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Cigna, Valley Preferred Form ACO

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U.S. health insurer CIGNA Corp. ( CI) recently partnered with Valley Preferred to launch an Accountable Care Organization ( ACO) initiative. This step is in sync with Cigna’s goal to improve the quality of care and services provided to customers, lower healthcare costs and thus improve overall value.


An ACO is a group effort by healthcare 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 services offered, this model is intended to improve the health of individuals and communities as well as curtail rising healthcare costs.


The program will be Cigna’s first ACO initiative in Pennsylvania and be effective from Jul 1. 


The program will serve more than 5500 individuals who are presently covered by a Cigna health plan and receive healthcare services from Valley Preferred. 


Through this program doctors will monitor and coordinate all the aspects of patient care. This will be enabled by using patient data from Cigna’s database.  


The enrollees in the program will also receive the services of registered nurses employed by Valley Preferred. They will coordinate patient care, educate patients about various health conditions, and counsel them on proper healthcare. The ACO will also designate care coordinators who will stay close to the patients and monitor the services being offered. 


Valley Preferred physicians will receive remuneration based on their ability to offer quality medical care at lower rates.


Cigna calls its ACO-like initiatives Collaborative Accountable Care ( CAC). Initiatives like ACO or CAC are being deployed to improve the quality of healthcare services offered to patients. 


At present, Cigna is engaged in more than 52 CAC initiatives in 22 states. Effective Jul 1, the tally will rise to 66 CAC initiatives. These programs provide services 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 #2 (Buy). Another stock, Assured Guaranty Ltd. ( AGO) carrying a Zacks Rank #1 (Strong Buy) is worth considering.

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