Center for Medicare and Medicaid Services Sanctions Cigna for Substantial Failures in Medicare Plans

The Center for Medicare and Medicaid Services has suspended Cigna from enrolling new customers or marketing plans for Cigna Medicare Advantage and Standalone Prescription Drug Plan Contracts.

The agency found numerous problems and in a letter accused Cigna of “widespread and systematic failures impacting Cigna enrollees’ ability to access medical services and prescription medications.” The failures included the denial of health care coverage and prescription drugs to patients who needed them, maintaining inadequate documentation, and failing to implement a risk assessment program. Cigna acquired HealthSpring in 2012, which brought the company over a million Medicare beneficiaries, and created a poorly functioning organizational structure that CMS called “decentralized and fragmented.”

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

Cigna offers a privately run alternative plan to traditional Medicare, which includes insurance coverage for hospital and doctor care, known as Medicare Advantage, as well as prescription drug coverage, or Part D. According to the Kaiser Foundation, in 2015, Cigna had a market share of 3% in Medicare Advantage plans. The sanctions do not impact people who are all enrolled, and will mainly affect Cigna’s marketing to people who age into Medicare. Medicare beneficiaries are allowed to shop for new plans every year during a period known as open enrollment that runs from October 15th to December 7th.

Medicare Advantage is a relatively small part of Cigna’s portfolio, but these are quite serious problems. It is unclear to what extent these problems affect Cigna’s other market segments, including commercial insurance and its administrative services only business for large employers. If Cigna cannot manage their members now or be trusted to behave ethically, it raises the question of how trustworthy their positive evaluations of the proposed merger with Anthem really are.