Cigna 2008 Annual Report Download - page 46

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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 the
Federal Employee Retirement Income Security Act (“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:
• those offering individual and group Medicare Advantage (HMO) coverage in Arizona;
• contractual arrangements with the federal government for the processing of certain Medicare claims and other administrative
services; and
• those offering Medicare Pharmacy (Part D) and Medicare Advantage Private Fee-for-Service products that are subject to federal
Medicare regulations.
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 the programs (which may occur in years subsequent to provision by CIGNA of 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 C beginning on page 1 for additional information about CIGNA’s
participation in government health-related programs.
Privacy and Information Disclosure and Portability Regulations
The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) imposes requirements for guaranteed issuance (for
groups with 50 or fewer lives), electronic data security standards, and renewal and portability, on health care insurers and HMOs. In
addition, HIPAA regulations required the assignment of a unique national identifier for providers by May 2007. The federal
government, states and territories (as well as most non-U.S. jurisdictions) impose requirements regarding the use and disclosure of
identifiable information about individuals and, in an effort to deal with the growing threat of identity theft, the handling of privacy and
security breaches.
Antitrust Regulations
CIGNA subsidiaries are also engaged in activities that may be scrutinized under federal and state antitrust laws and regulations.
These activities include the administration of strategic alliances with competitors, information sharing with competitors and provider
contracting.