Medicare Policy Preserves Cigna Bonuses As Insurer Fixes Plan Failures
Despite sanctions against Cigna for its mismanaged Medicare Advantage plans, a quietly announced revision in Medicare policy will allow the insurer to keep hundreds of millions of dollars in bonus payments. The change by the Centers for Medicare & Medicaid Services drove up both Cigna and Anthem stocks.
Kaiser Health News:
Cigna Profits As Medicare Softens Penalty Policy
Cigna will get to keep hundreds of millions of dollars in bonus payments for some of its Medicare Advantage plans, despite recently imposed sanctions for mismanaging those plans in ways that federal officials said threatened seniors’ health and safety. Securities analysts are raising their 2017 earnings estimates for Cigna in reaction to a broad policy change that Medicare quietly released in a memo Tuesday. At the same time, consumer advocates are raising concerns that the Obama administration’s move will hurt efforts to keep pressure on the private insurance plans, which are an alternative to traditional Medicare. The federal government pays the plans to handle beneficiaries’ care. (Galewitz, 3/11)
Anthem, Cigna Enjoy Stock Boost After Medicare Advantage Change
The market surge for the two health insurers comes just after a major shift in the Medicare Advantage program. The CMS rescinded a policy that reduced the star ratings of private Medicare plans facing sanctions. Highly rated Medicare Advantage insurers that were sanctioned, and therefore got tagged with fewer stars, also lost lucrative bonuses tied to those higher ratings. But starting March 8, and lasting until at least the end of 2017, that policy is no more. Cigna's Medicare plans were sanctioned in January for an array of problems, and that would have cost Cigna anywhere from $180 million to as much as $350 million in taxpayer-funded bonus money next year if the sanctions weren't lifted by March 31, according to financial analysts. (Herman, 3/10)