Impact of ACA, CMS and Exchanges to Cigna Clarifying the Government Sector

Level Set ACA – Affordable Care Act – MLR Rebate spend at least 80%/85% of their premium income on health care claims and quality improvement Not applicable to global business – Industry Fee one of several new fees intended to help fund implementation of the Patient Protection and Affordable Care Act (PPACA) – Reinsurance Fee to help stabilize premiums for coverage in the individual market during the years 2014 through Medicare Advantage and Medicare Part D Public Exchanges – requirement of ACA

Affordable Care Act –Current Actions Commercial MLR requirements Provisions – MLR Rebate Paid $15M in 2013; expected $37M – Health Insurance Industry Fee $130M Commercial $100M Medicare – Reinsurance Fee $110M anticipated

ACA – Additional Issues Cigna Global Expat Business/ACA Provisions

ACA – FUTURE IMPACTS Provisions – MLR Rebate – Anticipate Insurance Industry Fee – 2-2.5% of premiums in 2014 – 3-4% of premiums in the future – Not tax deductible Reinsurance Assessment (tax deductible) – Cost PMPY 2014 $60-$ $25 -$35

CMS – Current Environment Impacts – Sequestration – effective 2013 carriers were reduced by 2% for all government programs including Medicare Advantage and PDP carriers – MLR - Medical Loss Ratio - CMS regulates % revenue Cigna makes per member; and Cigna make may be penalized for making more $$ Consequently, focus on adherence to quality measures i.e. HEDIS

CMS Quality Measures Mandated minimum reductions to risk scores Medicare Advantage plans who are not rated at 4-5 CMS stars: – Reduced enrollment periods – Limitations on disenrollments – Decreased payment bonuses – Possible exclusion from program

CMS – Future Direction GROWTH - organically by increasing customers within our current markets GROWTH – inorganically by acquiring other Medicare Advantage plans Medicaid Market Catamaran – managing all Part D claims Updated electronic capabilities

Public and Private Exchanges – Emerging Market Options PUBLIC -Cigna offers coverage on 5 public health exchanges ( AZ, CO, FL, TN, TX) with 4 planned in Public exchanges are highly regulated and perceived to high higher medical trend, although low member counts won’t impact bottom line in 2014 ( Individual Family Plans –IFP) PRIVATE - Cigna has developed its own propriety exchange - Cigna Guided Solutions. Cigna Guided Solutions leverages all the components of the Select Segment core Value Proposition including innovative Medical, Dental, Vision, and Group plan offerings, flexible funding arrangements, extensive networks and a commitment to health improvement – operated in 19 markets THIRD PARTY EXCHANGES –multi or single carrier exchanges eg AON Hewitt, Mercer, Gallagher Individual business fueled by exchange participation is a key component of Cigna’s domestic growth strategy and planned movement from large group to individual business

Public and Private Exchanges – IMPACTS Organizational shift to individual products Web based enrollment and IT support of new tools and directories – leverage of HealthSpring experience Internal Infrastructure to support new exchange products and regulatory requirements Financial impacts in taxes, re-insurance CMS requirements for measurement and results will impact ability to offer, and payment CMS changes require a higher level of flexibility, rapid response and focus on non-commercial customers

Public and Private Exchanges – Cigna’s Role Provide healthcare services consistent with core strategy and mission – customer centricity, HCP partnerships Prepare for new legal and regulatory requirements Continue to raise organizational awareness of emerging products Leverage delivery system partnerships – V2V, CCC, CAC, Pay for Performance

Additional Resources Fuse – Healthcare Legislation Home Page Fuse – Private Exchange Home Page ures/HEDIS2014.aspx ures/HEDIS2014.aspx Informed on Reform Home Page