CMS sanctions Cigna over 'substantial failures' in Medicare plans

Federal regulators have banned Cigna from selling new Medicare products because of issues with its Part C and Part D plans that increased enrollees' out-of-pocket expenses and led to delays or denials in receiving medical services and prescription drugs.

In its enforcement letter, the Centers for Medicare & Medicaid Services (CMS) said Cigna violated regulations about Part C and Part D organization/coverage determinations, appeals and grievances; Part D formulary and benefit administration; access to facilities and records; and compliance program effectiveness.

The company's acquisition of HealthSpring in 2012, which brought Cigna an additional 1 million Medicare beneficiaries, created an organizational structure that CMS described as "decentralized and fragmented," which exacerbated the compliance issues that CMS identified.

The shortcomings pose a serious threat to enrollees' health and safety, which is why CMS says it chose to immediately suspend Cigna's Part C and Part D plan enrollment and marketing activities, effective Jan. 21. Furthermore, this is far from Cigna's first time running afoul of federal regulations, the letter states.

"Cigna has received numerous notices of non-compliance, warning letters and corrective action plans from CMS over the past several years," CMS says. "A number of these notices were for the same violations discovered during the audit, demonstrating that Cigna has not corrected issues of noncompliance."

The agency says Cigna's "substantial failures" in this regard will require considerable correction in order for the insurer to return to a state of compliance with CMS.

Cigna announced the sanctions in a public filing with the Securities and Exchange Commission, noting that they will not affect current beneficiaries' enrollment or plans.

"Cigna is working to resolve these matters as quickly as possible and is cooperating fully with CMS on its review," the company says in the filing, adding that it is "committed to its customers and ensuring that its customers have access to the quality healthcare, customer service and prescription drugs that they need."

Cigna is not the only insurer that has faced sanctions relating to its Medicare plans. In April, CMS fined Aetna $1 million when the insurer wrongly identified 6,887 pharmacies as being in its Medicare Part D network, and back in 2010, it imposed an intermediate sanction to stop the insurer from marketing to or enrolling new Part D beneficiaries in its plans due to issues with the insurer's administration of its Part D drug benefit.

To learn more:
- read CMS' letter
- here's the SEC filing

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