Cigna Exits Medicare Advantage, PE Takes Over Disability Care, &” Pharmacies Battle PBMs

Hey all,

Happy Thursday! It's fascinating to observe the contrasting strategies in the Medicare Advantage market: while Cigna and CVS/Aetna are strategically reducing their footprint, UnitedHealthcare continues to expand. What competitive advantage might UHC possess that its competitors don't? Enjoy the rundown!

Jacob Brody (Co-Founder & CEO, ZorroRX)

(Modern Healthcare) Cigna Sells Medicare Business to HCSC for $3.3B

Health Care Service Corp. has completed its $3.3 billion acquisition of Cigna’s Medicare operations, significantly expanding its Medicare Advantage membership and geographic reach. The deal includes Medicare Advantage, Medicare Part D, Medicare supplement assets, and the CareAllies consulting unit, allowing HCSC to enter 25 additional states and strengthen its national presence. Cigna, which had a relatively small Medicare Advantage footprint, plans to use most of the sale proceeds for stock buybacks while focusing on expanding its Evernorth health services subsidiary. Full Article

(Healthcare Brew) Pharmacies and PBMs Clash Over Proposed Part D Rule Change 

Independent pharmacies and pharmacy benefit managers (PBMs) are at odds over a proposed CMS rule that would allow pharmacies to terminate Medicare Part D contracts without cause, but only with PBM consent. Pharmacies argue that current rules force them into contracts with unfair reimbursement rates, while PBMs warn that allowing easy contract terminations could disrupt patient access and increase administrative costs. The National Community Pharmacists Association (NCPA) is pushing for stronger protections, while the Pharmaceutical Care Management Association (PCMA) opposes changes, fearing instability in drug coverage. CMS is expected to finalize the rule by March or April. Full Article

(STAT) Private Equity and Disability Care Facilities 

A new report from the Private Equity Stakeholder Project reveals that private equity firms have acquired over 1,000 disability and elder care providers in the past decade, leading to increased cases of abuse, neglect, and even deaths among people with intellectual and developmental disabilities (IDD). Historically operated by nonprofits, the industry has become an attractive investment due to high demand and a fragmented care landscape, but cost-cutting measures have led to unsafe conditions and reduced services. Despite federal and state oversight efforts, including a 2024 Biden administration rule increasing Medicaid funding transparency, the industry remains largely unregulated. Full Article