Archive for the ‘Cigna’ Category

On Friday, June 1st, 2012, two major insurance companies announced that they will be paying “lifetime renewals” on Medicare Advantage and Medicare Part D.  Aetna announced this for both products and Cigna for just their Part D plans.  In the past, some carriers had extended renewals for up to 10 years, but these are the first carriers to extend renewals for as long as the plan remains in force.

This creates a good deal of certainty for the producer as there has always been a lingering doubt about exactly how long renewals would be paid.  When CMS began regulating the compensation agreements between insurance companies and insurance agents, they set up a 6 year renewal cycle.  This guidance came out on December 24th, 2008.  The first year a Medicare beneficiary enters a Medicare Advantage plan or Medicare Part D plan is called the “initial year” or “cycle year 1″.  If a Medicare beneficiary has been in a Medicare Advantage plan or Medicare Part D plan for 1 year or longer, CMS reports the “cycle year” to the insurance company.  For example, a Medicare beneficiary may be in cycle year 2, 3, etc.

Now that the compensation rules have been in place for several years, it is possible to write a Medicare advantage this coming AEP for a Medicare beneficiary who is in cycle year 6 (2008, 9, 10, 11, 12 and 13, with 2013 being the 6th cycle year).  So this begs the question, if the insurance company is paying commissions on a 6 year cycle (one initial year plus 5 renewal years), how many years of renewal commission can an agent expect to receive, assuming their client stays in the plan.  I’ve spoken with insiders and never really got a definitive answer on this question.

By going to a 10 year renewal cycle, some carriers “kicked this can down the road”.  Now that we’ve seen 2 major carriers embrace lifetime renewals, this whole question may become a moot point.

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Here is the story from the Baltimore Sun.  This transaction closed yesterday.  The acquisition of HealthSpring is a major step in building Cigna’s presence in the Medicare Advantage and Part D market.  Prior to adding HealthSpring, Cigna’s business in Medicare Advantage was limited to an HMO plan in the Phoenix market.

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Cigna has cleared the first hurdle in it’s acquisition of Medicare advantage provider, HealthSpring.  Here is a link to the story from CBS News.

The Cigna/HealthSpring deal was valued at $3.8 billion and was the largest in a series of acquisitions in the Medicare advantage market which have occurred in 2011.

Virtually all of the major carriers in the Medicare advantage market have completed sizable deals in 2011 including UnitedHealth, Humana, WellPoint and Cigna.  The only major player who is yet to make an acquisition is Aetna (but there are still a few weeks left in 2011!)  Earlier this year, however, Aetna did acquire a Medicare Supplement business from Genworth, so they seem to like to business.

Earlier this week, United announced the acquisition of XLHealth which further reduced the number of potential candidates.

I commented back in August that I felt the deals would continue and I still feel the same.

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Holy smokes, I didn’t see this one coming!  Cigna is getting back into the Medicare Advantage market in a BIG way.  Here is a link to the story from Businessweek.

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Enrollment Kits for CIGNA Medicare Rx® (PDP) are now available to order from the CIGNA Medicare Services®
Marketing and Fulfillment Portal at: http://custompoint.rrd.com/cignamedicare.

Reminder:  Orders for enrollment kits can only be placed online, phone orders will not be accepted.

At the login screen, enter your CIGNA Agent ID in the User ID field, your CIGNA Password in the Password
field. If you are having problems placing your order or have questions, please call 1-800-973-9183
for assistance.

Marketing Materials

If you wish to create your own marketing materials, be sure to send your drafts to CIGNA through your
Agency Manager, as CMS approval is required on all Medicare marketing materials.


Producers contracted to sell the CIGNA Medicare products must successfully certify prior to marketing or
selling CIGNA Medicare products. Producers must complete requisite lessons and pass requisite exams
with a score of 85% or better prior to distributing any of CIGNA’s Medicare products.
If you fail to pass the
exams within three attempts, you will not be allowed to market or sell CIGNA’s Medicare Products for the
2011 selling season.

Click here for certification instructions.

Click here to get trained and certified
– Use your CIGNA Agent ID and password to login.

If you have technical questions about certification, please contact CIGNA’s Certification Help Desk at
1-866-228-1920 or email us at CIGNAUniversity@gpworldwide.com.

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This comes from the CMS enrollment figures for Medicare Advantage plans.  Cigna announced on June 10th, they will be exiting the PFFS market in 2011. Here are a couple different looks at their enrollment as of May 1st, 2010:

State Totals:  Cigna PFFS Total Enrollment by State

State/County totals:  Cigna PFFS Total Enrollment by State by County

Top County Enrollment Figures:  Cigna PFFS Enrollment Ranked by County (Minimum 100 enrollees)

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Here is the press release.

Many of you who follow my blog may have noticed back in April that I referenced that in their press release, they didn’t mention individual PFFS business for 2011.  My original coverage of this story can be found here. I thought that was a pretty good tip that this press release was coming!

Additionally, I followed their analyst conference call in May where they mentioned that they hadn’t made up their minds on this book of business.

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Here is the company’s press release. Cigna joined other major health insurers in posting a nice gain over the first quarter of 2009.  Cigna’s stock closed up almost 3% in the midst of a turbulent day on Wall Street which saw the Dow fall almost 1,000 points before recovering do close down about about 350 points.

During the Question and Answer portion of the conference call, an analyst asked about the future of Cigna’s individual Medicare Private Fee for Service business which totals over 100,000 members.  Cigna commented that they were evaluating this business and that they would have more information on the second quarter call which would take place after the early June deadline for filing 2011 plans and the deadline for indicating if they might exit this business.  They mentioned that the business was performing in line with their expectations.

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Here is a link to the Press Release from the Cigna Website.

Here is the link from Humana’s Investor Relations website.

Here is a link to the article from the WSJ with comments by Carl MacDonald of Oppenheimer.

Interestingly, when you read the Press Release, it specifically mentions Cigna’s Individual HMO product in Arizona, but does not mention their Individual Medicare Advantage PFFS products for 2011.  Here is the pertinent section copied and pasted:

CIGNA will continue to independently offer its comprehensive suite of group and individual retiree pharmacy solutions, commercial group medical plans that supplement Medicare, and its Arizona Medicare Advantage HMO health plan, in addition to its full array of commercial medical, dental, pharmacy, disability and behavioral plans.

Obviously, this agreement has no impact on 2010 individual Medicare Advantage plans whether PFFS or HMO.  What I would glean from this is that Cigna is taking a very hard look at their individual PFFS Medicare Advantage business in 2011.

Cigna will be announcing their First Quarter earnings on May 6th.  Medicare Advantage Providers are asked to report to CMS if they will be continuing their PFFS products on May 3rd.  Based on this, I’m thinking that we might get some more clarity on this issue on their conference call in a few weeks (I’m 100% sure this question will come up!)

Cigna has 108,868 members enrolled in Private Fee for Service as of 4/1/2010 which is up from 17,490 as of 12/31/2009 (Over 90,000 new members!)

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Oppenheimer’s Stock Analyst, Carl MacDonald, downgraded Cigna’s stock to “Perform” from “Out-Perform” based on his belief that Cigna had “significantly underpriced” it’s Private Fee for Service (PFFS) product.  He noted that Cigna added 50,000 PFFS members in the first 3 weeks of annual enrollment and expected about 100,000 new members for the full year of 2010.

He stated that “Cigna knows there is a problem, as it alerted brokers last week that it wouldn’t be accepting any additional (Private Fee-For-Service) applications effective Feb. 1. Cigna hasn’t seen any PFFS claims yet, but as they begin to arrive, it will be more clear that the product was underpriced.”

This is not entirely true, as Cigna’s announcement only applied to OEP business.  Cigna will continue to allow SEP and ICEP enrollments through the balance of 2010.

I ran through some of the January 2010 enrollment numbers from CMS over the weekend (I know, I lead an exciting life!) and found that Cigna was one of the very few companies to grow it’s PFFS membership.  I don’t put too much stock in CMS’ January numbers since they cut off their report as of early December which misses a good portion of the AEP.

Looking overall PFFS membership, it dropped by about 1/3 from December 31st 2009 to January 1st 2010. . .from 2.4 million to 1.6 million or about 800,000 NET lost.  A good portion of this comes from conversions of group retiree business from PFFS to PPO or RPPO business, however, that’s still a major shift in the individual market, as well.

Overall MA membership dropped by about 300,000 which was the first monthly drop I can remember.  I’m not as concerned with this for 2 reasons.  First, it means that “Network Based” MA plans grew by about 500,000 (offsetting the 800,000 loss in PFFS business).  Secondly, since the data only counts the first 3 weeks (or so) of AEP, CMS was deducting all of the disenrollments and not crediting those folks who were disenrolled and re-enrolled in mid to late December (I think this is a significant number!)

Anyway, back to Cigna, the Oppenheimer Analyst thinks that Cigna priced the PFFS business at negative 5% margin.  A Cigna spokesman said they felt, “This is based on one analyst’s opinion. We feel that our product is appropriately priced.”

Obviously, the product is attractively positioned to garner 100,000 new enrollments in a market that shrank by a third.  On the flip side, it wouldn’t make sense for Cigna to continue to add new members via SEP and ICEP if they are losing money on every enrollment.

Time will tell.  Looking at last year, I learned about Coventry’s decision to disenroll it’s PFFS business (I think I was one of the first to report this) after listening to their 1Q Conference Call and reported that in late April (Blog post here).  I think I’ll have a better idea after listening to the Cigna 1Q call where I’m sure this topic will come up.

This comes from a Wall Street Journal Blog posting here.

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