Cigna 2009 Annual Report Download - page 50

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Licensing Requirements
Pharmacy Licensure Laws
Certain CIGNA subsidiaries are pharmacies, which dispense prescription drugs to participants of benefit plans administered or
insured by CIGNA subsidiary HMOs and insurance companies. These pharmacy-subsidiaries are subject to state licensing
requirements and regulation.
International Licensure Laws
CIGNA International subsidiaries are often required to be licensed when entering new markets or starting new operations in
certain jurisdictions. The licensure requirements for these CIGNA subsidiaries vary by country and are subject to change.
Claim Administration, Utilization Review and Related Services
Certain CIGNA subsidiaries contract for the provision of claim administration, utilization management and other related services
with respect to the administration of self-insured benefit plans. These CIGNA subsidiaries may be subject to state third-party
administration and other licensing requirements and regulation.
Federal Regulations
Employee Retirement Income Security Act
CIGNA subsidiaries sell most of their products and services to sponsors of employee benefit plans that are governed by ERISA.
CIGNA subsidiaries may be subject to requirements imposed by ERISA on plan fiduciaries and parties in interest, including
regulations affecting claim and appeals procedures for health, dental, disability, life and accident plans.
Medicare Regulations
Several CIGNA subsidiaries engage in businesses that are subject to federal Medicare regulations such as:
x those offering individual and group Medicare Advantage (HMO) coverage in Arizona;
x contractual arrangements with the federal government for the processing of certain Medicare claims and other administrative
services; and
x those offering Medicare Pharmacy (Part D) and Medicare Advantage Private Fee For Service products that are subject to federal
Medicare regulations.
Several CIGNA subsidiaries are also subject to reporting requirements pursuant to Section 111 of the Medicare, Medicaid and
SCHIP Extension Act of 2007.
Federal Audits of Government Sponsored Health Care Programs
Participation in government sponsored health care programs subjects CIGNA to a variety of federal laws and regulations and risks
associated with audits conducted under these programs. These audits may occur in years subsequent to CIGNA providing the relevant
services under audit. These risks may include reimbursement claims as well as potential fines and penalties. For example, the federal
government requires Medicare and Medicaid providers to file detailed cost reports for health care services provided. These reports
may be audited in subsequent years. CIGNA HMOs that contract to provide community-rated coverage to participants in the Federal
Employees Health Benefit Plan may be required to reimburse the federal government if, following an audit, it is determined that a
federal employee group did not receive the benefit of a discount offered by a CIGNA HMO to one of the two groups closest in size to
the federal employee group. See “Health Care” in Section D beginning on page 3 of this Form 10-K for additional information about
CIGNA’s participation in government health-related programs.