Cigna barred from enrolling new Medicare Advantage, prescription drug plans

Deficiencies found in an audit of Cigna-HealthSpring operations has prompted the Centers for Medicare and Medicaid Services to temporarily bar Cigna from enrolling new customers to its Medicare Advantage and stand-alone prescription drug plans, and from marketing efforts, according to CMS.

The sanctions went into effect at 11:59 p.m., January 21.

Cigna-HealthSpring offers Medicare Advantage and Medicare Part D plans. The sanctions do not affect the benefits of Cigna Medicare Advantage and Medicare Part D's current enrollees, according to the report filed with the Securities and Exchange Commission.

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CMS imposed the sanctions after finding deficiencies in the operation of Cigna's Part C and D appeals and grievances. It also found issues with the Part D formulary and benefit administration and compliance program, according to Cigna and the Securities and Exchange Commission.

"Until those items can be resolved, CMS has imposed a suspension of all enrollment and marketing activities to sign Medicare customers," according to a statement from Cigna.

"Violations resulted in enrollees experiencing delays or denials in receiving medical services and prescription drugs, and increased out-of-pocket costs for medical services and prescription drugs," Gerard Mulcahy, director of CMS Medicare Parts C and D Oversight and Enforcement Group, told HealthSpring President Herb Fritch in a January 21 letter. "Cigna has had a longstanding history of non-compliance with CMS requirements. Cigna has received numerous notices of non-compliance, warning letters, and corrective action plans from CMS over the past several years. A number of these notices were for the same violations discovered during the audit, demonstrating that Cigna has not corrected issues of noncompliance."

Mulcahy said, "The lack of a compliance infrastructure, coupled with serious deficiencies of Cigna's administration of the Medicare Parts C and D requirements, resulted in enrollees being denied access to the medical services and drugs that they are entitled to receive."

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The insurer is working to resolve these matters as quickly as possible and is cooperating fully with CMS on its review, the Securities and Exchange Commission said.

CMS instructed Cigna to complete a corrective action plan by January 29.

Cigna said it is working to come into compliance with the audit deficiencies found in Cigna-HealthSpring operations between May and August 2015.

"We have internal quality review processes in place that identified some of the areas in advance of the audit findings and we have already started working to remedy them," Fritch said. "In other instances, we will implement the changes as quickly as possible to emerge a stronger organization further dedicated to those we serve."

Cigna acquired HealthSpring, Inc. in 2012, expanding its presence in the Medicare market and adding more than 1 million beneficiaries.

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The acquisition contributed to creating an organizational structure that was decentralized and fragmented, according to CMS. In December 2015, CMS told members of Cigna's senior leadership that an integration of operations among its various legal entities was necessary to run an effective organization.

"This breakdown in its operations has made it difficult for Cigna to adequately monitor and oversee whether it is in compliance with the Medicare Parts C and D requirements and has resulted in substantial failures that require considerable correction in order for Cigna to return to a state of compliance with CMS," Mulcahy said.

"... The nature of Cigna's noncompliance provides sufficient basis for CMS to find the presence of a serious threat to enrollees' health and safety, supporting the immediate suspension of Cigna's enrollment and marketing activities."

Federal regulators are currently scrutinizing Anthem's proposed $54 billion takeover of Cigna.

Twitter: @SusanJMorse