Choose or Lose

Physicians Must Be Careful in Filing CIGNA Settlement Claims

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Law Feature -- September 2004  

By Walt Borges  

If the Texas Medical Association established a reading list for its members, at the top would be a legal notice that tells physicians how to recover 13 years worth of underpaid and denied reimbursement from CIGNA HealthCare and its subsidiary health plans.

The 29-page notice Texas physicians received from CIGNA in July isn't light reading, but it may be one of the most important reading assignments a doctor can undertake this year, says TMA General Counsel Donald P. Wilcox, JD.

CIGNA is making available more than $70 million as part of a settlement of its share of a federal lawsuit that alleges it and other health insurers engaged in racketeering by systematically lowering and denying payment for legitimate claims. CIGNA agreed to spend hundreds of millions of dollars to change its claims-processing systems to make its business practices more fair to physicians. And, it has endowed a physician-controlled foundation that will study ways to improve patient care through better physician practices. (See "Foundations of Good Medicine," August 2004 Texas Medicine , pages 34-35.)

About 700,000 physicians nationwide received the notice. TMA President Bohn D. Allen, MD, notes that not all of them have been part of a CIGNA network or contract arrangement.

"All physicians should be aware that they should be participating, whether they were a part of a CIGNA [network] or not," Dr. Allen said. "They can pursue payment for their past claims."

Any physician in or out of a CIGNA network who submitted a claim to any of the eight class action defendants in the RICO lawsuit for services provided between Aug. 4, 1990, and Sept. 5, 2003, can participate in the CIGNA settlement. Mr. Wilcox says a broad range of physicians are being allowed to participate because the racketeering lawsuits alleged a conspiracy on the part of all defendant health insurers to underpay physicians.The other defendants are Anthem Inc., Coventry Health Care Inc., Health Net Inc., Humana Inc., PacifiCare Health Systems Inc., Prudential Insurance Co., UnitedHealthcare, and WellPoint Health Networks Inc.

The settlement could affect virtually every practicing physician and practice in the state, Mr. Wilcox says.

Only the 10,000 or so physicians nationwide who choose to opt out of the settlement cannot participate in the CIGNA process. Exactly how many of those are Texans is unknown.

The trial for the remaining defendants is scheduled for March 14, 2005, in a Miami federal court. 

How to File a Claim

Those who have tried to read the CIGNA notice may have experienced physical symptoms that include pupil dilation and sleepiness, followed by rising frustration, but Mr. Wilcox says not to worry. Considering legal options in a complex settlement requires a large dose of patience and some analytical thought, he says. Claims aren't due until February 2005, so there's plenty of time to consider the options and submit a claim that will maximize recovery.

Mr. Wilcox and TMA leaders suggest a 10-point process.

1. Don't attempt this alone: Get help.  

The complexities of recovery can be confusing, so Mr. Wilcox recommends physicians review the settlement and options with their practice manager and claims manager. This allows options to be considered and a time line for filing a claim to be established. But there also are several key concepts to understand. Claims categories, the choice of options, and the impact of individual choices on group practices are the most important. (See "Understanding the CIGNA Settlement" [PDF].)

The settlement was structured to allow physicians to recover in two ways: through a pro rata payment backed by minimal documentation or through an unlimited settlement payment fully supported by documentation. Only one option can be chosen.

A medical practice or individual physician can file for a pro rata recovery with minimum documentation provided by a certified proof of claim form. Called Category A claims, these can be used by physicians who have claims against the other defendants in the racketeering lawsuit, as well as those whose claims were processed by CIGNA.

CIGNA set aside $30 million to pay all claims submitted in Category A. The amount paid to each practice or physician will depend on the number of doctors who file Category A claims, with each getting an equal share of the Category A pie. Retired physicians or the estates of deceased physicians will receive twice the reimbursement as active doctors because they will not receive benefits from the changes in business practices CIGNA agreed to make as part of the settlement.

To seek unlimited recovery from CIGNA, physicians must use the Claim Distribution Fund (CDF). Claims filed through this unlimited settlement fund require substantial documentation for each claim in several categories. Category One under the CDF is available to doctors whose payment was denied or reduced for 1,200 specified claim coding and bundling edits. Category Two claims are for similar editing reductions or denials, but involve unspecified codes. A third category involves reimbursement denied because CIGNA decided the services were not medically necessary.

Physicians who file under the CDF may submit claims in each of the three categories.

"If your choice is Category A, you are done," Mr. Wilcox said. "If you are filing for recovery under the unlimited Claim Distribution Fund, you may file claims in all the categories - Category One, Category Two, and the medical necessity category."

Apparently the lawyers ran out of words when labeling the different types of claims. Just remember: Category A claims require minimal documentation, while Categories One and Two and the medical necessity category of the CDF require more extensive documentation.

Dr. Allen says choosing Category A to reduce the hassle of documenting claims may appeal to some physicians -- until they realize they are entitled to substantial recoveries if they choose the CDF and its three categories.

CIGNA is banking -- literally -- on many physicians choosing to avoid the administrative hassles of identifying, retrieving, and filing mispaid or denied claims. If a physician or practice has only a small number of claims, choosing Category A may seem attractive. But Mr. Wilcox suggests physicians first evaluate the amount of their claims before deciding how to file.

This is particularly crucial if a physician is a member of a group practice, Mr. Wilcox says. If a single physician from a group practice files in Category A and uses the group's tax identification number, every physician in the group is then obligated to submit all claims for a pro rata share of the $30 million fund. The group must then forego the uncapped CDF claims.

"It's important that all members of the practice be on the same page and in agreement on how they will file claims," Mr. Wilcox said.

2. Read the material on the TMA and CIGNA Web sites.  

For additional information, call the TMA Knowledge Center at (800) 880-7955 or (512) 370-1550, from 8:15 am to 5:15 pm (CT) Monday through Friday.

CIGNA's Web site, located at, contains all significant information about the settlement. Important supporting materials include a list of what CIGNA entities are subject to CDF claims, a downloadable list of the 1,200 CPT codes that identify Category One claims, and the requirements for documenting each claim. Twenty-five notices, forms, and exhibits needed to file the various claims in the different categories, funds, and subcategories are under the site's "Documents" link. Recent settlement developments are also detailed on the CIGNA site.

3. Obtain a facilitation list request form for Category Two claims
from the CIGNA Web site or administrator. Use the list to identify Category Two claims.

As part of the settlement, CIGNA agreed to provide a list of potential Category Two claims to physicians who request it. The list details the services provided by each physician or practice to CIGNA-covered patients not included in the Category One CPT list. The list should include services billed under CPT Codes 99201-99499, which are evaluation and management codes, and Code 90769, CIGNA HealthCare's well-woman benefit code. But CIGNA warns that all Category Two claims may not be identified by the list, so it is up to the physician to completely review records for mispaid claims, Mr. Wilcox says.

The request form for the facilitation list is available from the settlement administrator via a toll-free number, (877) 683-9363. CIGNA also will place the form on its Web site at

"This is especially important for solo practices or those with two, three, or four physicians," said Dr. Allen. "They need to call CIGNA and have them run the list so they can evaluate the amount of claims they may have."

4. Download Category One codes and identify those
that apply to your practice.

The codes, with payments ranging from $3 to more than $650, are listed on the CIGNA Web site at as a downloadable PDF file.

5. Find claims that were denied because of medical necessity
and determine whether they should be refiled.

Physicians can ask CIGNA to review denials that were based on decisions that the services were not medically necessary. If successful, a physician may expect reimbursement based on 2001 Medicare fee schedule rates. The same compensation applies to payments for Category Two claims.

6. Determine if you can extract file information electronically
to ease the administrative burden on your practice.

Claims can be filed electronically or on paper, but the documentation varies with each category and subcategory. Category A claims require a proof of claim form only, but claims on the unlimited settlement fund require varying degrees of documentation. If the documentation can be extracted and filed electronically, the practice will have to devote less staff time and expense to the recovery.

7. Determine whether electing to file fully documented claims
offers an advantage to the practice.

For many physicians with small numbers of CIGNA patients, the hassle of filing CDF claims may outweigh the simplicity of the pro rata Category A claims. For physicians providing numerous and complex services, the amount of money to be earned may make seeking recovery supported by full documentation worthwhile.

8. File claims correctly.  

Filing a Category A claim is easy: Simply fill out a proof of claim form and submit it. One form covers all claims, since a pro rata distribution is based on the number of participants and nothing else. Physicians can donate their Category A payments directly to the  Physicians' Foundation for Health Systems Innovations Inc ., established and funded by CIGNA as part of the settlement. The health insurer funded the foundation with a $15 million grant.

Documentation for claims in three categories of the unlimited settlement fund, the CDF, differ by category.

In Category One, a HCFA 1500 form, CMS equivalent, or CIGNA remittance form showing the specified codes will suffice. If those forms are not available, an internal accounting record showing the Category One codes will work.

Category Two claims are more complex. Each claim must be supported by a claim form and separate cover sheet for each requested payment. The cover sheets must indicate the CPT or HCPCS Level II codes for which compensation is requested. A CIGNA remittance form or internal accounting record supported by a HCFA 1500 form also is required.

For most Category Two claims, complete medical records must be provided with the claim forms. The exceptions are as follows:

  • Claims based on CIGNA's alleged failure to recognize modifiers -50, RT, LT, FA-F9, or TA-T9;
  • Claims that allege the HCPCS Level II "J" Code was translated into an overbroad or incorrect CPT code; and
  • Claims in which CIGNA is alleged to have incorrectly processed modifier -51 exempt CPT codes or add-ons using multiple procedure reductions.

Medical necessity claims require a proof of claim form, a separate cover sheet listing the codes in questions, a CIGNA remittance form or internal accounting record, and a complete copy of medical records relating to services occurring within 90 days of the date of the denied service.

One option for practices to consider is to use a third-party service to prepare the claims. In exchange for a portion of the recovery, these services will help prepare claims information and documentation. While TMA is not endorsing any service, TMA members qualify for discounts from at least one service -- the Managed Care Advisory Group -- because it has been endorsed by the litigation group that brought the suit. (See " TMA Arranges Discount to Help Recover CIGNA Claims .")

"Physicians need to look at the TMA Web site and notice the links to the commercial companies that will prepare claims," Dr Allen said. "Their fees can be as much as 35 to 40 percent, but for some practices, those fees may be worth it."

9. Meet the filing deadlines.  

The window for filing claims opened on Aug. 23, 2004, but it closes at different times. For practices filing electronic claims, all claims must be in by Feb. 7, 2005. For those filing paper claims, the deadline is Feb. 18, 2005.


10. After payment, don't forget the appeals processes.  

Category A claims are set for payment on March 4, 2005, and there is no appeals process.

For Category One under the CDF, all claims of less than $100 are to be paid within 14 days if the settlement administrator finds the claims valid. CIGNA has 30 days to object to payments over $100, but physicians may appeal CIGNA's decision to the settlement administrator, who has the final say.

Claims from Category Two and medical necessity denials are handled differently. The settlement administrator determines whether the claim was filed on time and includes all necessary documentation, then sends a payment request to CIGNA within two weeks. CIGNA has 30 days to pay or object, but the health insurer's denials are automatically sent to an independent review organization (IRO) outside the company. The IRO decision is final.


TMA Arranges Discount to Help Recover CIGNA Claims

The Texas Medical Association has arranged a members-only discount with a firm that will help physicians determine their best course of action for recovering unpaid or underpaid claims covered by the national class action settlement with CIGNA. The Managed Care Advisory Group (MCAG) also will help physicians identify and submit claims to CIGNA.

MCAG is offering its services to members of TMA, the American Medical Association, and certain other state medical societies. For more information on their services, see the MCAG Web site at or call (800) 355-0466.

The fee structure TMA has arranged for Texas physicians is as follows:

For nonmembers of either TMA or AMA:
Category A filing fee: $18
Fixed fees for filing under other categories: $50
Variable fees: 35 percent of all recoveries

For Texas physicians who are members of either TMA or AMA, but not both:
Category A filing fee: $12 (33-percent savings)
Fixed fees for filing under other categories: $50
Variable fees: 29 percent of all recoveries (17-percent savings)

For Texas physicians who are members of both TMA and AMA:
Category A filing fee: $12 (33-percent savings)
Fixed fees for filing under other categories: $0 (100-percent savings)
Variable fees: 25 percent of all recoveries (30-percent savings)

Groups of 10 or more physicians will not be charged the $50 fee, regardless of the physicians' AMA membership status.

TMA encourages member physicians to read the July 8 settlement notice very carefully . For more details on the settlement, options for recovery, and copies of all official forms, see the TMA Web site at 3537#additional.html  or call the TMA Knowledge Center at (800) 880-7955 from 8:15 am to 5:15 pm (CT), Monday through Friday. In Austin, call 370-1550.

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