Cigna 2015 Annual Report Download - page 38

PART I
ITEM 1. Business
Markets and Distribution
We offer health care and related products and services in the following customer segments or markets:
% of Medical
Customers
National Multi-state employers with 5,000 or more U.S.-based, full-time employees. We offer primarily ASO funding 25%
solutions in this market segment.
Middle Market Employers generally with 250 to 4,999 U.S.-based, full-time employees. This segment also includes single-site 53%
employers with more than 5,000 employees and Taft-Hartley plans and other groups. We offer ASO, experience-
rated and guaranteed cost insured funding solutions in this market segment.
Select Employers generally with 51-249 eligible employees. We offer ASO (often with stop-loss insurance coverage) and 8%
guaranteed cost insured funding solutions in this market segment.
Individual Individuals in twelve states: Arizona, California, Colorado, Connecticut, Florida, Georgia, North Carolina, 1%
Maryland, Missouri, South Carolina, Tennessee and Texas. In 2015, we offered coverage on eight public health
insurance exchanges (Arizona, Colorado, Florida, Georgia, Maryland, Missouri, Tennessee and Texas). In 2016, we
will not be on the public exchange in Florida. Consistent with the regulations for Individual PPACA compliant
plans, we offer plans only on a guaranteed cost basis in this market segment.
Government Individuals who are post-65 retirees, as well as employer group sponsored pre- and post-65 retirees. We offer 4%
Medicare Advantage, Prescription Drug programs, and Medicaid products in this market segment including
dual-eligible members who receive both Medicare and Medicaid benefits.
International Local and multinational companies and organizations and their local and globally-mobile employees and 9%
dependents. We offer guaranteed cost, experience-rated insured and ASO funding solutions in this market segment.
Cigna Guided Solutions
SM
is Cigna’s benefit administration and business environment. In certain geographic locations, some health
private exchange solution that targets clients who value fully care companies may have significant market share positions, but no
integrated solutions and focus on engaging employees in their benefit one competitor dominates the health care market nationally. In 2015,
offering. It leverages Cigna’s ability to provide a fully integrated industry consolidation was significant with the announcement of our
solution with our broad spectrum of products, benefit plans, services, proposed merger with Anthem as well as Aetna Inc.’s proposed merger
and full suite of funding options focused on improving total cost, with Humana Inc. We expect a continuing trend of consolidation in
health, and productivity. Through Cigna Guided Solutions, the overall health care industry (including hospitals, pharmaceutical
employers enjoy simplified administration and the convenience of companies, and providers of medical technology and devices) given
single source purchasing while employees receive more choice via an the current economic and political environment. We also expect
easy-to-use shopping experience and year round engagement. continued vertical integration with the lines blurring between
Together with integrated robust decision-support tools, employees are clinicians, hospitals and traditional insurers.
able to make personalized decisions to select the right benefit offering Competition in the health care market exists both for employers and
and get the most value from their plans. other groups sponsoring plans and for employees in those instances
In addition, Cigna participates on many third party private exchanges. where the employer offers a choice of products from more than one
We actively evaluate private exchange participation opportunities as health care company. Most group policies are subject to annual review
they emerge in the market, and target our participation to those by the plan sponsor, who may seek competitive quotations prior to
models that best align with our mission and value proposition. To renewal. We expect competition to increase in the individual market
date, we remain committed to participate with numerous private as a result of the growth in public health insurance exchanges under
exchanges for both active employees and retirees. Health Care Reform. Given the relatively immature individual market
and limited data around claim experience, we expect some uncertainty
We employ sales representatives to distribute our products and
and competitive volatility to continue through these initial years of the
services through insurance brokers and insurance consultants or
exchange roll out. Some of these risks are mitigated by the government
directly to employers, unions and other groups or individuals. We also
risk mitigation programs.
employ representatives to sell access to our national participating
provider network, utilization review services, behavioral health care The primary competitive factors affecting our business are quality and
and pharmacy management services, and employee assistance services cost-effectiveness of service and provider networks; effectiveness of
directly to insurance companies, HMOs and third party medical care management; products that meet the needs of employers
administrators. As of December 31, 2015, our field sales force and their employees; total cost management; technology; and
consisted of over 1,400 sales representatives in approximately 130 effectiveness of marketing and sales. Financial strength of the insurer,
field locations. In our Government business, Medicare Advantage as indicated by ratings issued by nationally recognized rating agencies,
enrollment is generally a decision made individually by the customer, is also a competitive factor. We believe that our health advocacy
and accordingly, sales agents and representatives focus their efforts on capabilities, holistic approach to consumer engagement, breadth of
in-person contacts with potential enrollees, as well as telephonic and product offerings, clinical care and medical management capabilities
group selling venues. and array of product funding options are competitive advantages in
meeting the diverse needs of our customer base. We also believe that
Competition and Industry Developments
our focus on helping to improve the health, well-being and sense of
security of the customers we serve will allow us to differentiate
Our business is subject to intense competition and continuing
industry consolidation that has created an even more competitive ourselves from our competitors.
8 CIGNA CORPORATION - 2015 Form 10-K