Cigna Acquisition Highlights Role of Chronic Care Management

To help reduce the cost of care for their frailest members, payers are increasingly focusing on prevention and disease management. It is estimated that these patients drive 35% to 50% of total healthcare costs.

Cigna's recent acquisition of Alegis Care, which focuses on homebound healthcare for the very frail, is yet another sign that payers are becoming increasingly comfortable crossing into provider territory to play a proactive role in reducing the cost of healthcare for their members.

It also puts Cigna on the frontline of what one consultant calls the "chronic care management arms race" as payers look to save money in the treatment of their frailest members by increasing the focus on prevention and management.

"These are among the costliest patients to serve," said Shawn Morris, the president of development and innovation for Cigna-HealthSpring in a statement released by the company. It is estimated that these patients drive 35% to 50% of total healthcare costs.

Alegis Care physicians make house calls and deliver medical care to chronically ill and elderly Medicaid and Medicare patients who are unable to travel to their regular physician's office. Services include transitional care from hospital to home, targeted chronic care management, and comprehensive health assessment.

Cigna, as well as WellPoint and Humana, has made turnkey acquisitions to help reduce the cost of care for this population. When WellPoint made the deal for CareMore Health Group, it acquired 25 healthcare clinics where physicians and other healthcare professionals specialize in delivering care coordination and intensive treatment to the chronically ill. Humana acquired SeniorBridge, a national network of care managers who provide in-home healthcare management and services for seniors.

The move by these payers to vertically integrate home-based care delivery allows them to "gain reputational benefits from delivering these services and to avoid the double marginalization that occurs when these services are purchased from an outside firm," says Adam Powell, a healthcare economist and president of Payer+Provider Syndicate in Boston.

"As Cigna, Humana, and WellPoint have all made acquisitions in this space, offering convenient chronic care management services may soon become table stakes."

Morris says Cigna looked at several care models before deciding on the Alegis Care approach, which puts the primary care physician in the driver's seat in caring for this population with support from social workers, nurse practitioners, pharmacists, and other healthcare providers. Morris says it is the right model to improve healthcare quality as well as the patient experience.

"If we can improve those two, we think the cost comes down," says Morris.

It is also easier to scale than the CareMore model, which requires bricks and mortar facilities.

Morris said Cigna has plans to expand its geographic reach, and grow the risk assessment and chronic care components of Alegis Care, as well as its third party business.

Risk assessment is particularly important in the care of this frail population, especially among new Medicaid or Medicare members. Morris says performing a thorough exam within the first 120 days of membership is critical in terms of quantifying co-morbidities in order to develop a care plan for the member.

"We identify the resources we need to bring to bear, such as a social worker or behavioral health, and we coordinate with the member's PCP in the delivery of those services."

Morris says right now chronic care is Alegis Care's smallest business. "We think we have the membership to scale this and we know how to do it in a risk environment. "

Alegis Care will continue to provide TPA services to other insurers. Morris says Cigna expects to build a business model to enable Alegis Care to continue to work for third parties and "be very successful at it. We think this is a population where no one has scaled the delivery of chronic care services and management—not the coordination of care—the actual delivery of care to chronics."

Alegis Care is already in five of the markets where Cigna-HealthSpring has Medicaid and Medicare Advantage members. There are plans to expand across all of those markets.

Morris also expects to capitalize on potential synergies with Cigna-HealthSpring's LivingWell clinics, which contract with physicians who work out of their own offices to provide in-office care to seniors. If a LivingWell patient is suddenly homebound, then Alegis Care physicians could be engaged to provide bridge care until the patient could once again travel to the LivingWell clinic for care. "That is part of our strategy," says Morris.