- With the release of their fourth quarter earnings, Cigna executives touted the company's ability to contain medical cost growth at 4% over 2019, continuing a streak. "We're delighted with the fact that we have seven years now delivering the lowest medical cost trend in the industry," CEO David Cordani told investors during an earnings call Thursday.
- The payer's medical loss ratio of 82.3% for the fourth quarter of 2019 beat Wall Street expectations even though it increased from the prior-year period. It's still "an encouraging sign" given several misses from other payers, David Windley of Jefferies said in a recent note. Shares were up more than 2% mid-morning.
- Cordani said the company is digesting the details of the 2021 Medicare Advantage rate notice CMS released Wednesday evening. The agency said the rate change would benefit plans' revenue by 0.93% on average.
Curbing the cost of care is an important objective for the Connecticut-based payer, which has previously promised to deliver a rate of medical cost growth that will not exceed the consumer price index by 2021.
For this year, the company expects medical cost trend to be between 3.5% and 4.5%, according to guidance the company provided Thursday.
"Today we feel like we're well on our way to that journey and I would underscore that with many of our clients today … benefiting from CPI or better trends," Cordani told investors.
He also addressed how new partnerships with companies such as Oscar and Prime Therapeutics will help the company achieve its goals of driving down cost and improving quality. The comments came after one analyst asked whether the move potentially helps strengthen a competitor.
"We think about it the exact opposite way. It's a dynamic marketplace and those who create the most value will win. Those who try to preserve or regress to control value will lose overtime," Cordani said.
Cigna reported adjusted revenues of $140 billion and income of $6.5 billion in 2019.
Financial performance was improved thanks to the inclusion of pharmacy benefit manager Express Scripts. Last year was the first full year the St. Louis-based PBM was included in Cigna's operations.
Adjusted revenue for the fourth quarter was $36.5 billion, a spike from $13.7 billion in the prior-year period, which does not include all of Express Scripts. Adjusted income from operations was $1.6 billion during the fourth quarter compared with $647 million during the prior-year period.
Cigna's medical membership grew to 17.1 million members, an increase of 184,000 members due to growth in the select and middle market segments, which were offset by declines in the national accounts and individual business.
Cigna's pharmacy business now has 75.9 million members, an increase of 2.7 million customers thanks to new commercial sales.
The payer's health services segments, largely comprised of the PBM business, filled 1.2 billion adjusted pharmacy prescriptions for the full year 2019 and 326 million in fourth quarter.
Cigna's integrated medical business, which includes its commercial health insurance and government business, reported revenue of $9.2 billion for the quarter, an 11% increase from the prior-year period due to commercial customer growth and premium increases. Its international segment also reported growth.