CIGNA Settlement Overview

(Agreement Preliminarily Approved Sept. 5, 2003-Final Approval April 22, 2004)

The following is a general overview of the major provisions of the CIGNA Settlement likely to be of interest to physicians.  It is not intended to be comprehensive.  The prospective relief noted below generally extends for four (4) years from the date of preliminary approval, unless terminated earlier as specified in the Agreement. All provisions set forth below are currently effective. Physicians interested in the specifics should read the language of the  actual Settlement Agreement .

Retrospective Relief:

• $70,000,000 minimum, unlimited maximum depending on extent class members prove CIGNA improperly downloaded, bundled or denied specific claims based on erroneous medical necessity determinations.
• $15,000,000 to a Foundation controlled by the Medical Societies that initiated the litigation to create interactions to improve the quality of health care in the country.  (§8)
• The time period for filing damage claims has passed; the final distribution of all damages had not occurred as of August 30, and a dispute over that distribution is pending in Court, before Judge Moreno.

Prospective Relief: over $400 million

• Better Medical Necessity Definition - Patients will be entitled to receive medically necessary care as determined by a physician exercising clinically prudent judgment in accordance with generally accepted standards of medical practice, and cheaper alternatives are permissible only when they are "at least as likely to produce equivalent therapeutic or diagnostic results."  (§7.16)
• Payment of Vaccines and Vaccine Administration - Recommended vaccines and injectibles and the administration of such vaccines and injectibles, will be reimbursed.  (§7.14)
• Reduced Downcoding - Evaluation and management codes will not be automatically downcoded.  (§7.19)
• Fairer Payment Rules - CPT reimbursement coding edits will comply with almost all of the guidelines contained in the AMA CPT Manual.  (§7.20)
• Disclosure of Fee Schedules - Complete physician fee schedules will be available on request without charge. (§7.3)
  • Fee schedules can be changed once a year only.  (§7.14)
• Disclosure of Payment Rules - Payment rules will be consistent across all company products.  (§7.8(a)) 
  • If one becomes available in commercially reasonable terms, a Web-based pre-adjudication tool will be available on the CIGNA Website so that physicians can determine what they will be paid.  (§7.8)
  • CIGNA's Computer claims processing software will be identified by name and version, and each claim coding and bundling edit that results in a substantial number of (at least 500) denials or reductions will be "described with particularity."  (§7.2)
• Capitation from Date of Enrollment - Capitation fees will be paid when the patient chooses a PCP or is assigned to a PCP, retroactive to date of enrollment.  (§7.28)
• All products and all affiliates clauses prohibited - CIGNA will not require physicians to participate in products they do not want to participate in, except that, generally speaking, psychiatrists who provide covered services to patients covered by CIGNA Behavioral Health, Inc., are expected to provide those services to all patients whose care is managed by CIGNA Behavioral Health to the extent they have room in their practice.  (§7.13)
• Participation in Pharmacy Risk Pools Optional - CIGNA's contracting policies will not require the use of pharmacy risk pools.  (§7.29)
• Stop-loss Insurance May be Purchased Elsewhere - CIGNA will not restrict physicians from purchasing stop-loss coverage from other insurers.  (§7.29)
• Faster Credentialing - New physician group members will be credentialed within 90 days of application, which physician groups can submit prior to their employment, and little or no additional credentialing will be required when already credentialed physicians change employment or location.  (§7.13)
• Arbitration Fees Capped - Arbitration fees for solo and small group physicians will be capped at $1000. (§7.29)
• Prompt, external dispute resolution mechanism for physician disputes - A streamlined, external review system will be established enabling physicians to dispute CIGNA's decisions on billing (Billing Dispute External Review Process), on medical necessity (Medical Necessity External Review Process), and on medical records requests (Clinical Information Officers).  (§§7.10, 7.11, 7.12)
• Gag clauses prohibited - "Gag" clauses will be prohibited.  (§7.29)
• Non-participating physicians protected - Disparaging language will be removed from EOBs , and the Agreement will not change or alter the rights of non-participating physicians to balance bill patients or to avoid dealing with CIGNA. (§§7.21 and 7.29)  Moreover, CIGNA will identify any databases it licenses from other parties to determine "reasonable and customary billed charges," and will disclose the data it used to make any specific determination that is challenged.
• No HIPAA Mandate - Non-participating physicians will not be forced to use electronic transactions or otherwise become HIPAA compliant, and CIGNA agrees to continue to accept paper claims.  (§§7.17 and 7.29)
• Restrictive Endorsements Limited - When the check is a partial payment of allowable charges, physicians may cash a check with "Payment in Full" on it without waiving the right to pursue a remedy under the Settlement.  (§7.29)
• Better Mental Health Coverage - CIGNA will generally apply the §7.16 definition of medical necessity described above to mental health care, including treatment for psychiatric illness and substance abuse, it will treat its participating psychiatrists like its other participating physicians with respect to its provider directories and referrals, and it will adhere to the "prudent lay person standard" for emergency services, including admission, or physical or chemical restraints.  (§7.33)
• Better state law supersedes the Agreement .  (§7.29)

Enforcement of Settlement Agreement

• A Physicians' Advisory Committee will be created to address issues of nationwide scope.  (§7.9) 
• Physicians and signatory state medical societies will enforce the Agreement, including CIGNA's agreement to abide by those laws that are more protective of physicians than the provisions otherwise contained in the Agreement, exclusively through an efficient dispute resolution process.  The United States District Court Judge handling the litigation will have ultimate enforcement power.  (§15)
• Physicians and signatory state medical societies retain the right to seek the enactment of better state laws and regulations, and to enforce those better protections in the courts.  (§13)

Coverage:

• The settlement covers all physicians (over 700,000 physicians, physician groups and physician organizations) who have provided covered  services to any person enrolled in or covered by a plan offered or administered by any of the defendants named in the complaint (including CIGNA,  Aetna, Prudential, Humana, WellPoint, Pacificare , HealthNet , Anthem, United and Coventry). 
• The settlement also includes the following 19 Signatory Medical Societies: Alaska, California, Connecticut, Denton County (TX), El Paso County (CO), Florida, Georgia, Hawaii, Louisiana, Nebraska, New Hampshire, New Jersey, New York, North Carolina, Northern Virginia, South Carolina, Tennessee, Texas and Washington.