The Cigna Group has finalized the sale of its Medicare health benefits businesses and a medical care provider services operation to Health Care Service Corp. (HCSC) for $3.3 billion. HCSC is the parent company of five Blue Cross and Blue Shield health insurance plans.
According to the terms of the deal, which was initially announced last year, HCSC has acquired a range of Cigna’s Medicare-related assets. These include Medicare Advantage plans, supplemental benefits, Medicare Part D drug benefits, and CareAllies, a business that assists medical care providers with administrative services and contracting.
Chicago-based HCSC operates Blue Cross and Blue Shield health insurance plans in several states, including Illinois, Texas, Oklahoma, and New Mexico. The company serves over 26 million individuals nationwide through its various benefit plans. This acquisition allows HCSC to expand its Medicare Advantage product offerings, which have been relatively smaller compared to other major health insurers.
Medicare Advantage plans, a popular choice for more than half of American seniors over 65, contract with the federal government to provide additional benefits and services. These may include disease management programs, nurse help hotlines, and often cover vision, dental care, and wellness programs.
While both HCSC and Cigna have significant Medicare operations, their combined reach is still smaller than that of market leaders such as UnitedHealth Group’s UnitedHealthcare, CVS Health’s Aetna, or Humana’s Medicare plans.
Cigna’s decision to exit the Medicare business aligns with a trend among some of its competitors to reduce their Medicare Advantage footprints. At the end of last year, Cigna had approximately 589,000 Medicare Advantage enrollees, a 2% decrease from the previous year. The company also had 2.5 million individuals enrolled in its Medicare Part D drug plans.
This acquisition will position HCSC as a significant player in the Medicare Advantage market, especially in areas where it already holds a large presence in commercial health insurance. With the addition of Cigna’s Medicare operations, HCSC now serves 26.5 million people, including 4.3 million Medicare members.
“This transaction is fully aligned with our mission of expanding access to quality health care by adding capabilities and deepening our geographic presence across the United States,” said Maurice Smith, chief executive officer, president, and vice chair of HCSC. “We recognize that the health and wellness needs for older Americans are growing, and we plan to have an important role in helping seniors live healthier, fuller lives. We are excited to welcome our new Medicare members and the employees who will continue to help them achieve their best health.”
Cigna stated that it will continue to offer pharmacy benefit services and other solutions to Medicare members through its Evernorth Health Services business, which includes the pharmacy benefit management company Express Scripts, as part of this deal. “We remain committed to serving Medicare populations through the portfolio of products and services we offer through Evernorth Health Services,” said David Cordani, Cigna’s chairman and chief executive officer.
