Wall Street Journal Examines Cost-Cutting Measures at Cigna
The Wall Street Journal on Friday examined the problems Cigna faced this year when it made an insulin pump by "little-known supplier" Louisiana-based Dana Diabecare USA its "preferred pump" as part of an ongoing cost-cutting plan designed to help the company recover from "two years of upheaval." According to the Journal, Cigna hoped to save money through a contract with New York-based Gentiva Health Services by accessing discounts that the contractor said it could negotiate with suppliers of home health service products. In one of its money-saving efforts, Gentiva recommended that Cigna make Dana's insulin pump -- a basic device that costs $3,500 to $4,000, compared with $6,000 for a Medtronic pump -- its preferred insulin pump for diabetics, meaning patients would have to file an appeal with Cigna if they wanted a different pump.
Cigna thought the move "sounded like a good deal," but doctors and patients say it "became a prime example of cost-cutting gone wrong," according to the Journal. The Dana pump lacks several of the features of the Medtronic pump that doctors say are vital for many patients, and reportedly, many patients went without the Dana pumps "as they tried to get Cigna to pay for higher-end brands recommended by their doctors," the Journal reports.
Cigna believed physicians' requests for alternate pumps would be handled by Gentiva, which then would send them on to Cigna. However, according to the Journal, Dana itself collected all such requests for "much of this year" -- a practice approved by Gentiva. Because Dana served as the intermediary, doctors said that when they filed requests, they received marketing material urging them to switch to the Dana pump or provide clinical justification for the alternate pump.
Such communications were handled by employees of a Dana unit who used false names and led doctors to believe they were communicating with a contractor processing claims for Cigna. According to the Journal, Dana employees who used false names had sometimes received confidential patient information from doctors and in some instances used that information to market the Dana pumps, a violation of federal privacy rules. Officials for Dana said they passed all doctor requests on to Gentiva, which then was supposed to give them to Cigna. Further, Dana CEO Susan Jernigan said the company was authorized by Cigna to be a "benefits clearinghouse," giving it authority to have confidential patient information.
Officials for Cigna said that they were aware that Gentiva has vendors perform some administrative functions and that Dana's collection of doctor appeals is acceptable because Cigna ultimately makes all decisions on appeals. Cigna officials say that during the six months that Dana was the preferred supplier of the pumps, the insurer covered 172 Dana pumps and approved 184 non-Dana pumps. However, patients and doctors say that requests for alternate pumps often received no reply. Cigna officials did not say how many appeals were rejected.
Cigna spokesperson Wendell Potter said that Cigna does not believe that any illegal disclosure of private patient information occurred. Cigna officials also said that the company does not condone the use of fake names and that it took "appropriate action" after an "extensive" internal investigation of the matter. Cigna in August dropped Dana as a preferred supplier, largely because of FDA concerns about late reporting of patient problems by Dana, according to Potter. The Journal reports that officials at the Federal Bureau of Investigation office in Dallas and New York state Attorney General Eliot Spitzer's (D) office have begun making inquiries into Dana (Johannes, Wall Street Journal, 11/12).