- Cigna on Friday announced it can resume selling Medicare Advantage plans, The Wall Street Journal reported.
- In January 2016, CMS suspended the payer's participation in Medicare Advantage and Part D plans. The issue stemmed from CMS' finding of deficiencies in Cigna's appeals and grievances processes, Part D formulary and benefit administration.
- Cigna had lost at least $500 million due to the sanctions, Axios reported.
The move is good news for the insurer and likely for shareholders.
Cigna's common stock rose to $169.01 per share at the close of business on Friday, up from $167.83 at the day's open. The payer's stock opened at $169.57 on Monday.
The narrow, privatized Medicare Advantage market has been a cash cow for many insurers, and Cigna's lost opportunity costs of at least $500 million point to the program's potential as more Americans age and the market grows.
A recent report from Kaiser Family Foundation found enrollment in the program is about 33% of Medicare beneficiaries (or about 19 million individuals) as of 2017. The largest players in the space are Humana and UnitedHealth who hold a combined 41% of MA enrollment. The report estimated membership could rise to 41% of Medicare beneficiaries over the next 10 years.
Some in the industry have been hearing rumblings of a potential Cigna, Humana merger:
Cigna/Humana deal chatter increasing with Cigna shares way up and billions in deployable capital.Would have to divest HealthSpring to do it.— John Gorman (@JohnGorman18) June 12, 2017
The MA news has spurred more ruminations about the potential deal. "Not only does the announcement bode well organically for Cigna and its re-entry into the 2018 Medicare Advantage selling season, it paves the way for a potential divestiture of the legacy HealthSpring Medicare Advantage book and a bid for Humana," Ana Gupte, a Leerink Partners analyst, was quoted in Reuters last Friday.
Medicare open enrollment begins Oct. 15.