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Cigna can’t sign new Medicare customers as probe lingers

September 6, 2016

Health insurer Cigna Corp. won’t be able to sign up new customers for its private Medicare plans during the fall enrollment season this year because of an investigation by U.S. regulators.

The Centers for Medicare and Medicaid Services said in January that it found “ widespread and systemic failures” in Cigna’s private Medicare business. On Tuesday, the Bloomfield, Connecticut-based insurer said in a regulatory filing that it probably can’t fix the problems in time for the enrollment season for private health insurance and drug coverage plans, which starts next month.

While Cigna has an agreement to be acquired by Indianapolis-based rival Anthem Inc. for $48 billion in a merger that would substantially consolidate the insurance industry, the U.S. has sued to block the deal on antitrust grounds. The case is scheduled to go to trial in late November, though the Justice Department has indicated it could be open to a settlement.

As of June 30, Cigna had about 533,000 customers in its Medicare plans, known as Medicare Advantage, and 1.04 million in its drug plans, known as Medicare Part D, the company said on its website. The privately run insurance plans are sold as alternatives to the government-run version of the health program for the elderly and disabled, and the drug benefit was created in 2003 to supplement health coverage.

“We continue to address the matter in full partnership with CMS,” Matt Asensio, a Cigna spokesman, said in an e-mail. “Our current customers’ benefits are not impacted.”

The ban came after the U.S. told Cigna it found problems in how the company handled appeals and grievances, as well as with its drug coverage. The government said it “determined that Cigna’s conduct poses a serious threat to the health and safety of Medicare beneficiaries.”

Cigna was banned from marketing policies to new clients, and customer affected by the issues were given the option of switching to new coverage. Existing Cigna customers will still be able to renew their plans for next year.

Company shares fell less than 1 percent on Tuesday, to $127.58 each.



In the filing, Cigna also reaffirmed its forecast for 2016 adjusted operating profit of $2.02 billion to $2.11 billion.

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