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CIGNA Corp. - Health Care Insurance -
Category Main Page
(215)
761-1000
One
Liberty Place
Philadelphia, PA 19192
www.cigna.com
Sales
$18.8
billion
Business Description
CIGNA Corporation and its subsidiaries constitute one of the largest
investor-owned employee benefits organizations in the United States. Its
subsidiaries are major providers of employee benefits offered through the
workplace, including health care products and services, group life, accident
and disability insurance, retirement products and services and investment
management.
Health Care
Principal Products and Markets
CIGNA’s Health Care operations offer a wide range of managed care and
indemnity products and services primarily to meet the needs of employers of
all sizes and their employees and dependents. These operations also provide
disability and life insurance products which were historically sold in
connection with certain experience-rated medical accounts and continue to be
managed by CIGNA’s health care business. These products and services are
provided by subsidiaries of CIGNA Corporation.
The customers of these operations range in size from some of the largest
United States corporations to small enterprises, and include employers,
multiple employer groups, unions, government-sponsored programs and other
groups. Products are marketed in all 50 states, the District of Columbia and
Puerto Rico.
Products and Services
CIGNA’s Health Care operations provide a wide array of products and services
to satisfy the benefit needs of employers and their employees and
dependents, as described below:
• managed care products and services, such as:
• medical health maintenance organizations (“HMOs”),
• point-of-service (“POS”) medical plans,
• managed dental programs,
• managed behavioral health care services and employee assistance programs,
• medical cost and utilization management, and
• managed pharmacy programs and pharmaceutical fulfillment services; and
• indemnity products and services, such as:
• medical and dental preferred provider organizations (“PPOs”),
• traditional medical and dental indemnity,
• indemnity pharmacy programs, and
• disability and life insurance products historically sold in connection
with certain experience-rated medical accounts.
Managed Care Products and Services
Managed care products provide for an effective, efficient use of health care
services by coordinating utilization of care and controlling unit costs
through provider contracts. Managed care products and services include those
described below.
Medical Health Maintenance Organizations. HMOs generally offer the most
cost-efficient form of health care coverage. Members typically choose a
primary care physician from CIGNA’s provider network. Primary care
physicians are responsible for the member’s primary medical and preventive
care. In some cases, a member must receive a referral from his or her
primary care physician to receive services from a participating specialist
or medical facility that are covered under the member’s plan.
CIGNA also provides an open access HMO product. This product offers the
member an HMO network of providers without the requirement of a referral
from the primary care physician in order to have services provided by a
participating specialist or medical facility covered under the member’s
plan.
CIGNA delivers its medical HMOs principally through individual practice
association (“IPA”) models.
Under an IPA model, the HMO contracts with independent physicians and
hospitals to provide services to members. IPA models typically cover wide
geographic areas and have low fixed costs. They rely on cost-effective
contracts with providers and appropriate medical cost and utilization
management to deliver quality medical care at an appropriate cost. CIGNA has
one medical HMO that offers the consumer both an IPA model and a staff
model. In a staff model, physicians and certain other providers are
employees of the medical HMO.
The IPA model typically offers broader provider choice to the consumer,
whereas the staff model generally offers more limited provider choice but
lower costs.
As of December 31, 2003, CIGNA’s HMO networks included approximately 275,000
physicians and 2,700 hospitals.
Currently, many contracted providers are compensated by CIGNA on a
discounted fee-for-service or other service-specific basis (such as hospital
per diems) for health care services provided to the member. Certain of
CIGNA’s HMO providers receive a monthly predetermined fee (capitation) from
CIGNA to cover the cost of certain services available to each HMO member,
regardless of the medical services actually provided to each member.
Capitation arrangements shift some of the financial risk from CIGNA to the
providers.
In some cases, capitated providers subcontract with other providers for
certain health care services. In the event that the capitated provider is
paid but fails to pay its subcontracted providers, the subcontracted
providers or regulators may attempt to look to the CIGNA HMO for payment.
The CIGNA HMO may, in some cases, voluntarily make additional payments
directly to the subcontracted providers to ensure continuity of care to its
members through the provider network. A few states have adopted laws or
regulations requiring that HMOs pay subcontracted providers in this
situation. CIGNA HMOs typically require a satisfactory letter of credit or
other financial guarantee from the capitated provider to protect CIGNA from
this possible exposure, although not all capitated arrangements have this
protection.
CIGNA contracts with the federal Centers for Medicare and Medicaid Services
(“CMS”) to provide Medicare HMO coverage for eligible individuals in
Arizona. The contract provides for a fixed per member per month premium from
CMS, based upon a formula that calculates the projected cost of providing
services for each Medicare member. Premium amounts are updated annually.
Members generally receive enhanced benefits over standard Medicare
fee-for-service coverage, including prescription drug and vision coverage,
and pay lower, fixed co-payments for services used. Depending on the plan
benefits selected, members may be required to pay an additional premium to
CIGNA for their HMO coverage.
CIGNA is also a participating provider in the fee-for-service Medicare
program, furnishing outpatient care to Medicare beneficiaries through CIGNA
subsidiaries.
Reimbursement for inpatient and outpatient services is made by CMS pursuant
to laws and regulations governing the Medicare program. Currently, CMS
reimburses outpatient services in accordance with payment classification
groups based on historical cost information filed by the participating CIGNA
subsidiary.
Until the fourth quarter of 2003, CIGNA also contracted with the Office of
Personnel Management for the federal employees program and with one state
agency to offer coverage for individuals eligible for Medicaid.
Point-of-Service Medical Plans. Under POS medical plans, participants
generally pay an HMO-type fixed co-payment or co-insurance amount to use
CIGNA’s managed care network providers. Alternatively, participants may
choose to go to non-network providers. Use of non-network providers is
subject to certain deductibles and cost sharing provisions, which result in
a higher cost to participants than if they used network providers.
Participants in point-of-service plans are considered managed care members
for purposes of the table on page 10.
CIGNA also provides an Open Access POS product. This product allows access
to specialist providers without the requirement of a referral from the
primary care physician.
Managed Dental Programs. CIGNA offers managed dental care products through a
network of independent providers in most states. CIGNA contracts with
dentists to provide services to members. Most network dentists receive a
monthly predetermined fee (capitation) for each covered member. Network
dentists may also receive additional fees for certain services. Generally,
members are responsible for a fixed co-payment for certain covered services
provided by a network dentist.
Managed Behavioral Health. CIGNA also provides managed behavioral health
care services and employee assistance programs. CIGNA provides its
behavioral health care coverage through a national network of independent
behavioral health providers and facilities that are paid on a contracted
fee-for-service basis. Members pay a fixed co-payment for most of these
services.
Medical Cost and Utilization Management. In addition, CIGNA provides medical
cost containment and disability management services to help insurers and
employers optimize the quality relative to the cost of certain of their
benefit programs.
Managed Pharmacy Programs. CIGNA also provides managed pharmacy benefit
programs to HMO and POS members through participating national and
independent pharmacies. Members typically pay a fixed co-payment for these
services.
CIGNA also offers mail order, telephone and on-line pharmaceutical
fulfillment services through its CIGNA Tel-Drug operation. Tel-Drug offers
to managed care and PPO participants a cost-effective alternative to other
participating pharmacies at the same benefit levels offered by the
consumer’s underlying medical benefits plan.
Credentialing and Quality Management
CIGNA promotes the delivery of quality care under its managed care products
in part through the credentialing of medical providers and facilities, using
quality criteria which meet or exceed external accreditation or state
regulatory agency standards, or both.
CIGNA’s practitioner credentialing criteria include verification of a
current unrestricted professional license, a valid and unrestricted license
to prescribe drugs (as appropriate), board certification or other
appropriate training and hospital privileges (as appropriate) at a CIGNA
participating facility. In addition, CIGNA queries the National Practitioner
Data Bank to obtain information about the practitioner’s malpractice
experience and also obtains Medicare sanction activity. CIGNA expects
practitioners to demonstrate an acceptable history of malpractice claim
experience, adequacy of malpractice insurance coverage and an acceptable
work history. Typically, most practitioners are recredentialed every three
years.
To be credentialed, CIGNA requires the medical facilities with which it
contracts to have an unrestricted state license, no sanctions by the
Department of Health and Human Services, accreditation by an approved
accrediting organization and adequate malpractice and general liability
coverage. Typically, most medical facilities are recredentialed every three
years.
CIGNA also encourages the delivery of quality care through its internal
quality program. Accreditation by the National Committee for Quality
Assurance (“NCQA”) of CIGNA’s medical HMOs validates CIGNA’s quality
program. The NCQA is a nationally recognized independent, not-for-profit
organization dedicated to assessing, measuring and reporting on the quality
of managed care plans. As of December 31, 2003, 71% of CIGNA’s U.S. plan
locations are NCQA accredited and 100% of these have received Excellent or
Commendable accreditation for HMO and POS products. The remainder of CIGNA’s
U.S. plan locations are scheduled to complete NCQA accreditation by May
2004.
In addition, CIGNA participates in NCQA’s Health Plan Employer Data and
Information Set (HEDIS) Quality Compass Report. HEDIS Effectiveness of Care
measures are a standard set of metrics to evaluate the effectiveness of
managed care organization clinical programs. CIGNA’s national results
compare favorably to industry averages.
Indemnity Products and Services
Preferred Provider Organizations. CIGNA has contractual arrangements with
certain physicians, hospitals and other independent providers that comprise
medical and dental PPO networks. Under a typical PPO plan, a participant may
elect (with certain exceptions) to receive care from any health care
provider. Within applicable state requirements and restrictions, CIGNA
reimburses PPO participants at a higher percentage for the costs of care
obtained from contracted providers, who are generally paid on a discounted
basis, than it does for care obtained from non-contracted providers. As of
December 31, 2003, 2002 and 2001, CIGNA had 141, 140 and 139 medical PPO
networks. As of the same dates, CIGNA’s national dental PPO network had
approximately 62,000, 57,000 and 54,000 participating dentists.
Some of CIGNA’s medical PPO networks, called “Gatekeeper PPOs”, use
contracted primary care physicians to make referrals to specialists and
other health care providers.
Under a Gatekeeper PPO, the higher reimbursement level is usually available
only if participants obtain a referral from their primary care physicians
before using other contracted providers. As of December 31, 2003, 2002 and
2001, CIGNA had 48 Gatekeeper PPO networks, in addition to its medical PPO
networks that do not require referrals from the primary care physician.
Participants in Gatekeeper PPOs are considered managed care members for the
purposes of the covered lives table on page 10.
Traditional Medical and Dental Indemnity. Traditional medical and dental
indemnity products generally do not restrict selection of providers or vary
their insureds’ cost sharing obligations depending on the providers chosen.
The costs of traditional indemnity products to customers are higher than
managed care products, due to the limited number of negotiated fee
arrangements with physicians and hospitals to control unit costs and limited
influence over the utilization of services. Under indemnity arrangements,
insureds usually pay deductibles and coinsurance, subject to annual
out-of-pocket maximums.
Indemnity Pharmacy Programs. CIGNA also provides pharmacy programs to its
PPO and traditional medical indemnity participants. Participants may choose
to pay the retail price of prescriptions, or obtain prescriptions at a lower
price from the program’s participating pharmacies. As stated above, PPO
participants also have access to mail order, telephone and on-line
pharmaceutical fulfillment services through Tel-Drug, which is a
cost-effective alternative to other participating pharmacies.
Disability and Life
Principal Products and Markets
CIGNA’s Group Insurance operations provide the following insurance products
and their related services: long- and short-term disability insurance, group
life insurance, and accident and specialty insurance. These products and
services are provided by subsidiaries of CIGNA Corporation. CIGNA markets
these group insurance products and services to employers, employees,
professional and other associations and other groups.
Disability Insurance
CIGNA markets group long-term and short-term disability insurance products
in all states and statutorily required disability insurance plans in certain
states. These products generally provide a fixed level of income to replace
a portion of wages lost because of disability. They also provide assistance
to the employee in returning to work and assistance to the employer in
managing the cost of employee disability.
CIGNA’s disability insurance products may be coordinated with behavioral
programs, workers’ compensation, medical programs, social security advocacy,
and the Family and Medical Leave Act and leave of absence administration.
This integration provides customers with increased efficiency and
effectiveness in disability claims management.
Life Insurance
Group life insurance products include group term life, group universal life
and group variable universal life insurance. Group term life insurance may
be employer-paid basic life insurance or employee-paid supplemental life
insurance.
Group universal life insurance is a voluntary life insurance product in
which the owner may accumulate cash value. The cash value earns interest at
rates declared from time to time, subject to a minimum guaranteed rate, and
may be borrowed, withdrawn, or used to fund future life insurance coverage.
With group variable universal life insurance, the cash value varies directly
with the performance of the underlying investments and neither the return
nor the principal is guaranteed.
Approximately 4,500 group life insurance policies covering approximately 5.4
million lives were outstanding as of December 31, 2003.
Other
CIGNA offers personal accident insurance coverage, which consists primarily
of accidental death and dismemberment and travel accident insurance to
employers. Group accident insurance may be employer-paid or employee-paid.
CIGNA also offers specialty insurance services that consist primarily of
life, accident and disability insurance to professional associations,
financial institutions, schools and participant organizations.
Retirement
General
CIGNA’s Retirement operations provide investment products and professional
services to sponsors of qualified and non-qualified pension, profit sharing
and retirement savings plans. This segment’s businesses also offer corporate
life insurance, principally to Fortune 1000 companies, and operate a retail
broker-dealer operation and a federal savings bank. Except for certain
investment management services provided by unaffiliated entities, as
described below, the products and services related to this segment are
provided by CIGNA subsidiaries.
Principal Products and Markets
CIGNA offers a broad range of products to both defined benefit and defined
contribution pension plans, profit-sharing plans and retirement savings
plans. The largest category of Retirement Assets under Management relates to
defined contribution plans, which provide participant accounts with benefits
based upon the value of contributions to, and investment returns on, the
individual’s account. This has been the fastest growing portion of the
pension marketplace for a number of years. Defined contribution plan assets
amounted to 54% of Retirement Assets under Management as of December 31,
2003, compared with 52% as of December 31, 2002. The second largest category
of Retirement Assets under Management relates to defined benefit plans,
under which annual retirement benefits are fixed or defined by a benefit
formula.
CIGNA sells investment products and investment management services, either
separately or as full-service packages with administrative and other
professional services, to corporate pension plan sponsors and Taft-Hartley
trustees. CIGNA markets full-service products that include investment
management and pension services to small, middle and large market customers.
In addition, CIGNA sells products to sponsors of larger plans that look to
more than one entity to provide actuarial, administrative or investment
services and products, or combinations thereof.
CIGNA markets a Total Retirement Services® offering, which integrates tax
qualified and non-qualified defined contribution and defined benefit
products and services. Non-qualified plans are primarily used to provide
supplemental retirement benefits to highly compensated employees in addition
to the benefits offered under the qualified plan. Total Retirement Services®
plans accounted for approximately 23% of Retirement Assets under Management
as of December 31, 2003 compared with 24% as of December 31, 2002. The
assets of the pension plans and 401(k) plans for CIGNA employees are
included in Total Retirement Services® plans. If the impact of those plans
is excluded, Total Retirement Services® plans accounted for approximately
17% of Retirement Assets under Management as of December 31, 2003 compared
with 18% as of December 31, 2002.
For defined contribution plans, principally 401(k) plans, CIGNA markets
products that offer investment services, participant recordkeeping and plan
administrator support services. CIGNA’s defined contribution plans also
offer employee communications, enrollment, plan design, technological
support and other consulting services. For defined benefit plans, CIGNA
offers investment services and administrative and professional services,
including recordkeeping, plan administrator support services, plan
documentation, and actuarial valuation and advice.
CIGNA also provides retail brokerage and banking products and services. A
primary focus of the retail operation is offering individual retirement
account rollover products and related banking and brokerage services to
terminating plan participants. A federal savings bank subsidiary offers
retail banking products, including certificates of deposit and individual
retirement accounts. In addition, CIGNA’s broker-dealer operation manages a
self-directed brokerage account feature in CIGNA-administered 401(k) plans
as well as other retail brokerage accounts.
CIGNA also offers single premium annuities on both guaranteed and
experience-rated bases, and guaranteed investment contracts (“GICs”), which
provide guarantees of principal and interest with a fixed maturity date.
Corporate Life Insurance
Corporate life insurance products are permanent life insurance contracts
sold to corporations to provide coverage on the lives of certain of their
employees. Permanent life insurance, which is non-participating, provides
coverage that when adequately funded does not expire after a term of years
and builds a cash value that may equal the full policy amount if the insured
is alive on the policy maturity date. Non-participating insurance does not
pay dividends, but deviations from assumed experience may be reflected in
future policy values.
Corporate life insurance products include universal life and variable
universal life. Universal life policies typically provide flexible coverage
and flexible premium payments. Universal life cash values fluctuate with the
amount of the premiums paid, mortality and expense charges made, and
interest credited to the policy. Variable universal life policies are
universal life contracts where the cash values vary directly with the
performance of the investments underlying the policy.
Ticker
CI
SIC Code
6324
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