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Cigna pulls out of Fla. exchange, blames addiction treatment fraud

Citing “an exponential increase in fraudulent and abusive” substance abuse treatment practices — and in particular drug screening — Cigna Inc. won’t be offering Florida health plans on the federal Health Insurance Marketplace when it opens for business Nov. 1.

In explaining the decision, Cigna spokesman Joseph Mondy singled out stories in The Palm Beach Post detailing how fraudulent drug screening has reaped millions for South Florida labs, especially those affiliated with sober homes and treatment centers. In one case revealed by The Post, pee-in-a-cup lab work cost more than $300,000 for a single client.

In part because of soaring costs, the 2016 Florida plans could no longer be offered at affordable prices, Mondy said.

“What is certainly going to happen as a result of this is the (addiction treatment) industry is going to get that the payday is going to come to a standstill if they don’t police themselves,” said John Lehman, president of the Florida Association of Recovery Residences. “It’s certainly going to send a pretty loud message that something needs to be done.”

The sky-high charges have exploited addicts and alcoholics seeking help, gouged insurers and spurred an FBI investigation into the area’s billion-dollar addiction treatment industry.

But with Cigna’s move, the issue has expanded beyond that industry: An estimated 30,000 Floridians now on Cigna policies through the federal marketplace will have to move to other insurers if they want to stay with a marketplace plan.

The Cigna decision affects only 2016 exchange plans, and only individual and family medical plans offered on the Florida public health insurance marketplace. Cigna plans to resume offering plans in the Florida Marketplace exchange in 2017, Mondy said.

There is no impact on customers enrolled in Cigna’s 2015 Florida Marketplace plans, Mondy said. However, if customers plan to renew their enrollment through the Florida marketplace for 2016, they will have to enroll in a plan offered by another health carrier, he said.

Also not impacted by the move: Plans offered off the exchange, Cigna-HealthSpring Medicare Advantage Plans and Cigna’s group health plans offered through employers and unions.

No good deed

If Cigna is hard-hit, said Delray Beach attorney Jeffrey Lynne, it’s largely because Cigna offered a Florida plan on the exchange with the best benefits for substance abuse treatment.

“I guess no good deed goes unpunished,” said Lynne, who represents treatment centers and has worked with lawmakers to rein in abuses.

Lynne said he believes the fraudulent charges gave Cigna an excuse to do something it wanted to do anyway: Exit behavioral health coverage and protect its bottom line as a pending $54 billion merger with Anthem is finalized.

“It’s easy to villainize the industry,” Lynne said.

But Lynne conceded that the largely unregulated South Florida treatment industry has led to a wide range of abuses.

In one scam, for instance, brokers would go out of state to find addicts in need of assistance and arrange to bring them to Florida, sources told The Post. Claiming they were “residents,” they purchased a Florida policy on the exchange.

In some cases, treatment providers and brokers not only guided the addicts through the process but provided them with Florida addresses to prove their residency and paid their deductibles, sources told The Post.

The insurer almost always was Cigna. When the policy kicked in, the addict would be admitted to a treatment center.

But in some cases, no premiums would be paid after that first month, leaving the addict, who might not have known about the deal, the treatment center and Cigna all holding the bag for what could be tens of thousands of dollars in treatment charges.

Paying for pee

The billing that is believed to have attracted the attention of the FBI, however, is a simple urine test to check for the presence of drugs. It’s a staple of rehab and a fast way to track relapse.

However, some treatment centers, sober homes and their affiliated labs have charged hundreds of dollars for the test.

Then, the same urine sample would be shipped off to another lab for more extensive testing, which could cost $3,500 or more.

An addict tested three times a week with the more sophisticated urinalysis is a cash machine: $36,000 every month, $432,000 a year. A sober home with six residents on the same testing regimen could bring in $2.5 million.

In another conflict over testing, Cigna earlier this year sued Sky Toxicology and two affiliated lab firms in federal court, alleging a $20 million civil fraud revolving around urine testing.

Texas-based Sky does business in multiple states. But the suit was filed in West Palm Beach, said Cigna in court papers, because the bulk of the alleged misdeeds took place in South Florida — and the doctors and treatment centers who participated are here, too.

According to the suit, Sky, a consortium of labs, offered doctors and drug treatment centers ownership interests in the companies. For their investment, Cigna said, providers were paid “kickbacks in the form of dividends” linked to how many urine tests they sent to Sky. Settlement talks begin Friday in Dallas.

Jeffrey Cohen, attorney for Sky, said he doesn’t believe Cigna’s explanation for pulling out of Florida’s insurance exchange. Cohen believes Cigna is using accusations of insurance fraud to cover the real reason.

“I think what they are doing is deflecting blame for their decision not to participate in the Affordable Care Act in Florida,” Cohen said. “I think they found a story that gives them some political and PR cover.”

Cigna also has gone after treatment providers. Ken Bailynson, owner of Good Decisions Sober Living in West Palm Beach, said in court papers that Cigna refused to pay claims of residents in his sober housing complex, which was raided by the FBI in September 2014.

Bailynson blamed the billing company, which denied his accusation. The case settled with Bailynson paying his overdue balance of $16,500.

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