Cigna 2014 Annual Report Download - page 35

PART I
ITEM 1. Business
Our Commercial operating segment encompasses both our U.S. Organization (‘‘HMO’’) and indemnity managed care benefit plans
commercial and certain international health care businesses serving that use meaningful cost-sharing incentives to encourage the use of
employers and their employees, including globally mobile individuals, ‘‘in-network’’ versus ‘‘out-of-network’’ health care providers and
and other groups (e.g., governmental and non-governmental provide the option to select a primary care physician. The national
organizations, unions and associations). In addition, our U.S. provider network for Managed Care Plans is somewhat smaller than
commercial health care business also serves individuals through our the national network used with the preferred provider (‘‘PPO’’) plan
product offerings both on and off the public health insurance product line. Generally, customers may use non-participating health
exchanges. Through this segment, we offer our insured and care professionals, but the customers’ cost-sharing obligation is
self-insured customers medical, dental, behavioral health, vision, and usually greater for out-of-network care.
prescription drug benefit plans, health advocacy programs and other •PPO Plans. Our PPO product line features a network with broader
products and services that may be integrated as part of a provider access than the Managed Care Plans. The preferred
comprehensive global health care benefit program. Our Government provider product line may be at a higher medical cost than our
operating segment offers Medicare Advantage, Medicare Part D and Managed Care Plans.
Medicaid plans.
•Choice Fund Suite of Consumer-Driven Products. Our medical
plans are often integrated with the Cigna Choice Fund suite of
Principal Products and Services
products, including Health Reimbursement Accounts (‘‘HRA’’),
Health Savings Accounts (‘‘HSA’’) and Flexible Spending Accounts
Commercial Medical Health Plans – U.S. and
(‘‘FSA’’) that are designed to encourage customers to play an active
International
role in understanding and managing their health and associated
The Commercial operating segment, either directly or through its expenses. Customers can use these accounts to finance eligible
partners, offers some or all of its products in all 50 states, the District health care expenses and other approved services. In most cases,
of Columbia, the U.S. Virgin Islands, Canada, Europe, the Middle these products are combined with a high deductible medical plan.
East, and Asia. We offer a variety of medical plans including: We continue to experience strong growth in these products and they
represent a rapidly growing percentage of our overall medical
•Managed Care Plans including Network, Network Open Access and customer base.
Open Access Plus. We offer a product line of Health Maintenance
Approximately 90% of our commercial medical customers are in funding arrangements where lower medical costs directly benefit our corporate
clients and employees who share in the cost of their coverage. The funding arrangements available for our commercial medical and dental health
plans are as follows:
% of Commercial
Funding Arrangement Medical Customers Description
Administrative Services 82% ASO plan sponsors are responsible for self-funding all claims, but may purchase stop loss
Only (‘‘ASO’’ or insurance to limit exposure for claims in excess of a predetermined amount.
‘‘self-insured’’) We collect fees from plan sponsors for providing access to our participating provider network
and for other services and programs including: claims administration; behavioral health; disease
management; utilization management; cost containment; dental; and pharmacy benefit
management.
In some cases, we provide performance guarantees associated with meeting certain service
standards, clinical outcomes or financial metrics.
Insured – Experience 6% Premium charged during the policy period (‘‘initial premium’’) may be adjusted following the
Rated policy period for actual claim, and in some cases, administrative cost experience of the
policyholder.
When claims and expenses are less than the initial premium charged (an ‘‘experience surplus’’),
the policyholder may be retrospectively credited for a portion of this premium.
However, if claims and expenses exceed the initial premium (an ‘‘experience deficit’’), we
generally bear the risk. In certain cases, experience deficits may be recovered through future year
experience surpluses if the policyholder renews.
Insured – Guaranteed 12% We establish the cost to the policyholder at the beginning of a policy period and generally
Cost cannot subsequently adjust premiums to reflect actual claim experience until the next annual
renewal.
Employers and other groups with guaranteed cost policies are generally smaller than those with
experience-rated group policies; accordingly, our claim and expense assumptions may be based
in whole or in part on prior experience of the policyholder or on a pool of policyholders,
depending on the policyholder’s size and the statistical credibility of their experience.
HMO and individual plans (medical and dental) are offered on a guaranteed cost basis only.
CIGNA CORPORATION - 2014 Form 10-K 3
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