JasonJayhawk
11-18-2004, 06:33 PM
This story indicates how much money is involved in the insulin pump market. Where there's money, there is bound to be corruption.
From:
http://www.sun-sentinel.com/business/local/sfl-sbcigna14nov14,0,5654727.story?coll=sfla-business-headlines
At Cigna, conflicts of interest surface in appeals
By Laura Johannes
The Wall Street Journal
Posted November 14 2004
When a little-known supplier offered a big discount on a device for diabetics, Cigna Corp. thought it sounded like a great deal.
The nation's fourth-largest insurer says its claims payments for insulin pumps -- pager-sized devices that dispense the hormone at a trickle all day -- were getting very expensive. Market leader Medtronic Inc. charges insurers as much as $6,000 for its device, compared with $3,500 to $4,000 for a no-frills Korean-made device sold by Dana Diabecare USA, a closely held Metairie, La., firm. So in February Cigna made the Dana device its "preferred" pump, forcing patients who wanted the Medtronic or other pumps to file an appeal.
Such cost-cutting is coming back into vogue as employers pressure insurers to do something about spiraling health-care costs. Insurers are wary of being painted as the bad guy of health care, as they often were in the 1990s, and political and legal considerations make it hard to slash high-profile items. So more insurers are trying to pare around the edges by cutting such items as medical devices used by relatively few people.
But Cigna's deal on insulin pumps became a prime example of cost-cutting gone wrong, doctors and patients say. For much of this year, doctors who wanted a pump from one of Dana's competitors for a Cigna-covered patient were forced to funnel their requests through a Dana employee. But the doctors didn't know this because the Dana employees used phony names and said they were "benefit coordinators."
Some patients went without any pump at all as they tried to get Cigna to pay for higher-end brands recommended by their doctors. These doctors say the features lacking in the Dana pump are often essential for diabetics, although others think they're just conveniences.
Diane Misko, of Plainville, Conn., fought unsuccessfully with Cigna for months to get a Medtronic pump. She says poor blood-sugar control made her too tired to work effectively, forcing her to retire from her job as a social worker in May, six months ahead of schedule. In August, she turned 65 and qualified for Medicare. It immediately approved the Medtronic.
Queries under way
Three state and federal agencies are in the early stages of probing Dana's operations. The Dana employees who used false names sometimes received confidential patient information from doctors and, according to an ex-employee, used the information to market Dana pumps. Some lawyers say Dana's possession of the information may violate federal patient-privacy laws.
Dana's chief executive, Susanne Jernigan, says Dana was authorized by Cigna to serve as a "benefits clearinghouse" and in that role had legal authority to possess confidential patient information. She says Dana passed on requests for rival pumps to a Cigna contractor and didn't use its position to improperly market Dana's own device.
Cigna says it does not condone use of the fake names. It says it recently completed an "extensive" internal investigation and took "appropriate action." It declined to give details, saying it can't comment on personnel matters. Cigna says that it ended Dana's status as the preferred pump in August.
The Dana affair comes amid Cigna's efforts to restore its reputation after two years of upheaval. Cigna's share price fell 38 percent in one day in October 2002 after severe technology glitches forced the insurer to slash prices to retain customers. Later it switched course, saying it wouldn't underprice its products to keep volume up. In February, Cigna cut 9 percent of its work force and reduced its quarterly dividend more than 90 percent to 2.5 cents a share from 33 cents a share.
This year profits are stronger, despite the pressures from employers for smaller price increases, but the number of people with Cigna health insurance has fallen to 9.9 million as of Sept. 30, 2004, down 16 percent from 11.8 million a year earlier. Cigna now gets most of its income from health insurance after completing the sale of its retirement benefits business earlier this year to Prudential Financial Inc.
The favored pump
The difficulties with Dana shine a spotlight on one of Cigna's cost-cutting moves: its use of a contractor, Gentiva Health Services Inc. of Melville, N.Y., to help it with home health-care claims. Home health care includes devices such as wheelchairs used by patients at home and at-home services such as physical therapy.
Many insurers deal directly with device makers and home-service providers, but Cigna thought it could save money contracting the work to Gentiva, which describes itself as a specialist in the field and thus able to get good deals with suppliers. As a result of this deal, patients who have Cigna insurance and need a home health-care device or service deal mostly with Gentiva, not Cigna.
Gentiva, which gets about a third of its roughly $850 million in annual revenue from Cigna, recommended the Dana pump, Cigna says. It then became Cigna's "preferred" device. Pumps are a popular option for diabetics who have trouble keeping their blood-sugar level stable by insulin shots alone. The shots can cause blood-sugar to spike too low, causing weakness, blackouts and even death. Pumps deliver small doses of insulin throughout the day, with increased doses at mealtimes, with the aim of keeping blood sugar consistently at a safe level.
The Dana pump weighs only 1.8 ounces, making it one of the lightest of its capacity on the market. But it lacks features such as an internal calculator to figure out the mealtime dose. Instead the patient must calculate the dose either by hand or with an external software program and type the dosage data into the pump. The Dana pump also lacks a vibrating alarm as a backup in case the user can't hear the beeping alarm.
Cigna's own assessment concluded that the Dana pump was equivalent to others on the market, says Cigna spokesman Wendell Potter. But he says the insurer relied on Gentiva to make sure that the "structure and operation" of Dana were sound. Cigna thought that Gentiva would handle doctor requests for a pump and send appeals to Cigna if a doctor refused to accept the Dana, Potter says.
Fictitious names used
However, Dana itself was collecting the doctor claims for much of this year. Several doctors say that when they requested another brand of pump, either by calling Cigna directly or having a sales representative of the other pump maker talk to the insurer, their offices received faxes urging them to reconsider. The faxes said the doctors should switch their prescription to the Dana device or supply "clinical justification" for the other brand.
The faxes purported to be from a concern called "Care Diabetes" and were signed by "Sunny Simon" and "Britney Hunter," among other names. Doctors say they thought Care Diabetes was a contractor processing claims on Cigna's behalf -- a common practice in the insurance industry -- and they supplied confidential medical information on their patients to document the need for a non-Dana pump.
In fact, although the fax gave no hint of it, Care Diabetes is a unit of Dana, the chief executive of Dana confirms. And "Sunny Simon" and "Britney Hunter" were fictitious names used by Dana employees.
"It's a dang scam," says Tammy Hargett, a diabetes educator working on behalf of Frank Campos, a 40-year-old factory worker from San Angelo, Texas, who needs a pump. "Why are we sending all this paperwork to a company that won't make any money if they give us the pump we want?"
A March appeal that Campos's doctor faxed to "Sunny Simon" resulted in no response, according to Hargett. In May, a second request for a Medtronic pump was sent directly to Cigna, which the insurer denied in June. A third appeal is now pending, but in the six months since Campos has been waiting, he says the diabetic numbness in his hands and feet -- which could ultimately result in loss of a limb -- has been worsening.
Hargett says the Dana pump wouldn't have been practical for Campos because his job doesn't allow him to carry a separate portable electronic device needed to calculate the insulin dose.
Defending dual role
Gentiva spokesman David Fluhrer says Gentiva didn't know the Dana employees used phony names and doesn't condone the practice. But he confirms that "one way" Gentiva operates is to let a company marketing one device handle doctors' requests for a competing device. He says this dual role isn't a conflict of interest because the insurer ultimately makes the decision. Fluhrer declined to say how often Gentiva adopts this practice.
Cigna said it is aware that Gentiva has vendors perform some administrative functions. The insurer said it has no problem with a vendor collecting appeals for competing products from doctors so long as the vendor truthfully identifies itself. It said this practice is acceptable because Cigna makes all decisions on appeals.
"It's sort of like giving someone a syringe of insulin and saying `Give yourself a shot,'" says Dave Hargett, chairman of the association. Spokespeople for Cigna, Gentiva and Apria declined to comment on the breathing-machine issue.
Cigna dropped Dana as a preferred supplier in August. This was shortly after a former Dana employee, Susan Harriman, told Cigna about Dana's practices. Potter, the Cigna spokesman, says the main reason for dropping Dana was a letter that the Food and Drug Administration had sent to Dana in July warning about late reporting of patient problems with the pumps. Both the FDA and Dana say the problem was later resolved.
From:
http://www.sun-sentinel.com/business/local/sfl-sbcigna14nov14,0,5654727.story?coll=sfla-business-headlines
At Cigna, conflicts of interest surface in appeals
By Laura Johannes
The Wall Street Journal
Posted November 14 2004
When a little-known supplier offered a big discount on a device for diabetics, Cigna Corp. thought it sounded like a great deal.
The nation's fourth-largest insurer says its claims payments for insulin pumps -- pager-sized devices that dispense the hormone at a trickle all day -- were getting very expensive. Market leader Medtronic Inc. charges insurers as much as $6,000 for its device, compared with $3,500 to $4,000 for a no-frills Korean-made device sold by Dana Diabecare USA, a closely held Metairie, La., firm. So in February Cigna made the Dana device its "preferred" pump, forcing patients who wanted the Medtronic or other pumps to file an appeal.
Such cost-cutting is coming back into vogue as employers pressure insurers to do something about spiraling health-care costs. Insurers are wary of being painted as the bad guy of health care, as they often were in the 1990s, and political and legal considerations make it hard to slash high-profile items. So more insurers are trying to pare around the edges by cutting such items as medical devices used by relatively few people.
But Cigna's deal on insulin pumps became a prime example of cost-cutting gone wrong, doctors and patients say. For much of this year, doctors who wanted a pump from one of Dana's competitors for a Cigna-covered patient were forced to funnel their requests through a Dana employee. But the doctors didn't know this because the Dana employees used phony names and said they were "benefit coordinators."
Some patients went without any pump at all as they tried to get Cigna to pay for higher-end brands recommended by their doctors. These doctors say the features lacking in the Dana pump are often essential for diabetics, although others think they're just conveniences.
Diane Misko, of Plainville, Conn., fought unsuccessfully with Cigna for months to get a Medtronic pump. She says poor blood-sugar control made her too tired to work effectively, forcing her to retire from her job as a social worker in May, six months ahead of schedule. In August, she turned 65 and qualified for Medicare. It immediately approved the Medtronic.
Queries under way
Three state and federal agencies are in the early stages of probing Dana's operations. The Dana employees who used false names sometimes received confidential patient information from doctors and, according to an ex-employee, used the information to market Dana pumps. Some lawyers say Dana's possession of the information may violate federal patient-privacy laws.
Dana's chief executive, Susanne Jernigan, says Dana was authorized by Cigna to serve as a "benefits clearinghouse" and in that role had legal authority to possess confidential patient information. She says Dana passed on requests for rival pumps to a Cigna contractor and didn't use its position to improperly market Dana's own device.
Cigna says it does not condone use of the fake names. It says it recently completed an "extensive" internal investigation and took "appropriate action." It declined to give details, saying it can't comment on personnel matters. Cigna says that it ended Dana's status as the preferred pump in August.
The Dana affair comes amid Cigna's efforts to restore its reputation after two years of upheaval. Cigna's share price fell 38 percent in one day in October 2002 after severe technology glitches forced the insurer to slash prices to retain customers. Later it switched course, saying it wouldn't underprice its products to keep volume up. In February, Cigna cut 9 percent of its work force and reduced its quarterly dividend more than 90 percent to 2.5 cents a share from 33 cents a share.
This year profits are stronger, despite the pressures from employers for smaller price increases, but the number of people with Cigna health insurance has fallen to 9.9 million as of Sept. 30, 2004, down 16 percent from 11.8 million a year earlier. Cigna now gets most of its income from health insurance after completing the sale of its retirement benefits business earlier this year to Prudential Financial Inc.
The favored pump
The difficulties with Dana shine a spotlight on one of Cigna's cost-cutting moves: its use of a contractor, Gentiva Health Services Inc. of Melville, N.Y., to help it with home health-care claims. Home health care includes devices such as wheelchairs used by patients at home and at-home services such as physical therapy.
Many insurers deal directly with device makers and home-service providers, but Cigna thought it could save money contracting the work to Gentiva, which describes itself as a specialist in the field and thus able to get good deals with suppliers. As a result of this deal, patients who have Cigna insurance and need a home health-care device or service deal mostly with Gentiva, not Cigna.
Gentiva, which gets about a third of its roughly $850 million in annual revenue from Cigna, recommended the Dana pump, Cigna says. It then became Cigna's "preferred" device. Pumps are a popular option for diabetics who have trouble keeping their blood-sugar level stable by insulin shots alone. The shots can cause blood-sugar to spike too low, causing weakness, blackouts and even death. Pumps deliver small doses of insulin throughout the day, with increased doses at mealtimes, with the aim of keeping blood sugar consistently at a safe level.
The Dana pump weighs only 1.8 ounces, making it one of the lightest of its capacity on the market. But it lacks features such as an internal calculator to figure out the mealtime dose. Instead the patient must calculate the dose either by hand or with an external software program and type the dosage data into the pump. The Dana pump also lacks a vibrating alarm as a backup in case the user can't hear the beeping alarm.
Cigna's own assessment concluded that the Dana pump was equivalent to others on the market, says Cigna spokesman Wendell Potter. But he says the insurer relied on Gentiva to make sure that the "structure and operation" of Dana were sound. Cigna thought that Gentiva would handle doctor requests for a pump and send appeals to Cigna if a doctor refused to accept the Dana, Potter says.
Fictitious names used
However, Dana itself was collecting the doctor claims for much of this year. Several doctors say that when they requested another brand of pump, either by calling Cigna directly or having a sales representative of the other pump maker talk to the insurer, their offices received faxes urging them to reconsider. The faxes said the doctors should switch their prescription to the Dana device or supply "clinical justification" for the other brand.
The faxes purported to be from a concern called "Care Diabetes" and were signed by "Sunny Simon" and "Britney Hunter," among other names. Doctors say they thought Care Diabetes was a contractor processing claims on Cigna's behalf -- a common practice in the insurance industry -- and they supplied confidential medical information on their patients to document the need for a non-Dana pump.
In fact, although the fax gave no hint of it, Care Diabetes is a unit of Dana, the chief executive of Dana confirms. And "Sunny Simon" and "Britney Hunter" were fictitious names used by Dana employees.
"It's a dang scam," says Tammy Hargett, a diabetes educator working on behalf of Frank Campos, a 40-year-old factory worker from San Angelo, Texas, who needs a pump. "Why are we sending all this paperwork to a company that won't make any money if they give us the pump we want?"
A March appeal that Campos's doctor faxed to "Sunny Simon" resulted in no response, according to Hargett. In May, a second request for a Medtronic pump was sent directly to Cigna, which the insurer denied in June. A third appeal is now pending, but in the six months since Campos has been waiting, he says the diabetic numbness in his hands and feet -- which could ultimately result in loss of a limb -- has been worsening.
Hargett says the Dana pump wouldn't have been practical for Campos because his job doesn't allow him to carry a separate portable electronic device needed to calculate the insulin dose.
Defending dual role
Gentiva spokesman David Fluhrer says Gentiva didn't know the Dana employees used phony names and doesn't condone the practice. But he confirms that "one way" Gentiva operates is to let a company marketing one device handle doctors' requests for a competing device. He says this dual role isn't a conflict of interest because the insurer ultimately makes the decision. Fluhrer declined to say how often Gentiva adopts this practice.
Cigna said it is aware that Gentiva has vendors perform some administrative functions. The insurer said it has no problem with a vendor collecting appeals for competing products from doctors so long as the vendor truthfully identifies itself. It said this practice is acceptable because Cigna makes all decisions on appeals.
"It's sort of like giving someone a syringe of insulin and saying `Give yourself a shot,'" says Dave Hargett, chairman of the association. Spokespeople for Cigna, Gentiva and Apria declined to comment on the breathing-machine issue.
Cigna dropped Dana as a preferred supplier in August. This was shortly after a former Dana employee, Susan Harriman, told Cigna about Dana's practices. Potter, the Cigna spokesman, says the main reason for dropping Dana was a letter that the Food and Drug Administration had sent to Dana in July warning about late reporting of patient problems with the pumps. Both the FDA and Dana say the problem was later resolved.