Cigna to exit individual exchange business

The Cigna Group plans to exit the Affordable Care Act individual exchange market by 2027 and launch a new rebate-free pharmacy benefits model, leaders from the company said during a call with investors this morning.

“We did not see a clear path to scale this business to achieve meaningful impact within the context of the broader Cigna portfolio,” said Brian Evanko, who will become CEO of The Cigna Group after the current CEO, David M. Cordani, retires on July 1, 2026.

The insurer’s individual exchange business has been shrinking in recent years and represents a small slice of Cigna’s overall revenue, he said. Cigna emphasized there will be no changes to coverage or networks during 2026, and the company will support members through their open enrollment transition into 2027. “We did not make this decision lightly, and we appreciate the importance of ensuring patients have continuity through the transition,” Evanko said.

The insurer reported first-quarter revenue of $68.5 billion and adjusted earnings per share (EPS) of $7.79, representing 16% year-over-year EPS growth. The results exceeded internal expectations across both of Cigna's major business segments, Evernorth Health Services and Cigna Healthcare. Executives have raised expectations for the full-year 2026 adjusted EPS guidance to at least $30.35.

Within Evernorth, specialty and care services delivered pre-tax adjusted earnings growth of 20%, reaching $1.1 billion, driven by strong demand for specialty therapies, increased biosimilar adoption, and contributions from Cigna's recent investment in Shield Health Solutions. Pharmacy benefit services earnings of $394 million came in line with expectations, although revenue declined due to previously disclosed large client renewals and investments tied to the company’s new PBM model.

For the full year, Cigna now expects Evernorth to generate adjusted income from operations of at least $6.9 billion, with Cigna Healthcare projected to deliver pre-tax adjusted earnings of at least $4.525 billion.

Evernorth’s rebate-free PBM model

This year, the company has launched Evernorth Signature Pharmacy Benefits Services, which will become the standard model for all Evernorth pharmacy benefit clients in 2028. This new program ends the use of rebates and lowers the cost of brand-name medications by 30%, a spokesperson for the company told Managed Healthcare Executive. Evernorth plans to integrate this model with new direct-to-patient programs when they become available

The company first announced the new program in October 2025, and company executives said they were targeting at least 50% of Evernorth pharmacy benefit services members enrolled in Signature by 2028. Fully insured Cigna Healthcare customers will automatically transition to the new model as part of normal renewals.

“Our new simplified model will give clients clear visibility, economic value, and greater predictability,” Evanko said. “Second, they appreciate that we are proactively leading through regulatory legislative changes. They are seeking clarity, predictability, and value, and our Signature model directly addresses these priorities and supports plan sponsors as they address their obligations today and in the future.”

As part of Signature, patients will be guaranteed the lowest out-of-pocket cost at the point of sale, whether through negotiated pricing, copays, or cash-pay alternatives, with any cash-pay amounts counting toward the member’s deductible.

“Affordability of prescription drugs continues to be one of the top challenges facing both patients and therefore the entire pharmacy benefits industry,” Evanko said. “Nearly all key stakeholders, whether they’re employers, whether they’re brokers, or whether they’re drug manufacturers themselves, acknowledge that the status quo is unsustainable.”

Prior authorization and affordability

Cigna updated investors on its efforts for prior authorization reform, saying it had removed hundreds of tests, procedures, and services from its prior authorization requirements. Last week, the company said it is expecting a more than 70% reduction in prior authorization volume by the end of 2026. Cigna has already reduced the overall volume of medical authorizations by about 15%, the insurer said in a recent transparency report.

Additionally, last week Cigna outlined progress on standardizing and automating prior authorization processes, building on voluntary commitments made with HHS and CMS in June 2025.

In pharmacy, AI is being used to streamline prescription processing, schedule orders, identify patients needing additional services, and improve member communications under the Signature model. In healthcare, predictive risk models are identifying complex, high-cost patients earlier in their clinical journey, enabling targeted outreach that Cigna says saves an average of $2,000 per member per year and eliminates unnecessary provider visits.

AI-driven improvements to customer service have already yielded measurable results: Inbound call volumes dropped 20% for digitally eligible Cigna Healthcare members and 25% for Evernorth pharmacy members compared with just two years ago.

On affordability, Cigna pointed to $0 out-of-pocket programs for biosimilars such as Humira (adalimumab) and Stelara (ustekinumab) as evidence of its commitment to lowering patient costs. The company said biosimilar penetration continued to rise in the first quarter of 2026, with AI-assisted personalized outreach helping drive conversion in a way executives described as high-satisfaction and low-friction for both patients and physicians.

Cordani said that these efforts are enabling greater automation and more seamless and efficient access to care while maintaining appropriate safeguards. “We have made a commitment to make the healthcare journey more affordable and personalized,” he said. “This is what spurred us to improve our prior authorization process, as outlined in our first customer transparency form last month. Our goal is to make the process faster and more seamless while ensuring the care is delivered at the right time and right place, appropriately and safely.”

Evanko stressed that the company does not use AI for clinical decision-making. “Rather, AI capabilities increase ease and strengthen the decision quality of our highly experienced clinical team in pharmacy benefit services to enable better care and service for our customers,” he said. “This includes leveraging AI in our Signature model to improve member communication and notifications and help patients make decisions on their care journey and enhancing our capabilities to deliver the lowest out-of-pocket cost for consumers, including the GLP-1s, where we continue to evolve as new oral solutions enter the market and prices decrease.”

AI assisted with the writing of this article.