Big news is rippling through the Medicare insurance world as Cigna Group has announced the sale of its Medicare business to Health Care Service Corporation (HCSC).
The transaction, pending regulatory approval, includes the Cigna lines of Medicare Advantage, Cigna Supplemental Benefits, Medicare Part D and CareAllies. The reported sale price is $3.7 billion and the parties announced it Jan. 31.
Agents should start exploring how these changes in the Medicare landscape will open new opportunities for them in the growing Medicare insurance industry. The size of the deal is significant, impacting millions of Medicare recipients. The numbers according to a Blue Cross Blue Shield of Texas release:
- Cigna’s Medicare plans currently serve 3.6 million members
- With nearly 600,000 in Medicare Advantage plans
- More than 450,000 on Medicare Supplement plans
- 2.5 million with Medicare Part D
- CareAllies serves approximately 450,000 patients.
The deal gives HCSC, a Blue Cross Blue Shield insurer, an immediate boost in its Medicare business. The deal also specifies that Cigna Group and HCSC have agreed to enter into a four-year services agreement under which Evernorth Health Services, a subsidiary of The Cigna Group, will continue to provide pharmacy benefit services to the Medicare businesses.
In November, reports began to surface that Cigna was exploring a sale of its Medicare Advantage business. That progressed to reports of HCSC and Elevance Health submitting bids for the business.
The deal still has to go through federal approval and customary closing conditions. It is expected to close in the first quarter of 2025.
“The agreement will enable The Cigna Group to drive meaningful value for all our stakeholders, providing an enhanced ability to accelerate investment and growth in our services platform, while further deepening our commitment to our existing health benefits platform. In tandem, the transaction will position our Medicare businesses and CareAllies for additional growth as they continue to serve the needs of their customers as part of HCSC,” said David M. Cordani, Chairman and Chief Executive Officer of The Cigna Group. “This decision is aligned with our highly disciplined approach to managing our portfolio and allocating resources toward growth opportunities in our Evernorth Health Services and Cigna Healthcare portfolios. While we continue to believe the overall Medicare space is an attractive segment of the healthcare market, our Medicare businesses require sustained investment, focus, and dedicated resources disproportionate to their size within The Cigna Group’s portfolio. We continue to see significant, meaningful growth opportunities for government services, including Medicare, in our Evernorth Health Services portfolio of businesses.”
For HCSC, the expansion is welcomed and will complement and grow offerings. “HCSC is building on its commitment to lead and expand access to quality affordable care for people in all phases of their lives,” said Maurice Smith, HCSC’s CEO, President and Vice Chair. “This acquisition supplements our growth strategy in the large and growing Medicare marketplace and will bring many opportunities to HCSC and its members – including a wider range of product offerings, robust clinical programs, and a larger geographic reach. We look forward to offering our proven member and provider engagement model to even more people, and we are excited to welcome Cigna’s Medicare and CareAllies teams with their demonstrated talent and expertise.”
