Cigna to Sell Medicare Advantage Plans to Blue Cross Blue Shield Insurer for $3.3 Billion

Cigna is officially exiting the Medicare business, agreeing to sell all of its Medicare insurance plans to Health Care Service Corp., a large Blue Cross Blue Shield insurer, for $3.3 billion.

The deal includes Cigna’s 600,000 Medicare Advantage plan members, as well as all Medicare beneficiaries who have a Medicare prescription drug plan and Medigap plan through Cigna.

The sale marks the end of a tumultuous run for Cigna’s troubled business that insured older adults and people with disabilities. The health insurance giant primarily derives its revenue from selling health insurance and administrative services to employers, especially large ones, as well as its pharmacy benefit manager. But in 2012, it bought HealthSpring, a large Medicare Advantage plan, for $3.8 billion and now is selling it for less than that despite growing its Medicare Advantage enrollment by 75%.

Cigna has continued to be a small player within Medicare Advantage, a controversial taxpayer-funded program that has been a growth engine for the insurance industry and has been dominated by UnitedHealth Group, Humana, CVS Health’s Aetna, Elevance Health, and Kaiser Permanente.

Over the years, Cigna’s Medicare Advantage suffered from a plethora of quality and compliance problems that the federal government said posed a “serious threat to the health and safety of Medicare beneficiaries.” For example, its Medicare plans inappropriately denied care and prescription drugs, and the company did not explain to members why certain services were not covered. The government eventually banned Cigna from selling Medicare plans in 2016, and then lifted those sanctions a year and a half later.

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