Bloomfield-based health insurer Cigna Group is exploring the sale of its Medicare Advantage business, according to a report from the news service Reuters on Monday.
Medicare Advantage is an alternative to government-sponsored Medicare, which is offered by private companies, mostly to people 65 and older. Medicare Advantage plans are approved and funded by the federal government.
As of this year, about 50% of Medicare beneficiaries were members of Medicare Advantage plans, according to the health policy research organization KFF.
The potential sale marks a departure from Cigna’s expansion in the sector, according to Reuters. Cigna entered the Medicare Advantage business with its $3.8 billion acquisition of HealthSpring in 2011.
The move comes at a time when the U.S. government is “tightening its purse strings in reimbursing health insurers for their services,” according to Reuters.
Citing unnamed sources, Reuters reported that Cigna is “working with an investment bank to evaluate options for its Medicare Advantage business, which could fetch several billions of dollars in a potential divestment.”
Cigna generated $179.4 billion in revenue in 2022. The company generated $7.9 billion from Medicare Advantage – 4.4% of its total revenue – along with $1.2 billion from Medicare Part D.
According to its 2022 annual report, Cigna doubled the size of its Medicare Advantage provider network over the past two years and significantly increased the number of available specialists.
However, Cigna said during an earnings call last week that its profit margins for Medicare Advantage remain below its target of 4% to 5%.
Cigna offers its Medicare Advantage program in 29 states and the District of Columbia.
A spokesman for Cigna told Reuters that the company does not comment on “rumors and speculation.”
Reuters said it did not name the sources because the matter is confidential.
