By Caroline Humer
(Reuters) - The U.S. government has suspended new enrollment in Cigna Corp's Medicare Advantage health plans for seniors and standalone Medicare prescription drug plans, citing noncompliance in its appeals and grievances procedures.
The government said Cigna had deficiencies in its appeals and grievances processes in both Medicare Advantage and the Medicare prescription drug program, according to a copy of a letter it sent to Cigna on Jan. 21.
Officials also found problems with the administration of its covered drug plans and compliance program, such as not properly handling prior authorization and exception requests.
Cigna said in a regulatory filing the suspension, effective immediately, does not affect members currently enrolled in the plans. It said it is working to resolve the issues as quickly as possible.
Cigna shares fell 1.3 percent to $138.29.
Open enrollment for 2016 Medicare Advantage plans closed in December but individuals can enroll in the program throughout the year as they turn 65 years old or if they qualify under special circumstances.
According to its website, Cigna has about 500,000 people enrolled in Medicare Advantage plans and more than 1 million people in all Medicare Part D drug plans, which help pay for drugs administered outside of a hospital. It has a total of nearly 15 million people enrolled in medical plans.
Cigna is one of many private health insurers that manage healthcare and drug benefits for older and disabled people under the government-paid Medicare program.
It is overseen by the Centers for Medicare and Medicaid Services, part of the U.S. Department of Health and Human Services. The agency has suspended other insurers in the past such as Aetna Inc. Aetna's April 2010 suspension was lifted in July 2011.
In the letter to Cigna, the Centers for Medicare and Medicaid said Cigna's deficiencies posed "a serious threat to the health and safety of Medicare beneficiaries" and followed years of noncompliance.
Sanctions will remain in place until they are corrected and will likely not recur, according to the letter. Cigna is due to submit a corrective plan by Jan. 29.
A Cigna spokesman did not have an immediate comment beyond the regulatory filing. Cigna plans to be bought by Anthem Inc in a $45 billion deal that is under review by antitrust regulators.
(Reporting by Caroline Humer in New York; Editing by Chizu Nomiyama)