Cigna CEO David Cordani talks Medicare Advantage, exchanges, Anthem merger

David Cordani speaking

When Cigna CEO David Cordani isn’t running triathlons, he’s brainstorming ideas to renovate the healthcare system, which he says will strain the U.S. economy if the industry doesn't enact change.

Cordani told attendees at the CAPG Colloquium in the District of Columbia on Friday that leveraging the power of communities, transitioning from a volume-based payment model and building on the success of Medicare Advantage are all keys to the future of U.S. healthcare.

These changes are needed, he said, not only to help control costs but because his generation is set to be the first in U.S. history to have a shorter life expectancy than the one before it.

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Cordani said there is no single silver bullet for fixing healthcare systems, but "incentives are powerful"--sufficiently powerful to propel the industry from outdated fee-for-service payment models. 

With 10,000 new people eligible for Medicare each day, the industry also must adapt and prepare for more volume, he said. 

The success of Medicare Advantage, he says, can be traced to its upgraded provider reimbursement model compared to fee-for-service reimbursement, which Cordani called "unsustainable." Value-based payment models are in place for 85 percent of Cigna's MA members, Cordani added.  

Still, Cordani does not see change happening from the top and trickling down. Rather, he said, the power of local communities and virtual communities of physicians present massive opportunities to deliver value. 

On the financial front, Cordani dropped hints about the prospects of the firm’s controversial proposed merger with Anthem, saying “size doesn’t necessarily drive medical costs lower.”

Between an antitrust lawsuit from the Justice Department to potential contract breaches, the deal’s complexity is "through the roof,” Cordani added later. Nevertheless, the merger could expand choice, increase plan quality and affordability, and “accelerate” value-based care efforts, according to Cordani.   

Regarding the Affordable Care Act exchanges, Cordani said the day the law was passed he and his firm anticipated that marketplace enrollment would be smaller than Wall Street and K Street's expectations. Cigna also predicted that the business line would not be profitable and that exchanges would be “choppy operationally” in the first few years.

Still, Cordani says it isn't lost on him that more than 10 million people rely on the exchanges for coverage, noting that Cigna’s exchange participation is motivated by social responsibility. Cigna is not looking to lessen its participation, he added.

 

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