Cigna 2012 Annual Report Download - page 39

PART I
ITEM 1 Business
employment, consumer protection and anti-corruption. The
Medicare Regulations
operations in countries outside the United States: Several Cigna subsidiaries, including those acquired in the
are subject to local regulations in the locations in which Cigna HealthSpring transaction, engage in businesses that are subject to
subsidiaries conduct business, federal Medicare regulations such as:
in some cases, are subject to regulations in the locations of those offering individual and group Medicare Advantage (HMO)
customers, and coverage;
in all cases are subject to FCPA. contractual arrangements with the federal government for the
processing of certain Medicare claims and other administrative
FCPA prohibits offering, promising, providing or authorizing others
services; and
to give anything of value to a foreign government official to obtain or
retain business or otherwise secure a business advantage. Cigna is also those offering Medicare Pharmacy (Part D) products that are subject
subject to applicable anti-corruption laws in the jurisdictions in which to federal Medicare regulations.
it operates. Additionally, in many countries outside of the U.S., health In Cigna’s Medicare Advantage business, the Company contracts with
care professionals are employed by the government. Therefore, Cigna’s the Centers for Medicare and Medicaid Services (‘‘CMS’’) to provide
dealings with them are subject to regulation under the FCPA. services to Medicare beneficiaries pursuant to their Medicare
Violations of the FCPA and other anti-corruption laws may result in program. As a result, the Company’s right to obtain payment from
severe criminal and civil sanctions as well as other penalties and the CMS is subject to compliance with numerous and complex
SEC and Department of Justice have increased their enforcement regulations and requirements that are frequently modified and subject
activities with respect to FCPA. The UK Bribery Act of 2010, which to administrative discretion. The marketing and sales activities
went into effect in 2011, is an anti-corruption law that applies to all (including those of third-party brokers and agents) are also heavily
companies with a nexus to the United Kingdom and whose scope is regulated by CMS and other governmental agencies.
even broader than the FCPA. It is yet to be seen how the UK Bribery Several Cigna subsidiaries are also subject to reporting requirements
Act will be enforced, but any voluntary disclosures of FCPA violations pursuant to Section 111 of the Medicare, Medicaid and SCHIP
may be shared with the UK authorities, thus potentially exposing Extension Act of 2007.
companies to liability and potential penalties in multiple jurisdictions.
Cigna has internal control policies and procedures and has
implemented training and compliance programs for its employees to
Federal Audits of Government Sponsored Health Care
deter prohibited practices. However, if Cigna’s employees or agents fail
Programs
to comply with applicable laws governing its international operations, Participation in government sponsored health care programs subjects
the Company may face investigations, prosecutions and other legal Cigna to a variety of federal laws and regulations and risks associated
proceedings and actions that could result in civil penalties, with audits conducted under these programs. These audits may occur
administrative remedies and criminal sanctions. See the Risk Factors in years subsequent to Cigna providing the relevant services under
section beginning on page 19 for a discussion of the risks related to audit. These risks may include reimbursement claims as well as
operating globally. potential fines and penalties. For example, with respect to Cigna’s
Medicare Advantage business, CMS and the Office of the Inspector
Federal Regulations
General perform audits to determine a health plan’s compliance with
federal regulations and contractual obligations, including compliance
Employee Retirement Income Security Act and the
with proper coding practices (sometimes referred to as Risk
Public Health Service Act
Adjustment Data Validation Audits or RADV audits) and compliance
Cigna subsidiaries sell most of their products and services to sponsors with fraud and abuse enforcement practices through Recovery Audit
of employee benefit plans that are governed by ERISA. Many of the Contractor (RAC) audits in which third-party contractors conduct
health insurance reform provisions of the Patient Protection and post-payment reviews on a contingency fee basis to detect and correct
Affordable Care Act were incorporated in ERISA, Cigna subsidiaries improper payments. See ‘‘Global Health Care’’ in Section B beginning
are subject to requirements imposed by ERISA affecting claim and on page 2 of this Form 10-K for additional information about Cigna’s
appeals procedures for individual insurance and insured and participation in government health-related programs.
self-insured group health plans and are expected to comply with these The Federal government has made investigating and prosecuting
requirements on behalf of the dental, disability, life and accident plans health care fraud and abuse a priority. Fraud and abuse prohibitions
they administer. These health insurance reform provisions made encompass a wide range of activities, including kickbacks for referral
applicable to group health plans under ERISA were also incorporated of customers, billing for unnecessary medical services, improper
into the Public Health Service Act and are directly applicable to health marketing, and violation of patient privacy rights. The regulations
insurance issuers (i.e., health insurers and HMOs). and contractual requirements in this area are complex and subject to
change and compliance will continue to require significant resources.
CIGNA CORPORATION - 2012 Form 10-K 17
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