The Cigna Group will spend up to $150 million to reform its prior authorization, patient advocacy and provider services this year, CEO David Cordani said Thursday.
The commitment comes a month after the assassination of a high-profile industry executive sparked loud, public conversations about the worsening value of health insurance.
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“In December, we witnessed the tragic murder of Brian Thompson, a leader at UnitedHealth Group. The past several weeks have further challenged us to listen to the public narrative of our industry,” Cordani said during the company’s fourth-quarter earnings call.
The day before, Cigna unveiled a new plan to limit out-of-pocket drug costs for patients, which Cordani cited as an example of the changes it will make. Cigna operates a pharmacy benefit manager, insurance company and healthcare service arm. Its PBM Express Scripts has faced criticism from regulators and lawmakers over its alleged role in increasing drug costs.
Like other health insurance companies, Cigna has also struggled to rein in rising medical expenses.
The company reported $3.4 billion in net income, or $12.12 per share, for the full year of 2024, down 34% from the $5.2 billion reported in 2023 after surgical and specialty drug expenses unexpectedly rose in its stop-loss business. Revenue increased 27% to $247.1 billion. Cigna sells stop-loss insurance to employers to cover costs that rise above a certain threshold.
For the fourth quarter ended Dec. 31, the company reported net income growth of 38% to $1.4 billion on a 28% revenue increase to $65.6 billion.
Cigna’s medical loss ratio, which measures the portion of premiums spent on medical care, rose 5.5 percentage points to 87.9% in the fourth quarter and 1.9 percentage points to 83.2% for the year.
The insurer’s costs began accelerating last quarter after more employees used expensive specialty drugs, such as the cancer medication Keytruda, and underwent high-cost inpatient surgeries, like oncology and heart procedures, Chief Financial Officer Brian Evanko said during the call. The company did not notice the issue soon enough to price it in its employer contracts in 2025, he said.
But through “pricing action, operating cost efficiency, affordability initiatives and accelerated investments,” Cigna projects returning to profitability in its stop-loss plans by 2027, he said. He did not offer details.
Cigna counted 17.5 million U.S. members at the end of 2024, down 3.7% after the company stopped selling exchange plans in Pennsylvania, South Carolina and Utah this year. Cigna is also trimming its Medicare business and waiting for one state regulator to approve the $3.3 billion sale of its Medicare Advantage arm to Health Care Service Corp. The company expects the deal to close in the first quarter.
Cigna shares opened at $275 on the New York Stock Exchange on Thursday, down 9.3% from the previous day’s close