Cigna scaling back Medicare Advantage footprint in 8 states next year

Dive Brief:

• Cigna is the latest health insurer to roll back its Medicare Advantage offerings next year, as the privately run Medicare plans look for ways to preserve profits amid higher costs from more seniors utilizing medical care.
• Cigna’s planned reductions will affect 36 plans in eight states, and include the insurer exiting at least three counties entirely, according to a notice to marketing agents published by Pinnacle Financial Services on Wednesday.
• However, the majority of those plans have low membership, and patients in most markets will have access to another Cigna MA plan, according to the notice.

Dive Insight:

Seniors in select areas of Colorado, Florida, Illinois, Missouri, North Carolina, Tennessee, Texas and Utah will lose access to at least one Cigna plan next year. Meanwhile, Cigna is exiting two counties in Missouri and one county in North Carolina.

The reductions will affect roughly 5,400 members, mostly in Florida, according to the notice. That’s about 1% of Cigna’s total MA membership.

“Every year, Cigna Healthcare Medicare evaluates services areas for viability, network adequacy, and provider engagement,” the notice says. “If any gaps are identified in these areas that cannot be resolved, it can result in Cigna Healthcare reducing these service areas and/or not renewing plans.”

Cigna is a relatively small player in the MA market. Of the Connecticut-based insurer’s 19 million medical customers, only about 600,000 are in the privatized Medicare plans. The insurer’s bread-and-butter is offering employer-sponsored plans, along with services for other healthcare companies like its massive pharmacy benefit manager Express Scripts.

However, Cigna has tried to grow its MA business over the last few years, attracted by the rising number of seniors electing for MA over traditional Medicare. For 2024, Cigna offered plans in 603 counties across 29 states and the District of Columbia, reaching almost half of the total addressable market.

But now, Cigna is winnowing its footprint in advance of removing itself from the Medicare market entirely, after the plans failed to yield the margins Cigna expected. In January, the insurer said it was selling its Medicare business to Chicago-based Health Care Service Corporation for $3.7 billion. The deal is expected to close in the first quarter of 2025.

With the sale, Cigna is exiting a sector that’s historically proved a huge source of growth for insurers, but has seen its earnings potential shrink following regulatory changes and unfavorable cost trends.

Challenges include changes to payment rules that could lower payment to plans; stricter methodology for calculating quality ratings that’s causing payers to lose out on lucrative bonuses; and seniors utilizing more healthcare, driving up medical costs.

Major MA payers are winnowing their offerings for 2025 in a bid to protect margins, with CVS and Humana expected to take the most drastic action.