Cigna pays $150K penalty to settle Virginia complaint

Cigna Health and Life, one of the larger health insurers in Virginia, will pay an unusually large civil penalty of $150,000 to settle a Bureau of Insurance complaint that it was misleading customers about bills they would face if they went outside its network of providers.

The company is changing the language in its forms to fix the problem.

The issue is over "balance billing," a practice that used to cost some patients tens of thousands of dollars when they went to doctors who are not in an insurer's network. Virginia banned balance billing in 2020 after years of impasse between insurers and providers.

Some health care practices, particularly emergency room doctors, anesthesiologists or laboratories that worked in an in-network hospital but were themselves not in a network, would bill patients for amounts above what the insurers paid for a service. In many cases, patients were not aware that they were using an out-of-network provider.

Cigna's explanation of benefits forms, which detail to patients what it paid on a claim and what they should pay, did not make clear that the Virginia law meant customers were no longer liable for such so-called balance billings, the Bureau of Insurance said.

A bureau investigation found nearly 13,700 forms with the improper disclosure.

The problem was language directed at health care providers that said a patient should not be liable if the provider accepted Cigna's payment. The State Corporation Commission said the form should instead state clearly that the patient was not liable to the health care provider.

Under Virginia's balance billing ban, insurers are supposed to pay out-of-network providers a fee in line with the norm for the service in their part of Virginia. Disputes about the amount paid go to an arbitrator.

Earlier this year, a bureau review found the number of disputes going to arbitration had declined.

Insurers and provider associations say they believe that is because the 2020 law is leading both sides toward a middle ground, where insurers feel they are not paying too much and providers feel they are getting adequate compensation for their work.

In a letter to Cigna this month, Julie Blauvelt, the bureau's deputy commissioner for life and health insurance, said the company "has repeatedly failed to timely provide information" when the regulators began looking into the issue in June 2022.

She said Cigna did make an effort beginning in November to improve its responsiveness.

Cigna, in agreeing to the settlement, said it did not admit to any violation of law.

The company collected $1.15 billion in premiums from Virginians last year, according to the National Association of Insurance Commissioners.