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Cigna Expands CAC Initiative - Analyst Blog

By: Zacks.com
Posted: 1/11/2013 2:40:00 PM
Referenced Stocks: AET;CI;UNH

U.S. health insurer CIGNA Corp. ( CI ) announced that it is going to launch another Accountable Care Organization ("ACO") initiative with Orlando Health Physician Partners. This step is in sync with Cigna's goal to improve the quality of care and service provided to the customers along with lowering healthcare costs and improving overall value.

An ACO is a group effort by health care providers, who voluntarily form alliances to provide coordinated high quality care to patients. An ACO is accountable for the quality, cost and overall care offered to members. By focusing on the needs of patients and connecting payments to the service offered, this model is intended to improve the health of individuals and communities as well as to curtail the rising healthcare costs.

Cigna's new ACO initiative with Orlando Health will serve more than 24,000 individuals covered by Cigna health plan. These customers already receive services from approximately 532 doctors affiliated with Orlando Health in 94 practice locations around Orlando.

Through this program doctors will monitor and coordinate all the aspects of a patient's care. The enrollees in the program will also have the benefit of receiving services of registered nurses employed by Orlando Health. They will coordinate patient care, educate patients about various health conditions, and will also advice and give emotional support to the patients if the need arises.  The ACO will also designate care coordinators who will stay close to the patients and monitor the services being given to them.

Cigna calls its ACO-like initiatives Collaborative Accountable Care ("CAC"). ACO or CAC is one of the several ways by which President Obama is looking to improve the quality of health of Americans. It is considered as a tool that would offer seamless, high quality care for the entire population.

At present, Cigna is engaged in 52 CAC initiatives in 22 states. These programs provide service to more than 510,000 Cigna customers. The company initiated its first CAC program back in 2008. It aims to serve about 1 million customers via 100 CAC initiatives by 2014.

Companies like UnitedHealth Group Inc. ( UNH ) and Aetna Inc. ( AET ) are also assertive about ACO initiatives. Going forward, we expect acceleration in the formation of such patient-centered collaborations.

Cigna currently retains a Zacks Rank # 3 (Hold). We, also, maintain our long-term Neutral recommendation on its shares.



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