Cigna saw net income rise 6.2% to $1.5 billion in the second quarter because of less emergency department and surgery utilization and lower direct costs associated with the COVID-19 pandemic, the company reported Thursday.
The decline in spending on care for fully insured customers, along with repricing in the insurer’s government-sponsored business, drove Cigna’s medical loss ratio down to 80.7%. The company reported an 84.4% medical loss ratio during the same period a year ago.
Cigna’s medical loss ratio was higher last year because of demand for behavioral health and substance abuse treatment, Chief Financial Officer Brian Evanko said during a call with investors Thursday. Patients scheduling mammograms, blood screenings and other preventive services returned to pre-pandemic levels during the second-quarter of this year but other types of care haven’t rebounded, he said.
“We’re not yet seeing any meaningful signs of pent-up demand or acuity,” Evanko said.
Health insurance company profits have fluctuated during the pandemic as patients deferred care. Rival insurers such as UnitedHealth Group’s UnitedHealthcare and Elevance Health—formerly Anthem—also reported lower utilization compared with 2019 during the second quarter.
Other highlights from Cigna’s quarterly earnings report include:
- $45.4 billion in revenue, up 5.4%;
- The Evernorth healthcare services subsidiary generated $34.8 billion in revenue, up 7%, powered by growth in specialty pharmacy, despite lower home delivery volumes. CEO David Cordani said the company will invest in Evernorth and could make acquisitions in specialty pharmacy, virtual and behavioral healthcare and other forms of care delivery;
- The health insurance division reported $11.3 billion in revenue, up 4%, driven by premium increases. Membership grew 5.2% to 17.8 million. More than 80% of Cigna’s policyholders are enrolled in commercial plans. The company also will reprice its stop-loss business next year, Evanko said.
Cigna aims to boost Medicare Advantage enrollment by investing in distribution and marketing and by focusing on converting commercial, Medicare Part D and Medicare supplement members. The company’s Medicare Advantage membership fell below expectations during open enrollment last year, which the company at the time credited to aggressive pricing by competitors. The insurer’s Medicare Advantage margins this year will reflect that, Cordani said Thursday.
The company also expects its Medicare Advantage star ratings to decline once regulators resume stricter quality assessments, Cordani said. Centene also recently disclosed it expects to lose more stars than competitors once regulators begin reevaluating Medicare Advantage plans.
The Centers for Medicare and Medicaid Services relaxed standards during the COVID-19 public health emergency, which caused a record number of Medicare Advantage policies to receive top ratings last year. CMS is reevaluating how to calculate star ratings for this year.
“The industry as a whole will face stars dislocation with the disaster relief and prolonged impact of COVID changes expected to have some adjustment,” Cordani said.