Why It Matters
Commercial health insurers are using sophisticated administrative systems and automated software to deny or delay patient care claims, effectively holding onto premium dollars longer and generating investment returns on withheld funds. State attorneys general and physician advocates say these practices amount to systemic fraud that harms patients and distorts the healthcare market.
What Happened
Despite signing voluntary pledges to streamline prior authorization last summer, major insurers—including UnitedHealthcare, Cigna, Aetna, CVS Health, and Humana—continue deploying a range of administrative barriers designed to slow claim payouts and deny coverage, according to physician advocates and recent state legal actions.
The denial tactics extend far beyond traditional prior authorization. One mechanism, called “click and close,” requires medical directors to maintain rapid case-review quotas, with bonuses tied to the volume of cases closed and the speed of denials. Step therapy, or “fail first,” mandates that patients exhaust cheaper, less effective treatments before gaining access to physician-recommended care.
Automated claim-rejection software represents another tool. Software called “Procedure to Diagnosis” (PxDx) automatically rejects claims when procedure and diagnosis codes fail to align precisely, processing denials in as little as 1.2 seconds. Over a two-month period in 2022, Cigna doctors using this software denied more than 300,000 payment requests.
Inaccurate provider directories—known as “ghost networks”—list doctors, therapists, and clinics as in-network when they are unreachable, retired, no longer accepting insurance, or closed to new patients. These false listings force patients to seek out-of-network care or delay treatment.
UnitedHealth Group also owns and uses the nH Predict algorithm, developed in the late 1990s and early 2000s by SeniorMetrix, which estimates how long patients “should” need acute nursing home or rehabilitation care—often underestimating actual medical need.
By the Numbers
$100 million — alleged Medicare fraud by UnitedHealthcare, according to a Massachusetts Attorney General lawsuit filed May 29
300,000 — payment requests denied by Cigna doctors using PxDx software over a two-month period in 2022
1.2 seconds — processing time for PxDx claim rejections
3 million — claims denied by individual market-qualified health plans in Pennsylvania during 2024
Legal and Regulatory Response
State attorneys general have begun pursuing enforcement actions. Massachusetts filed suit against UnitedHealthcare on May 29, alleging systematic Medicare fraud. Arizona followed on June 1 with a broader lawsuit against eight insurers: UnitedHealthcare, MultiPlan, Aetna, Cigna, Humana, Elevance, Molina, Centene, and Health Care Service Corporation.
Physicians at the Arizona Attorney General’s press conference characterized the practice bluntly: “These are not victimless crimes.”
The Pennsylvania Insurance Department documented the scale of claim denials in the individual market, finding that qualified health plans denied more than 3 million claims statewide in 2024 alone.
Zoom Out
Concern about insurer denial tactics gained public attention after the Trump administration and physician advocates requested voluntary commitments from insurance CEOs last summer to streamline prior authorization. Six major carriers—UnitedHealthcare, Cigna, Aetna, CVS Health, and Humana—signed six-part pledges. Yet physician testimony and legal filings suggest the underlying problem extends beyond prior authorization to a broader ecosystem of automated denials and administrative delays.
Dr. Linda Peeno, a physician, first testified before Congress on May 30, 1996, about harm caused by denial-of-care practices. She has testified two additional times since, underscoring that insurer gatekeeping practices have persisted for decades despite regulatory scrutiny.
What’s Next
The Massachusetts and Arizona lawsuits will likely accelerate scrutiny of insurer practices nationally. Congressional and state regulatory attention to prior authorization, claim-denial automation, and ghost networks is expected to intensify as attorneys general pursue enforcement and gather evidence of systemic patterns.