed to do in response to the committee’s suggestions: CIGNA will be required to consider whether the group’s proposals are commercially feasible and consistent with the best interests of providers, patients, customers, shareholders and others. If CIGNA did not adopt the suggestion, it would have to provide a written explanation of its reasons to the committee. The company will also post the committee’s suggestions and CIGNA’s responses on its website. [Section 7.9 at pp. 36 – 38]

    We have nominated Dr. Cathy Rea, former president of the Virginia Academy of Clinical Psychologists, as the psychologist for the committee. If you have issues that you would like to raise with the committee, please direct them to us (at abrino@apa.org) so that we can act as a clearinghouse for issues, rather than contacting Dr. Rea directly.

  • Provisions for easier recredentialing. If a psychologist who is already credentialed by CIGNA changes practice groups, CIGNA will only require the submission of limited additional information such as the change of employment or location. [Section 7.13a at p. 52-53.]

  • Fee reductions: Fees can only be reduced once per calendar year and the company will give 90 days notice of the reduction, as described in the previous bullet point. [Section 7.14a at p. 55].

  • Obtaining copies of provider contracts. CIGNA will give providers copies of their provider contracts and any attachments within 30 days of a request for the contract, or as soon as practical. [Section 7.29.l at p. 74]

  • No requirement of electronic claims submission. Providers who do not wish to submit claims electronically to avoid triggering HIPAA will be allowed to continue submitting paper claims. [Section 7.29.f at p. 72]

Finally, the settlement agreement gives CIGNA discretion to not apply the policy changes to class members who, before the March 2005 deadline, “opted out” of the settlement (gave formal notice of their intent not to get the benefits of the settlement or be bound by it). It is not clear to us, however, whether the company will actually treat psychologists differently if they opted out.

For some of the provisions outlined above, the real benefit to psychologists and their patients may depend on how the company implements these policies. The agreement, however, contains various reporting and enforcement mechanisms to improve implementation and the Practice Organization will monitor implementation with help from state leaders and members.

PLEASE NOTE: This document is not intended to provide legal advice. Legal issues are complex and highly fact-specific and require legal expertise that cannot be provided by a general document of this nature. The information in this document should not be used as a substitute for obtaining personal legal advice and consultation prior to making decisions regarding individual circumstances.