Cigna Cooks the Books

As reported in earlier posts on this blog, the US government agency Center for Medicaid and Medicare Services (CMS) suspended Cigna’s right to enroll customers in its Medicare plans until the company comes up with a plan to correct its longstanding problems. Before the suspension, CMS had rated Cigna HealthSpring’s Medicare Advantage plan in Arizona with five stars, the only Arizona plan to receive such a high rating. After the open enrollment period was over and it was too late for seniors to change plans did CMS finally reveal that Cigna had not met government standards for years. If effect it re-rated Cigna from a five-star plan to a zero-star plan.

We all know that many government agencies function poorly, but let’s concentrate of Cigna. Can Cigna be trusted at all? It’s difficult for outsiders to look inside the company to judge the degree of Cigna’s dysfunction. We have a small if inaccurate view of that dysfunction thanks to the yearly report that the company is required by law to file in Vermont. The most recent information I am able to find comes from the report filed in 2014 for the year 2013.

Cigna filed the original report 25 days after the March 1 deadline, but the report was rejected due to large discrepancies between it and the report the company filed with the Federal Government’s Securities and Exchange Commission (SEC). For example in the original report to Vermont, Cigna reported having compensated its CEO David Cordani $3.9 million. In the SEC filing his compensation was reported as $12.8 million. That’s an astounding discrepancy!

Cigna reported to Vermont that its chief financial officer had received $1.4 in compensation compared to $3.3 million in the SEC filing. It reported to Vermont that Herbert Fritch, head of its HealthSpring subsidiary, had been paid $4.2 million. The number reported to the SEC was $10.7 million.

Cigna then filed a “corrected” report. The original report stated that Cigna had denied an astounding 21 percent of claims filed in Vermont. In the revised report, that number was lowered to 7.9 percent, which still seems very high to me. I suspect that neither number is correct.

Which of the various numbers that Cigna reported can one believe? I think that not one of them is credible. If you believe anything that Cigna reports, you will probably believe the figures that the Chinese government reports about its economy. In the case of both Cigna and China, we know that we’re being lied to, but we don’t know how much the lies we’re being fed differ from the truth. At least in the case of China, the lies don’t affect the chance that some Americans might die. In the case of Cigna, they do.

If Cigna ever gets serious about cleaning up its internal mess, it will start by firing its CEO, David Cordani, and bringing in a troubleshooter with a record of fixing dysfunctional companies.

As a footnote, Cigna reports that its earnings in the final quarter of 2015 were down by 8.8 percent. I wonder how far down they really were.