Episode Details

Well, this episode became extremely relevant again after that Cigna case bubbled up in the news.

Here's the "too long, didn't read" version:

Attorneys filed a class action lawsuit against Cigna, alleging that the carrier is overcharging for lab services or did overcharge for lab services. The plaintiff is an individual member of a Cigna plan.

The complaint tells a pretty wild story. On the Explanation of Benefits (EOB) that this member received for lab services, the amount billed was over $17,000. My understanding is, this member went to Labcorp to get those lab services.

Cigna claimed it had negotiated a discount of over $14,000 for those lab services, meaning the remaining balance was something like $2700.

OK … good news, I guess. Instead of the lab services costing $17,000, they cost $2700 to the plan and member. Except Cigna said to this member that they were only gonna pay $471 on the member's behalf. This left the member with the responsibility to fork out over $2000 in deductible and coinsurance payments. I'm rounding the numbers here for brevity.

So, in sum, member's told she owes $2000+ out of pocket for charges that were allegedly originally over $17,000.

Now, a couple things: The cash price for an uninsured customer at Labcorp for the same services was $449, according to the complaint. Also, weirdly, on the Explanation of Benefits, Cigna allegedly said that the lab services provider was not Labcorp. It was "Health Diagnostic Lab" (or everything I just said in all caps with some letters missing) instead of the actual provider Labcorp.

Then the plot thickens …

The lawsuit alleges that this "HLTH DIAG LAB" is a pseudonym for Cigna Healthcare of Arizona and that this Cigna affiliate used their pseudonym to create a fake invoice. This is also a quote from the complaint.

Bottom line, and this is the real point I wanna make here, the actual out of pocket to the payer was something less than $500, $600, you would think. But it appears that the plan was hoping to get almost 5x that out of the plan member. And had this plan member met her deductible that year, I would speculate that this 5x would have come out of the pocket of the plan sponsor. Either way, 5x margin? That's some pretty sweet returns.

Look, the point I'm making here isn't about this particular case. It's about the totality of the thing. This case just got a whole bunch of attention because, as Julie Selesnick put it on LinkedIn recently, "This case … hits all the high notes—overcharging, keeping the spread, fraudulent billing."

But think about this for a second. You think this was an isolated incident? That someone in Arizona had a brainstorm to juice their quarterly earnings and set up a whole company to jack up one person's lab payments? I don't know. What do you think?