CT Physicians Accused of “Price Gouging” COVID-19 Tests

April 27, 2021 - A group of physician practices in Connecticut suing Cigna over COVID-19 reimbursement is actually exploiting a national health emergency by overcharging for COVID-19 tests, the payer recently told a judge.

Cigna Health and Life Insurance Company accused Murphy Medical Associates in an April 16th court document obtained by Law360 of price gouging COVID-19 tests and related services. Specifically, the payer said the practices demanded payers to reimburse $1,500 for an in-house test while acknowledging that the tests only cost between $200 and $600 at other labs.

The payer also accused the group of physician practices of charging for tests, consultations, and other services that were unnecessary or never provided.

Therefore, the court should dismiss the case filed by Murphy Medical Associates, Cigna said in the document.

The motion to dismiss is the latest in a court battle between the Connecticut practice, which operates several practices in the state including Diagnostic and Medical Specialists of Greenwich, and the national payer Cigna over COVID-19 reimbursements.

The practice, led by Steven Murphy, MD, first sued Cigna in November, telling a federal judge that the payer had refused to reimburse its providers approximately $6 million for testing more than 4,000 Cigna members for COVID-19.

Murphy had set up several drive-thru and walk-up COVID-19 testing sites in southwestern Connecticut and parts of New York when the pandemic first hit last spring.

Cigna reportedly told members and others in the community that the practice is a “fraudulent enterprise” and that patients would have to pay out of pocket for COVID-19 testing that it had denied for reimbursement, Murphy told the judge.

Additionally, Murphy accused the payer of engaging in a “paperwork war of attrition,” requesting “voluminous frivolous and bad faith” medical record and audit requests for every claim the group submitted for reimbursement.

The requests were a “clear effort to overwhelm the practice and to delay or avoid its payment obligations indefinitely,” according to the complaint.

In response to the complaint, which was amended by Murphy in March, Cigna said in the latest court document, “[T]he Amended Complaint is long on rhetoric but woefully short on required facts. In particular, the Amended Complaint does not identify a single one of the ‘over 4,000’ Cigna members it allegedly tested, and for whom it seeks payment.”

“Neither is there any legal support for Plaintiffs’ contention that they have a direct right to sue health plans and plan administrators for bills for SARS-CoV-2 testing services. The FFCRA, the CARES Act, and abundant caselaw addressing express and implied causes of action, plainly lead to the conclusion that Congress did not provide a private right of action,” the document continued.

The Coronavirus Aid, Relief, and Economic Security (CARES) Act and other COVID-19 legislation have required payers to cover COVID-19 testing at no out-of-pocket cost to members whether they receive the services from an in-network or out-of-network provider.

But some health payers have been accusing providers of taking advantage of the law’s requirements and overcharging for tests done at out-of-network facilities.

Under the law, payers must reimburse providers at either the in-network rate if they are part of the plan’s network or the provider’s cash price if they are out of the network.

Hospitals charge anywhere from $20 to $850 for a COVID-19 diagnostic test, revealed a recent analysis from the Peterson-KFF Health System Tracker.

However, most hospitals charged between $100 and $199 for the test and the median price was $127, according to the analysis of prices listed by the two largest hospitals in each state and the District of Columbia.

A survey conducted by America’s Health Insurance Plans (AHIP) last year showed that prices among out-of-network providers were on the higher side, with nearly 40 percent of diagnostic tests being more than $185. In a small number of cases, out-of-network providers charged over $390 for the COVID-19 tests.

Almost 10 percent of all claims for COVID-19 tests were from out-of-network providers, the survey also found.