Cigna 2010 Annual Report Download - page 27

CIGNA CORPORATION  2010 Form 10K 7
PARTI
ITEM 1 Business
administration; quality management; utilization management;
cost containment; health advocacy; 24-hour help line; 24/7 call
center; case management; disease management; pharmacy benefi t
management; behavioral health care management services (through
its provider networks); or any combination of these services.
• e self-insured plan sponsor is responsible for self-funding all claims,
but may purchase stop loss insurance from CIGNA HealthCare or
other insurers for claims in excess of a predetermined amount, for
either individuals (“specifi c”), the entire group (“aggregate”), or both.
•In some cases, CIGNA HealthCare provides performance guarantees
associated with meeting certain service related and other performance
standards. If these standards are not met, CIGNA HealthCare may
be fi nancially at risk up to a stated percentage of the contracted fee or
a stated dollar amount. CIGNA HealthCare establishes liabilities for
estimated payouts associated with these guarantees. See Note 24 to
the Consolidated Financial Statements beginning on page 121 of this
Form 10-K for details about these guarantees.
Pricing
Premium rates for insured funding arrangements are based on
assumptions about the expected utilization levels of medical services,
costs of medical services and the Company’s administrative costs.  e
profi tability of these arrangements will vary by the actual utilization
level of medical services, the cost of the services provided and the costs to
administer the benefi t programs. Additionally, overall profi tability may
be impacted by the implementation of the minimum loss ratio rebates
required by Health Care Reform, as potentially favorable experience
in a market will generate premium rebates instead of off setting any
unfavorable experience in other markets.
Pricing for self-funded arrangements is generally based on the expected
cost to administer those arrangements and will vary by the services
provided and the size and complexity of the benefi t programs among
other factors.
Reserves
In addition to paying current benefi ts and expenses under HMO and
health insurance policies, CIGNA HealthCare establishes reserves
for amounts estimated to fund reported claims not yet paid, as well
as claims incurred, but not yet reported. As of December 31, 2010,
approximately $1.5 billion, or 62% of the reserves of CIGNA
HealthCare’s operations comprised liabilities that are likely to be
paid within one year, primarily for medical and dental claims, as
well as certain group disability and life insurance claims.  e reserve
amount expected to be paid within one year includes $236 million
that is recoverable from certain ASO customers and from minimum
premium policyholders.  e remaining reserves relate primarily to
contracts that are short term in nature, but have long term payouts
and include liabilities for group long-term disability insurance
benefi ts and group life insurance benefi ts for disabled and retired
individuals, benefi ts paid in the form of both life and non-life
contingent annuities to survivors and contractholder deposit funds.
Reinsurance
CIGNA HealthCare reduces its exposure to large catastrophic
losses under group life, disability and accidental death contracts by
purchasing reinsurance from unaffi liated reinsurers.
Financial information, including premiums and fees, is presented in
the Health Care section of the MD&A beginning on page 48 and in
Note 23 to CIGNA’s Consolidated Financial Statements beginning
on page 118 of this Form 10-K.
Service and Quality
Customer Service
CIGNA HealthCare operates 12 service centers that together
processed approximately 119 million medical claims in 2010.
Satisfying customers is a primary business objective and critical to the
Company’s success. To further this objective, in 2009, the Company
made its call centers available 24 hours a day, seven days a week.
As of December 31, 2010, CIGNA operates seven call centers that
customers can call toll-free about their health care benefi ts, wellness
programs and claims.
Technology
CIGNA HealthCare understands the critical importance of
information technology to the level of service the Company is able
to provide to its customers and to the continued growth of its health
care business.  e health care marketplace is evolving and the level of
service that is acceptable to consumers today may not be acceptable
tomorrow.  erefore, CIGNA HealthCare continues to strategically
invest in its information technology infrastructure and capabilities
including technology essential to fundamental claim administration
and customer service, as well as tools and Internet-enabled technology
that support CIGNA HealthCare’s focus on engaging customers in
health care decisions.
For example, CIGNA HealthCare has developed a range of member
decision support tools including:
•myCIGNA.com, CIGNA’s consumer Internet portal.  e portal
is personalized with each member’s CIGNA medical, dental and
pharmacy plan information;
•myCignaPlans.com, a website that allows prospective customers to
compare plan coverage and pricing options, before enrolling, based
on a variety of factors.  e application gives customers information
on the total health care cost to them and their employer;
•Health Risk Assessment, an online interactive tool through which
customers can identify potential health risks and monitor their
health status;
•a number of interactive online cost and quality information
tools that compare hospital quality and effi ciency information,
prescription drug choices and average price estimates and member-
specifi c average out-of-pocket cost estimates for certain medical
procedures; and
•a special website designed for seniors that off ers customized features
as well as access to both the myCIGNA.com and cigna.com
websites.
Benefi t/Claim Resolution
CIGNA HealthCare customer service representatives are empowered
to immediately resolve a wide range of issues to help customers
obtain the most from their benefi t plans. If an issue cannot be
resolved informally, CIGNA HealthCare has a formal appeals process