Back to Resources

Cigna – HealthSpring Sanctioned by CMS

January 29, 2016

Latest Medicare sanction news, Cigna – HealthSpring Sanctioned by CMS.  On January 21, 2016 President of Cigna-HealthSpring, Mr. Herb Fritch, received a Notice of Imposition of Immediate Intermediate Sanctions from CMS Medicare Parts C and D Oversight and Enforcement Group suspending Cigna’s Enrollment* and Marketing** for some of its Medicare plans***. Marketing and enrollment sanctions will remain in effect until CMS is satisfied that the deficiencies upon which the determination was based have been corrected and are unlikely to recur. CMS says that it will also closely monitor Cigna organization and that Cigna may also be subject to additional sanctions, penalties, or other enforcement actions. CMS also stated that it will consider acting to immediately terminate Cigna’s contract “if issues that pose a serious threat to the health and safety of Medicare beneficiaries are identified or left uncorrected”.

CMS charged, among other things, that:

  • Cigna failed to comply with the CMS requirements related to 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
  • Cigna’s violations were “widespread and systemic,” and
  • Cigna has a “longstanding history of non-compliance.****

CMS concluded that these violations resulted in enrollees experiencing delays or denials in receiving medical services and prescription drugs, and increased out of pocket costs for medical services and prescription drugs. Historically CMS takes “access to care” issues very seriously and usually will require immediate corrective action to rectify issues that create a “serious threat to enrollee health and safety.”

Given that CMS classified Cigna’s violations as threats to the health and safety of Medicare beneficiaries it required swift action on the part of Cigna. CMS mandated that Cigna first step was to instantly stop all enrollment and marketing activities. Next, Cigna must provide CMS a corrective action plan (CAP) within seven days of the letter. Then, once Cigna has fully implemented its CAP, Cigna must submit to CMS an attestation from Cigna’s Chief Executive Officer, or most senior official, stating that Cigna has corrected the deficiencies that are the basis for the sanction and those deficiencies are unlikely to recur. Plus, CMS is requiring Cigna to hire an independent auditor to conduct a validation audit of all operational areas cited in the Notice of Imposition of Immediate Intermediate Sanctions and to provide a written report to CMS.

Many CEOs and Chief Financial Officers ask the question  – “what is the cost of a compliance program?”. Maybe the better question is “what is the cost of non-compliance?”. Aside from potential fines and monetary penalties, the cost of non-compliance may  include for Cigna – (1) interruption in business including the actual dates of suspension of marketing and enrollment activities and the time it takes to effectively re-enter the market; (2) the cost of consultants, if engaged, to come in help you fix the problems (typically companies need more hands on deck when problems have to be addressed quickly, completely, and adequately); (3) disruptions to normal operations as key resources get re-directed to problem solving; (4) the cost of independent auditors; (5) damage to reputation; (6) potential lost of contract; and (7) CEO potential personal liability related to his or her attestation that everything is now in order. How does a CEO get a comfort level that a CAP is complete before signing an attestation of this type? Review Creating an Effective Corrective Action Plan and Tracking Compliance Activities With Compliance Software for ways that compliance software can be used to provide adequate assurances that your CAP is complete.

HEALTHSPRING ACQUISITION PARTIALLY BLAMED FOR DECENTRALIZED COMPLIANCE PROGRAM AND OPERATIONAL ISSUES

CMS concluded that Cigna’s acquisition of HealthSpring, Inc. in 2012 contributed to its compliance issues. Cigna, with the acquisition substantially increased its Medicare business and added over a million beneficiaries to Cigna’s lines of business. CMS states that this “contributed to creating an organizational structure that is decentralized and fragmented,” and that made it difficult for Cigna to monitor and oversee whether it is in compliance CMS requirements. Review Creating an Effective Corrective Action Plan and Tracking Compliance Activities With Compliance Software for some best practices.

CIGNA ALLEGEDLY VIOLATED MEDICARE PART C AND PART D ORGANIZATION/COVERAGE DETERMINATION, APPEAL, AND GRIEVANCE REQUIREMENTS

Plans are required to classify general complaints about services, benefits, or the sponsor’s operations or activities as grievances and to classify complaints about coverage for drugs or services as organization determinations (Part C – medical services) or coverage determinations (Part D – drug benefits). Improper classification of an organization determination or coverage determination denies an enrollee the applicable due process and appeal rights and may delay an enrollee’s access to medically necessary or life-sustaining services or drugs. CMS identified serious violations of Part C and Part D organization/coverage determination, appeal, and grievance requirements that resulted in Cigna’s enrollees experiencing inappropriate delays and denials of medical services and medications. In addition, enrollees received inaccurate and/or incomplete information from Cigna, and experienced inappropriate and untimely resolution of their coverage requests and grievances. According to CMS violations included:

  1. Failure to conduct required outreach to providers or to beneficiaries to obtain information necessary to make appropriate clinical decisions.
  2. Misclassifying Part C reconsiderations as organization determinations.
  3. Denial letters for Part C organization determinations, Part D coverage. determinations and appeals did not include adequate rationales, contained incorrect/incomplete information specific to denials, or were written in a manner not easily understandable by beneficiaries.
  4. Failure to pay provider claims within 60 days after receipt of the organization determination request.
  5. Failure to notify beneficiaries and providers (if the providers requested the services) of its determinations within 72 hours of receipt of Part C expedited organization determination and reconsideration requests.
  6. Failure to auto-forward or timely auto-forward Part D coverage determinations and/or redeterminations to the Independent Review Entity (IRE) for review and disposition.
  7. Failure to provide accurate or complete information in Part C grievance resolution letters.
  8. Failure to have procedures for tracking and maintaining records about the receipt and disposition of Part C grievances.
  9. Dismissed Part C cases prior to the conclusion of the appeal timeframe.
  10. Failure to issue Part C Explanation of Benefits (EOB) notices to enrollees, as required.
  11. Failure to properly oversee its delegated entities responsible for processing Part C organization determinations, appeals and grievances.

CMS SAYS THAT LACK OF DELEGATED OVERSIGHT MIGHT HAVE ADDED TO THE PROBLEM

CMS stated that when a provider called Cigna to challenge a denial for medical services, Cigna’s delegated entity re-opened the pre-service organization determination when it was oppose to follow the reconsideration (i.e. appeals) process. Hence, enrollees’ requests for medical services were not processed at the appropriate level of appeal and, therefore, enrollees were denied a second-level review and the right to an independent review related to denied services. As a result, enrollees and/or providers received incorrect denial letters. Cigna was cited specifically for its failure to develop and implement an effective system for corrective actions required of its delegated entities. Plans should consider establishing, if they have not done so, a Delegated Oversight Committee to monitor the activities of core delegated administrative and management functions. For more information about delegated oversight requirements read Building An Effective Delegate Oversight Program post.  Read our Sample Delegated Oversight Committee Charter post for help with drafting a charter or contact Alturnative for consulting services.

FORMULARY & BENEFIT ADMINISTRATION VIOLATIONS CITED IN CMS SANCTION LETTER

CMS identified violations of Part D formulary and benefit administration requirements that resulted in Cigna’s enrollees experiencing inappropriate denials of coverage at the point of sale. Cigna’s violations include:

  1. Failure to properly effectuate prior authorization or exception requests.
  2. Failure to properly administer its CMS-approved formulary by applying unapproved quantity limits.
  3. Failure to provide enrollees transition supplies of medications.

INADEQUATE COMPLIANCE PROGRAM CITED IN CMS SANCTION LETTER

CMS’ audit also determined that Cigna is in substantial violation of compliance program requirements. Cigna’s violations include:

  1. Failure of the compliance officer or his/her designee to provide updates on results of monitoring, auditing, and compliance failures to Cigna’s senior leadership.
  2. Failure to establish and implement a formal risk assessment program and an effective system for routine monitoring and auditing of identified compliance risks.
  3. Failure to have an effective monitoring and auditing work plan that addresses risk associated with Medicare Parts C and D benefits.
  4. Failure to maintain thorough documentation of all deficiencies identified and corrective actions taken.
  5. Failure to develop and implement an effective system for corrective actions required of first tier entities.

Review Creating an Effective Corrective Action Plan and Tracking Compliance Activities With Compliance Software for some best practices.

Footnotes

* 42 C.F.R. §§ 422.750(a)(1) and 423.750(a)(1)

** 42 C.F.R. §§ 422.750(a)(3) and 423.750(a)(3)

*** (1) HealthSpring of Alabama, Inc., (2) Cigna Healthcare of Arizona, Inc., HealthSpring of Tennessee, Inc., (3) HealthSpring Life & Health Insurance Company, Inc., (4) Cigna Health and Life Insurance Company, (5) Cigna Healthcare of Georgia, Inc., (6) Bravo Health Mid- Atlantic, Inc., (7) Bravo Health Pennsylvania, Inc., (8) Cigna Healthcare of South Carolina, Inc., (9) Cigna Healthcare of North Carolina, Inc., and (10) HealthSpring of Florida.

**** Cigna has had a history of non-compliance with processing these requests timely. In 2013, Cigna received a notice of non-compliance for failing to process Part D coverage determinations and redeterminations within the required timeframes and failing to auto-forward those untimely decisions to the independent review entity (IRE). Cigna again received a warning letter in 2015 for these same violations.