Cigna 2011 Annual Report Download - page 43

21CIGNA CORPORATION2011 Form10K
PARTI
ITEM 1 Business
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. ese audits may occur in
years subsequent to Cigna providing the relevant services under audit.
ese risks may include reimbursement claims as well as potential nes
and penalties. For example, the federal government requires Medicare
and Medicaid providers to le detailed cost reports for health care
services provided. ese reports may be audited in subsequent years.
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.
e Federal government has made investigating and prosecuting health
care fraud and abuse a priority. Fraud and abuse prohibitions encompass
a wide range of activities, including kickbacks for referral of members,
billing for unnecessary medical services, improper marketing, and
violation of patient privacy rights. e regulations and contractual
requirements in this area are complex and subject to change and
compliance will continue to require signicant resources.
Health Insurance Portability and Accountability Act
Regulations
e federal Health Insurance Portability and Accountability Act of
1996 and its implementing regulations (“HIPAA”) impose requirements
on health insurers, HMOs, health plans, health care providers and
clearinghouses. Health insurers and HMOs are further subject to
regulations related to guaranteed issuance (for groups with 50 or fewer
lives), guaranteed renewal, and portability of health insurance.
HIPAA also imposes minimum standards for the privacy and security
of protected health information (“PHI”). HIPAA’s privacy and security
requirements were expanded by the Health Information Technology
for Economic and Clinical Health Act (“HITECH”) which enhanced
penalties for HIPAA violations and requires regulated entities to provide
notication to various parties in the event of a breach of unsecured
PHI. Regulations pursuant to HITECH continue to be promulgated
and are monitored and implemented as they are nalized.
HIPAA also established rulesthat standardize the format and content of
certain electronic transactions, including, but not limited to, eligibility
and claims. Federal regulations were issued requiring entities subject to
HIPAA to update their transaction formats for electronic data interchange
from HIPAA 4010 to version 5010 standards and convert from the
ICD-9 diagnosis and procedure codesto the ICD-10 diagnosis and
procedure codes. e IDC-10conversion is required by October1,2013.
Other Confidentiality Requirements
e federal Gramm-Leach-Bliley Act generally places restrictions on the
disclosure of non-public information to non-aliated third parties, and
requires nancial institutions, including insurers, to provide customers
with notice regarding how their non-public personal information is
used, including an opportunity to “opt out” of certain disclosures.
State departments of insurance and certain federal agencies adopted
implementing regulations as required by federal law. A number of states
have also adopted data security laws and/or regulations, regulating data
security and/or requiring security breach notication, which may apply
to Cigna in certain circumstances.
Antitrust Regulations
Cigna subsidiaries are also engaged in activities that may be scrutinized
under federal and state antitrust laws and regulations. ese activities
include the administration of strategic alliances with competitors,
information sharing with competitors and provider contracting.
Anti-Money Laundering Regulations
Certain Cigna products (“Covered Products” as dened in the Bank
Secrecy Act) are subject to U.S. Department of the Treasury anti-
money laundering regulations. Cigna has implemented anti-money
laundering policies designed to ensure that its Covered Products are
underwritten and sold in compliance with these regulations. Cigna may
also be subject to anti-money laundering laws in non-U.S. jurisdictions
where it operates.
Office of Foreign Assets Control
e Company is also subject to regulation put forth by the Oce of
Foreign Assets Control (OFAC) of the U.S. Department of the Treasury
which administers and enforces economic and trade sanctions based on
U.S. foreign policy and national security goals against targeted foreign
countries and regimes, terrorists, international narcotics trackers, those
engaged in activities related to the proliferation of weapons of mass
destruction, and other threats to the national security, foreign policy
or economy of the UnitedStates. In addition, Cigna may be subject
to similar regulations in non-U.S. jurisdictions in which it operates.
Investment-Related Regulations
Depending upon their nature, Cigna’s investment management activities
are subject to U.S. federal securities laws, ERISA, and other federal
and state laws governing investment related activities. In many cases,
the investment management activities and investments of individual
insurance companies are subject to regulation by multiple jurisdictions.
K. Miscellaneous
Cigna and its principal subsidiaries are not dependent on business
from one or a few customers. No one customer accounted for 10% or
more of Cigna’s consolidated revenues in 2011. Cigna and its principal
subsidiaries are not dependent on business from one or a few brokers
or agents. In addition, Cigna’s insurance businesses are generally not
committed to accept a xed portion of the business submitted by
independent brokers and agents, and generally all such business is
subject to its approval and acceptance.
Cigna had approximately 31,400employees as of December31,2011;
30,600employees as of December31,2010; and 29,300employees
as of December31,2009.
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