Cigna revenue, membership up with commercial focus

Les Masterson

Feb. 1, 2018

Dive Brief:

·         Cigna reported total revenue increased by 5% to $41.6 billion in 2017 during an earnings call Thursday.

·         The company's health insurance membership grew during the year by 700,000 members to 15.9 million, mostly from the commercial side of the business.

·         Cigna expects total revenue to increase 7% to 8% in 2018 and add another 300,000 to 500,000 medical customers.

Dive Insight:

The Bloomfield, Connecticut-based payer said net income for the year was $2.2 billion, or $8.77 per share. Adjusted income for operations was $2.7 billion, or $10.46 per share. The company projects adjusted income from operations in the range of $3.08 billion to $3.2 billion, or between $12.40 and $12.90 per share, in 2018. That would be between 19% and 23% growth over 2017.

Cigna medical membership increased to 15.9 million members by the end of 2017. That number includes an increase of nearly 800,000 members in commercial plans, which more than offset a loss of about 80,000 in government plans. The payer said the company expected the drop in government plans, including Medicare Advantage and Medicare Part D, in 2017.

While other national payers like UnitedHealth Group and Humana have a large MA member base, Cigna’s focus for 2018 remains on the commercial side. Cigna recently re-entered the MA market after CMS suspended the payer from selling plans in January 2016. CMS took action after finding issues with the company’s appeals and grievances processes. Cigna reportedly lost at least $500 million and more than 100,000 MA members due to the sanctions. CMS allowed Cigna to re-enter the market last June.

Eric Palmer, EVP and CFO, said the payer expects the company’s MA enrollment will increase by 3% this year. That growth will likely put Cigna well below MA competitors. MA membership grew 8% in 2017 with UnitedHealth Group increasing 14%, Humana gaining 7% and Aetna jumping 21%.

David M. Cordani, president and CEO at Cigna, called 2018 a transitional year in MA for Cigna. However, the company’s long-range MA membership growth rate forecast is in the high single digits. With that in mind, the payer may expand to adjacent counties in 2019.

Cigna may partner with providers who are already in Cigna accountable care organizations (ACOs) in the commercial market. Cordani added that the company may also take the M&A route to further grow its footprint in MA.

Meanwhile, the company’s commercial plan medical care ratio, also called the medical loss ratio, finished at 79.9% for the year after an 84.3% MCR in the fourth quarter. Cigna said the MCR shows “strong performance and effective medical cost management in our employer business, the impact of the health tax moratorium and expected seasonally higher fourth-quarter medical costs.” Cigna hopes to finish 2018 with an MCR of 77.5% to 78.5% for its commercial plans.

The government plan MCR, meanwhile, finished the year at 84.9% after an 83.4% fourth-quarter. Cigna is expecting an 84%-85% MCR for government plans this year.

Cordani said Cigna expects a 4-5% medical cost range in 2018 that will be driven by utilization and pharmacy costs.

On the recent tax cuts passed by Congress, Cordani said Cigna will use the $150 million savings for “meaningful investments back into multiple key constituency initiatives.” Cordani said Cigna will use the savings to invest in innovations, provide raises for employees and return “money back to the marketplace,” including furthering community initiatives.

Cigna’s positive earnings call mirrors similar results during other recent payer earnings reports, including Anthem, Aetna and UnitedHealth Group. Next week, two more payers, Humana and Centene, have scheduled earnings calls.

https://www.healthcaredive.com/news/cigna-revenue-membership-up-with-commercial-focus/516117/