Cigna CEO David Cordani said the company has between $7 million and $14 million to spend on mergers and acquisitions this year, and his wish list includes Medicare Advantage plans.
Cordani confirmed in a meeting with investors this week that Cigna is interested in building up its MA offerings after the Centers for Medicare & Medicaid Services lifted sanctions that had prevented it from participating in MA or Medicare Part D since January 2016, according to an article from Reuters.
Wall Street analysts have written research notes weighing the merits of one possible route. The lifted sanctions could open the door for Cigna to divest its legacy Medicare Advantage assets and instead pursue Humana, which is a prime target for acquisition because of its booming Medicare business.
Cordani declined to confirm that Cigna is interested in acquiring Humana, or if there is a timetable for any deals to be made. “We tend not to get too fixated on the headlines,” he told Reuters.
CMS banned Cigna from selling Medicare Advantage plans, saying the insurer violated regulations regarding coverage determinations, appeals and grievances; Part D formulary and benefit administration; access to facilities and records; and compliance program effectiveness. The lifted sanctions allow it to resume marketing and to begin enrolling people in plans on July 1.
Though two megamerger attempts in the insurance sector (one between Anthem and Ciga and another between Aetna and Humana) ultimately failed, it’s unlikely that the industry as a whole will lose interest in potential mergers and acquisitions. Both and Anthem and Cigna could be interested in acquiring Humana, though Cigna seems a more likely fit as their core businesses have less overlap.