Cigna Plans Broader Medicare Advantage Offerings
By Bruce Jepson – Forbes – January 10, 2019
Fresh from the completion of the Express Scripts acquisition, Cigna CEO David Cordani plans to broaden the insurer’s offerings to more seniors choosing Medicare Advantage plans as part of a major business expansion in coming years.
Cigna’s disclosure this week at the JPMorgan Healthcare Conference comes as the insurer and its rivals including Aetna, Anthem, Humana and UnitedHealth Group are expanding into new geographic regions to sell more Medicare Advantage products. All of these insurers are taking advantage of a market of more than 10,000 baby boomers aging into the Medicare population every day.
“We are well positioned today and going forward for existing and new markets,” Cordani said of future MA offerings. “Today, Cigna focuses on the individual, not the group M.A. marketplace. The group M.A. marketplace presents a future growth opportunity for us.”
Cigna has more than 435,000 Medicare Advantage enrollees, which is far fewer than UnitedHealth, Aetna and Humana. But Cigna and an increasing number of other insurers see a bigger opportunity as the Centers for Medicare & Medicaid Services changes rules allowing health plans to provide richer benefit packages to attract more seniors to Medicare Advantage plans.
Cigna is also looking to offer new less restrictive health plans that allow seniors more choices outside of health plan networks by introducing preferred provider organization (PPO) plans for Medicare Advantage enrollees. Unlike PPOs, HMOs restrict doctor choices to their networks. Cordani didn’t disclose a timetable for the PPO offerings.
“Today, Cigna participates largely in the individual HMO portion of the marketplace, not the individual PPO part of the marketplace,” Cordani said. “That presents additional growth opportunity for us as we go forward, but that growth is built off of the success of the individual HMO market.”
Medicare Advantage plans contract with the federal government to provide extra benefits and services to seniors, such as disease management and nurse help hotlines with some even providing vision and dental care and wellness programs.
There are now more than 22 million Americans enrolled in privately-administered Medicare Advantage plans for 2019 with the number expected to continue to rise. Medicare Advantage enrollment will rise to 38 million, or 50% market penetration by the end of 2025, according to a report from L.E.K. Consulting.
Cigna also sees an opportunity as Medicare moves to value-based payment models and away from traditional fee-for-service reimbursement that has been shown to lead to unnecessary tests and procedures due to its emphasis on volume of care delivered.
Cordani said 85% of Cigna's Medicare Advantage “customers are in aligned value-based relationships.” “Those are very important in terms of how our model works: hand in glove with high-performing physician organizations and integrated hospital systems for the benefit of our M.A. customers,” Cordani said.