(Adds details from CMS letter to Cigna, closing stock prices,
By Caroline Humer
NEW YORK, June 16 Cigna Corp, which was
prevented from selling new Medicare Advantage health insurance
for 18 months, said on Friday the U.S. government was allowing
new enrollments starting July 1 after program deficiencies were
The Centers for Medicare and Medicaid Services suspended the
program in January 2016, citing "widespread and systemic"
failures that barred patients from accessing medical services.
The government told Cigna in a June 16 letter that it could
now market Medicare Advantage as well as its Medicare
prescription drug plans, which are available to people aged 65
or older and the disabled.
Wall Street analysts said the development increased chances
of Cigna buying Medicare Advantage specialist Humana Inc
or participating in a different merger. Both companies had been
pursuing separate takeover deals but failed on antitrust
"Not only does the announcement bode well organically for
Cigna and its re-entry into the 2018 Medicare Advantage selling
season, it paves the way for a potential divestiture of the
legacy HealthSpring Medicare Advantage book and a bid for
Humana," Leerink Partners analyst Ana Gupte said in a note.
Gupte is among several analysts who have recently written
research notes about a possible deal between Cigna and Humana
after meeting with officials from both insurers. Neither company
has confirmed seeking such a tie-up.
Cigna shares rose 1.1 percent to close at $169.07, and
Humana was up 0.9 percent at $234.46 on the New York Stock
The Centers for Medicare and Medicaid Services letter said
other findings called for additional monitoring and reporting by
Cigna, and that it would issue a notice of corrective actions.
The government imposed the sanctions on Cigna after it found
in a 2015 audit that the insurer did not handle complaints and
grievances properly from patients who had been denied coverage
for health benefits or drugs. It also found problems with
Cigna's handling of its list of covered drugs. The 18-month
period is fairly typical for sanctions, which had been levied on
competitor Aetna Inc.
(Reporting by Caroline Humer; Editing by Leslie Adler and