Cigna is looking into the possibility of selling its Medicare Advantage (MA) business, according to a report from Reuters.
The health insurer appears to be working with an investment bank to evaluate its next move. A Cigna spokesperson told Reuters that it does not comment “on rumors or speculation.” The company’s MA division is likely worth several billion dollars.
Last week, The Cigna Group posted $1.4 billion in profit and $49 billion in revenue for the third quarter, surpassing Wall Street’s expectations, according to analysts at Zacks Investment Research. In October, Cigna agreed to pay $172 million to settle allegations that it submitted false and inaccurate MA diagnostic codes in order to boost reimbursement, resulting in Cigna entering into a five-year corporate integrity agreement with the Department of Health and Human Services.
Fierce reported that Cigna’s MA presence is now felt in 603 counties across 29 states, including 25 new counties, with a $0 premium plan available in every market. Deciding to divest the MA business would mark a stark contrast from its decision to enter the MA market in 2011 when it purchased HealthSpring for $3.8 billion.
Utilization and higher costs for MA plans have continued to rise, and Cigna has been no exception. During the second quarter, Cigna stated that higher utilization levels were consistent with the company’s expectations.
Discussions to sell the business are preliminary, and Cigna could decide to hold onto its MA plans, sources told Reuters. Cigna expects changes to the reimbursement model and star rating system could impact its MA performance next year.