Good morning. Ladies and gentlemen, thank you for standing by for Cigna's Fourth Quarter 2020 Results Review. At this time, all callers are in a listen-only mode. We will conduct a question-and-answer session later during the conference and review procedures on how to enter the queue to ask questions at that time. [Operator Instructions] As a reminder, ladies and gentlemen, this conference, including the Q&A session, is being recorded. We'll begin by turning the conference over to Ms. Alexis Jones. Please go ahead, Ms. Jones.

Good morning, everyone, and thank you for joining today's call. I am Alexis Jones, Lead Principal for Investor Relations. With me on the line this morning are David Cordani, our President and Chief Executive Officer; and Brian Evanko, Cigna's Chief Financial Officer. In our remarks today, David and Brian will cover a number of topics, including Cigna's full-year 2020 financial results, as well as an update on our financial outlook for 2021. As noted in our earnings release, when describing our financial results, Cigna uses certain financial measures, adjusted income from operations, and adjusted revenues which are not determined in accordance with accounting principles generally accepted in the United States, otherwise known as GAAP. A reconciliation of these measures to the most directly comparable GAAP measures, shareholders' net income and total revenues, respectively, is contained in today's earnings release, which is posted in the Investor Relations section of cigna.com. We use the term labeled adjusted income from operations and adjusted earnings per share on the same basis as our principal measures of financial performance. In our remarks today, we will be making some forward-looking statements, including statements regarding our outlook for 2021 and future performance. These statements are subject to risks and uncertainties that could cause the actual results to differ materially from our current expectations. A description of these risks and uncertainties is contained in the cautionary note to today's earnings release and in our most recent reports filed with the SEC. Before turning the call over to David, I will cover a few items pertaining to our financial results and disclosures. Regarding our results, in the fourth quarter, we recorded in after-tax special item benefit of $3.2 billion or $8.91 per share for sale of Cigna's Group Disability and Life business that was completed on December 31, 2020. We also recorded an after-tax special item charge of $148 million or $00.41 per share for integration and transaction-related costs. As described in today's earnings release, special items are excluded from adjusted income from operations and adjusted revenues in our discussion of financial results. Beginning next quarter, in our earnings release and quarterly financial supplement, the Group Disability and Other segment will be combined with Corporate and called, Corporate and Other Operation. This change to simplify our reporting was enabled by the aforementioned sale of the Group Disability and Life business. Additionally, please note that when we make prospective comments regarding financial performance, including our full-year 2021 outlook, we will do so on a basis that excludes the potential impact of any future share repurchases and anticipated 2021 dividend. With that, I will turn the call over to David.

Thank you, Alexis. Good morning everyone, and thank you for joining us on our call today. When we met a year ago, the challenges from COVID-19 were just beginning to fully emerge around the globe. With the arrival of vaccines, 2021 is likely to be a year of transition, as communities and businesses seek to turn the page. I am very proud of the ways in which our 70,000-plus colleagues led, and continue to lead through this difficult time for customers, our clients, our providers, our partners, and our communities. Starting last spring, we were amongst the first to waive out-of-pocket costs COVID-19 testing as well as treatment. Our Evernorth business quickly leveraged our supply chain expertise to ensure a consistent prescription drug supply and delivery during the uncertain times. In our U.S. Medical Business, we ramped up to meet the significant increased demand for behavioral health services by growing our network, adding virtual provider partners, creating demand webcasts, treating first responders, and adding search capabilities for provider ethnicity. All over, we were deploying hundreds of millions of dollars to support our clients and partners who were hit hardest by the pandemic. In partnership with New York Life, we launched the Brave of Heart Fund to provide charitable grants for families, frontline workers, and volunteers who lost loved ones to COVID-19. And last month, our Cigna Medical Group was amongst the first non-hospital organizations in the nation to administer antibody therapy for high-risk COVID-19 patients, freeing up much needed hospital space. And just a few weeks ago, we partnered with industry leaders from across the public and private sectors to ensure that people who received the vaccine had digital access to the vaccination records so they can safely return to their jobs and daily activities. As we continue to work…

Thanks, David. Good morning everyone. First if we look back at 2020, I am very proud of the actions we have taken in the company to meet the needs of our customers, clients, provider partners, communities, and coworkers while also delivering on our commitment to our shareholders. And as we enter 2021, we remain focused on delivering differentiated value and driving growth across our businesses. My remarks today, I'll review Cigna's 2020 results including the ongoing impact of COVID-19 on our business and provide our outlook for 2021. The consolidated financial highlights for 2020 include adjusted revenue of $160 billion, adjusted earnings of $6.8 billion after-tax, adjusted earnings per share of $18.45 and operating cash flows of $10.4 billion. These results reflect strong execution across our businesses through an unprecedented environment. Regarding our segments, I'll first comment on Evernorth. Fourth quarter 2020 adjusted revenues grew to $30.5 billion and adjusted pretax earnings grew to $1.6 billion. Evernorth strong results reflect organic growth with outstanding client retention and new partnerships, effective execution of supply chain initiatives, and continued strong performance in Accredo, our industry leading specialty pharmacy. During the quarter, we fulfilled $388 million adjusted pharmacy scripts, a 19% increase for our fourth quarter 2019. Overall, Evernorth delivered a strong fourth quarter as we completed our integration efforts and we entered 2021 with good momentum. Turning to U.S. Medical, fourth quarter adjusted revenues were $9.7 billion and adjusted pretax earnings were $328 million. These results reflect COVID-19 related impacts and the return of the health insurance tax. COVID-19 related impacts in the quarter include the direct costs of COVID-19 testing and treatment, the costs of actions we have taken to support customers, providers and co-workers and decreased specialty contributions partially offset by a reduction in non-COVID utilization. As we progressed through…

Thank you, Mr. Evanko. [Operator Instructions] Our first question is from Gary Taylor with JP Morgan. Mr. Taylor, your line is open.

Hi, good morning. Appreciate the details. I just want to go back to sort of thinking about the COVID headwinds this year. And I know '22 is a far way away, but from this distance should we be thinking about $20.00 plus $1.25, and then putting your long-term growth rate on that. Is there any reason not to sort of generally be thinking about that as the setup for 2022?

Gary, good morning, it's David. As Brian noted, we estimate the $1.25 for 2021. Big picture, we think you should view it as transient or removable. I'd caution you from, at this early stage, penciling all of it as an immediate return in 2022. But to be very clear, we do believe it is removable or recoverable from that standpoint through a variety of forces. One, obviously the effectiveness and the ramping of the vaccine that will transpire from that standpoint; two, further evolution of both programs and services, as well as treatments and therapies relative to dealing with COVID, and then third, ultimately, if necessary, pricing actions activities. So big picture, agree with your conclusion. We'd just caution you not to harden it fully 100% into a 2022 number yet.

Thanks, David.

Thank you for your question, Mr. Taylor. Our next question is from Kevin Fischbeck with Bank of America. Your line is open, sir.

Okay, great, thanks. And I guess the dynamic that you saw in Q4 around elevated medical costs kind of more than offsetting the decline in [indiscernible] this a little bit different than what we've seen from other companies, but I guess directionally similar with commentary about the impact to commercial versus Medicare. I guess maybe since you are kind of more commercially focused, maybe you could help draw a little bit of a distinction between how you expect utilization in the commercial business to rebound in 2021? Is there less pent up demand than what you might see in the Medicare business, and therefore commercial gets to more normal more quickly in 2021 than other business lines, just wanted to get your thoughts on that given your performance versus your peers in Q4.

Good morning, Kevin, it's Brian. So just a few kind of framing comments, and then I'll get to the core of your question. Throughout 2020, as the pandemic emerged, we certainly did witness an inverse relationship between COVID-19 claims and deferred care. And if you step back all the way to the second quarter of 2020, the impact to care deferrals more than outweighed the direct costs associated with COVID-19 claims for testing and treatment across both our commercial and Medicare businesses. During the third quarter, these factors approximately offset one another, meaning the cost to COVID claims approximately offset the effective care deferrals. In the fourth quarter specifically, as the back half of the quarter emerged, we started to see the cost of COVID-19 claims for both testing and treatment start to exceed the benefits we were seeing from increased care deferral activity. And so we ended the quarter with performance of medical costs in aggregate that was modestly above our seasonal baseline. That effect was consistent across both the commercial and the Medicare book-to-business. Although I would note that the commercial care deferrals were lower than the Medicare care deferrals that we saw in the fourth quarter. So that's the way I would encourage you to think about it. And as we roll that forward into 2021, our guidance contemplates the respective books-to-business in the $1.25 headwind.

Thank you, Mr. Fischbeck. Our next question is from Matt Borsch with BMO Capital Markets. Your line is open, sir.

Yes, thank you. Maybe if I could just ask a question on that prior dialogue. So do I have it right that in Medicare you're actually seeing the direct costs of COVID as higher than the deferral in the fourth quarter, and if so do you expect that to continue into 2021?

Morning, Matt. This is Brian. So yes, you have that right. For the fourth quarter we did see the direct cost of COVID-19 testing and treatment exceed the benefits of care deferral for the quarter in aggregate, with the back half of the quarter where the acceleration really occurred. I would note though that the fourth quarter also saw elevated care deferral relative to the third quarter in Medicare. And again, as we roll that forward stepping into 2021, we assume that the first portion of the year there will be elevated medical cost experienced in our book of business across U.S. Medical. And then as the year unfolds that will gradually dissipate toward the back half of the year.

Yes. And sorry, just one clarification, I'm trying to isolate Medicare, and not looking for any specific guidance but directionally Medicare. Just Medicare, to understand it in that book in the fourth quarter, it was the deferrals were less than treatment costs, and if that's expected to continue this year?

In the fourth quarter, both our commercial and Medicare businesses in aggregate saw total claim costs that were modestly above the seasonal baseline.

Okay, thank you.

[Technical difficulty]…

Thank you for your question, Mr. Borsch. Our next question comes from Ralph Giacobbe with Citi. Your line is open, sir.

Thanks. Good morning. Last year, you had talked about a potential opportunity to go back to customers and maybe take some risk off the table for them for 2021. I'm not sure if that program resonated or not and whether that had any impact on the guidance. And maybe if there are considerations around your stop loss book specifically for this year that we need to consider in terms of what's baked into the guidance. Thanks.

Ralph, good morning. It's David. I think what you're reflecting back on is, as the pandemic, the breath and magnitude of it began to take hold and become obvious, we made the decision as an organization that we would seek to return all the favorable economics that were manifested because of COVID disruption to clients, customers, patients, our provider partners, and our coworkers. So you're reflecting back to that. We did take proactive action throughout the course of the year to work with clients, that's a client-by-client set of actions depending on the client's position, desire, funding mechanisms, et cetera, to both return value in absolute sense, and in some cases restructure programs with an eye toward 2021. In some cases you could think about the, call it, the risk sharing relationship with those clients may have moved somewhat depending, again, on the clients' preference. But that's again a client-by-client call. To the latter portion of your comment, I would say there's no meaningful different between stop loss either structure or performance expectation for 2020 versus 2021. And we continue to feel very good about the way stop loss is performing for piece of mind for our clients, as well as for ourselves.

Okay, thank you.

Thank you, Mr. Giacobbe. Our next question is from Robert Jones with Goldman Sachs. Your line is open, sir.

Great, thanks for the question. And maybe just on Evernorth and the guidance. If I look at this $5.6 billion of operating profit expectation, it doesn't seem like it bakes in too much underlying growth, if I'm thinking about this right. So I just wanted to talk through some of the pieces. And if you account for the expected benefit from the Anthem overhead costs rolling off, some of the incremental deal synergies, the Prime Scripts, just want to make sure I'm thinking about the underlying business there correctly, and what you guys are assuming the kind of organic underlying growth could be in this business for '21?

Good morning. It's David. So let me start, I'll ask Brian to add some additional specificity. Stepping back relative to the Evernorth platform, we're delighted. We're really pleased with the performance, the growth that is being realized because of the value that's being delivered to our clients. Our commercial clients, our helpline clients, our government clients, from that standpoint. Two is, to put a pin in it, this is specifically relative to transit overhead, we were able to more rapidly accelerate the extraction of this transit overhead largely because of executing our efficiency initiatives, but also the significant growth. So this transit overhead extraction was more accelerated from its initiation in 2019 through 2020. Third point, before I hand it over the Brain, I would just ask you to recognize the fact that we continue to invest significantly because of the rate and pace of growth in the business as we are continuing to add significant business to that portfolio, and we've called out before, investments that are being made relative to OpEx, largely operating expenses, to add our first phase of our Prime relationship. Now, we're evolving the second phase of the Prime relationship, and we're delighted to do so. And that will take place throughout the totality of 2021, while reinforcing the growth in the underlying strength. Meanwhile successfully continuing to grow earnings in line with our prior strategic target, we will look forward to providing you some additional insight relative to the forward-looking both revenue and earnings trajectory of that business at our investor day. Brian, some adds?

The only comment I'd add on top of this, to remind you, Robert, that the 2020 performance, when you exclude transitioning clients it showed 20% revenue growth in Evernorth, and 22% growth in adjusted pharmacy scripts year-on-year. So coming off a very strong year in 2020, and stepping into 2021 with continued momentum.

That's fair. Thanks so much for the comments.

Thank you, Mr. Jones. Our next question is from Justin Lake with Wolfe Research. Your line is open, sir. Mr. Lake, are you on mute? Moving on to our next question from George Hill with Deutsche Bank, your line is open, sir.

Yes, good morning, guys, and thanks for taking the question. I guess as we think about the $1.25 headwind for calendar '21, are you able to give us an order of magnitude on what is the gross impact of the COVID headwind versus the gross impact of the expectations for reduced medical claims and reduced medical costs, that would be helpful, thank you.

Morning, George. It's Brian. So I appreciate the question, and the nature of the way you structured it. I'm going to approach it maybe a little bit differently, but hopefully this will get at what you're looking for here. As we do mention the $1.25, I would encourage you to think about it in three broad categories. The first one being the impact of elevated COVID-19 testing, treatment, and vaccination costs, as well as some of the pressure we anticipate in our revenue, for example, in our Medicare business. I would size that at about half of the $1.25. In fact, as it relates to the 2021 effect on our U.S. Medical book. And you'll see that primarily in the medical care ratio, or the MCR. The second component that's sizable is in customer volumes, again specifically in our U.S. Medical business, we would expect about 35% to 40% or so of that $1.25 to show up in the form of lower volumes due to the ongoing economic pressures associated with the pandemic and then the balance is smaller components that will show up in different parts of the company.

Okay, maybe as a quick follow-up, is there any impact expected to the Evernorth segment?

The Evernorth impact is quite modest. I would characterize it's immaterial relative to the size of that business.

Very helpful. Thank you.

Thank you, Mr. Hill. Our next question is from Ricky Goldwasser with Morgan Stanley. Your line is open. Mr. Goldwasser, are you on mute? Moving on to our next question from A.J. Rice with Credit Suisse, your line is open, sir.

Thanks. Hi, everybody. Just to ask about Evernorth, two aspects there, one with now enhanced capital for deployment. It seems like part of the story for Evernorth is diversifying the service offering beyond the pharmacy benefit focus that it currently has. Can you comment on how quickly and you think you can diversify and maybe update us on the areas that you're thinking about adding to the capability there and then just base it on Evernorth, there was some talk last year that the PBM selling season, people were renewing for a year because of the pandemic. And do you expect the selling season to have more RFPs than normal this year? Or is it sort of a normal RFP season from what you're seeing so far?

A.J. good morning, it's David. Relative to your first question, the platforms that we're operating within Evernorth and again, we'll walk through it in some good detail at our Investor Day, there are four platforms within that portfolio are well performing pharmacy services, our care management or benefit management or health intelligence platforms that are functioning, operating, delivering significant value today, and each one of which we'll continue to be invested in first and foremost, organically. Brian referenced the CapEx deployment that we have within our portfolio and Evernorth is a part user of that $1 billion CapEx. Secondly, through partnerships, the way we work to partner in different ways, shapes and forms and thirdly, potentially, through M&A from that standpoint. But the platforms we have we feel quite good about as an illustration in terms of the M&A capabilities we've talked about expanding our ability to serve customers, where they are, and where they seek to be served, whether that's expanded virtual platforms, expanded in-home capabilities, et cetera through that lens. As it relates to your second question, the selling season et cetera grounded in the comments we made relative to just the very strong growth results we've put up over multiple years now. We'll be able to carry that momentum through 2021. We're pretty thick into the 2022 selling season right now. The health plan season is far along, the large commercial season is meaningfully along, and the middle market consortium selling season is in the early stages. As of right now we know we have two health plan losses for 2022. We've had essentially 99% plus retention up until that point for our health plan business and we would like to retain every client every day. And we know that that's not possible. But we have two no losses that have been written about in the marketplace. Notwithstanding that, we have visibility to meaningful new business ads from the 2022 selling season and we'll be able to continue to build on the momentum we posted for 2019 and 2020.

Okay, thanks.

Thank you, Mr. Rice. Our next question is from Dave Windley with Jefferies. Your line is open sir.

Hi, good morning. I'm hoping to hear David how central and important telemedicine is to Cigna and Cigna's strategy, thinking about how are you baking that into product design? How are you thinking about extended higher reimbursement deferral of patient copay, and does like remote passive digital monitoring of high risk patients fold into that picture, I'd just love to hear you talk about how central that is and how much say Cigna is pushing that as opposed to waiting on customers to pull that from you?

So, good morning. It's interesting the way you ended in terms of push pull. We've talked before around our orientation is being we think about ourself as a consultative solution provider. So I pause a little bit on the push side of the equation, but stepping back, your framing I think is quite healthy. As I noted in my prepared remarks, we see the change in which care will be accessed and coordinated is one of the three defining trends over the decade in front of us. And we see significant opportunity to be clear. So let me agree, we see significant opportunity to deliver more value, more choice, more simplicity, with appropriate coordination back to customers and patients through effective use of virtual programs. This is well beyond telemedicine, it's well beyond Urgent Care triaging. There's longitudinal nature that is attached to that, it is aided by remote monitoring, it is aided by a coordinated system to make that longitudinal delivery work. We see this transcending from healthcare through behavioral health to coordinated health care and behavioral health services from that standpoint, and we see it as a significant opportunity. I'd also note that, we've been mindful in terms of the positioning of the corporation whereby we see that as not only a significant opportunity in the market, but for us, because we've sought not be positioned in, we'll call it bricks and mortar delivery or fixed delivery infrastructure, but having the flexibility of the variable delivery infrastructure that is aided for clients. And then lastly, we do see your point, you have the ability to design benefits; you have a virtual primary benefit structure that are being tested in the marketplace today. And you can push that, you can put that in the push category, but it's a choice that you would offer. And we've already seen some positive markers. So a significant opportunity, our company is positioned to pursue it. And you should expect us to spotlight this in a little bit more detail on March 8.

Great, thank you.

Thank you, Mr. Windley. Our next question is from Justin Lake with Wolfe Research. Your line is open, sir.

Thanks. Can you hear me this time?

Yes, we can, Justin.

Sorry about that. So couple quick numbers question, one the Evernorth revenues were materially higher than at least I was modeling yet it didn't seem to flow through to the bottom line in terms of earnings, which were more in line. So curious there, if there's anything I'm missing, and then on the exchange business, can you give us an update of a lot of competition there, I know you're rolling into a bunch of new markets, can you share with us how much new membership you expect to have there and any kind of margin impact, kind of versus typical targets that we should think about for '21? Thanks.

Good morning, Justin. It's Brian. I'll take the first part of your question, then, David will comment on the individual exchange part. In terms of the Evernorth business really pleased with the revenue performance that we drove in 2020, and your comment about the relationship to the earnings, couple of things I would keep in mind there. One is the relationship that came out with Prime Therapeutics, effective April 1st, and that became expanded on January 1, 2021. When we onboard any new clients, there's a level of startup cost associated with that, as we think about bringing on new headcount to make sure that we're ramped-up for the volumes that will come. So we had a little bit of expense related to the startup associated with our relationship with Prime Therapeutics in 2020. Additionally, the Cigna U.S. medical insourcing, which is now complete, brought revenue, but deminimis earnings contribution in 2020 to Evernorth. So those are really the two dynamics that caused a little bit of the revenue versus earnings growth difference that you think, David anything you want to call out relative to the individual business?

Sure, Justin, good morning, relative to the business. First, we're pleased with the performance that we're stepping into 2021 with rolls to that portfolio. As I noted in our prepared remarks, we're expanding to counties, we're participating in by about 50%. Brian did also note that we're exiting the non-ACA portion of that business. As it relates to margins, Justin, I would remind you, we were early to note that a couple of years ago, we thought that that portfolio of businesses nationally was earning margins above a sustainable margin threshold and we said targets have to revert to a sustainable marketing threshold. And in fact, the MCR we posted this year, we indicate it would show some impact of the margins, more normalizing and that indeed to take place. As it relates to the 2021 and beyond positioning, we think that our margin targets are sustainable, given our provider relationships and our service proposition and we look to grow that portfolio.

Thank you, Mr. Lake. Our next question is from Steven Valiquette with Barclays. Your line is open.

Great, thanks. Good morning. So if you think about the commercial membership, like you mentioned you expect continued organic growth throughout the year in overall commercial membership. Curious if we can read into that maybe that Cigna is perhaps already troughed on the quarterly progression of commercial enrollment as it relates to COVID impact, economic impact etcetera. And then just within that with national accounts expect that to be down a little bit, any sense on when we may see the trough on that, whether it's early in the year or late in a year in 2021. Thanks.

Good morning. It's David. I think you've identified several important features there. So, as it relates to commercial customers for 2021, as we expected to step into 2021 with about the number of customers we would end 2020 with, as relates to the years pattern. I'd ask you to think about it as follows. First, we expect the ongoing COVID impact to disenrollment to continue to have pressure on customers throughout the first-half of 2000, our customer number-- throughout the first-half of 2021. Second, as typically takes place in the national accounts segment, there are some non-COVID related disenrollment that happens historically in that business because most of the selling takes place during the first portion of the year. Offsetting that is continued growth and strength in the Select segment that has a very active selling season throughout the course of the year as well as some known middle market and new business ads that will take place during the middle portion of the year. Now, as it relates to looking forward, you asked the final part of your question relative to the trough in national accounts. Our early look at 2022 is we would expect a very attractive retention number at this point for our U.S. medical national account relationships, as well as the selling season has been pretty active right now for us. The RP volume is up. The quality of the RP volume is high. We have some new business opportunities wins that we have on board already. And we're an active pursuit. So we have a level of optimism relative to the outlook for that segment for January of 2022.

That's great. Thanks.

Thank you, Mr. Valiquette. Our next question is from Ricky Goldwasser with Morgan Stanley. Your line is open. Mr. Goldwasser you are on mute. Moving on to our next question from Josh Raskin with Nephron Research, your line is open.

Hi, thanks. Good morning. Congrats, David and Brian, and the rest of the team on the new roles. So our question here is more around Cigna was relatively early in sort of that development of an ACO strategy. It seems like the market is certainly been catching up quickly. So was wondering if you could speak to your efforts around engaging providers, especially primary care physicians and maybe perhaps how that approach differs in your Medicare book versus your commercial book?

Good morning Josh.

Good morning.

So, relative to the ACO strategy, I think that's a broad definition of what the market calls value-based relationships and you're correct, we had an early start and a lot of passion and drive and therefore strategic direction relative to it. I would start with the end and that is the Medicare advantage book in general has a higher penetration of a comprehensive nature of value-based care relationships per customer that we serve versus commercial. So and you probably see that in other ways, you look at the marketplace, the primary care physicians integrated, multi-specialty physician groups, et cetera, tend to adapt many internalize value based care, more comprehensively for Medicare advantage given the population's health needs and the opportunity to deliver really significant value. The exciting and piece of it is we've been working now for a decade to prove that thesis in the commercial space. It varies by market in terms of the level of breadth and depth, but we have well in excess of 600 collaborative accountable care relationships that are up and running and delivering meaningful value. The more mature ones are delivering meaningful value for customers and clients. What does that mean? Clinical quality, so higher gaps in care closure, service quality, strong service experience, and improved affordability from that standpoint. And then the last comment I would add here is the market is always dynamic, but one of the impacts of COVID-19 is it, it jars everybody in every norm and as it relates to value based care, it puts a spotlight back on value-based care that shared risk and shared performance relationships. Now may look a little bit more palatable to some that may have not viewed it in the past and were more white to a fee-for-service model. So, we see an opportunity to further expand and deepen some of those relationships both in commercial specifically, but as well as in some of the Medicare advantage opportunities.

Thank you.

Thank you, Mr. Raskin. Our next question is from Charles Rhyee with Cowen. Your line is open.

Hi, thanks for taking the question. Just wanted to ask again about the direct cover cost in this year in this $1.25 and [indiscernible] you gave it, but is there a way to give a split between maybe testing cost relative to treatment cost in that number that you expect this year? And I think there has been some talk about potential for changing rules where plans would be required to cover additional testing cost like about return-to-work kind of cost I think plans are currently covering, just wanted to get your sense first on that first part. And then, secondly, is that a big amount that you -- if that were to happen, how big amount is that in the testing scheme overall? Thanks.

Good morning, Charles. This is Brian. So in terms of the first part of your question there, dimensioning the test versus the treatment, we have gone through extensive modeling as you might imagine to project what we think is going to transpire in 2021, which led us to $1.25 COVID impact that described earlier. And as I went through to a previous question, we expect about half of that to come through in the form of elevated claim cost and/or revenue pressure in our U.S. Medical MCR book. So I am not going to split apart each of the different components in that for you. But just rest assured we've got a variety of projections that underlie that. So, David, maybe you want to comment on the effects of some other components?

So, related to testing as we stand today first and foremost, the industry broadly speaking stepped in early clear and aggressively in support of clients and patients related to testing initially as well as evolving through process, procedures related to treatment. As it relates to what I would describe as unmed or worksite support, the posture has been thus far in term -- and good collaboration with HHS, I mean [indiscernible] staff, but that is outside of what an insurance or a service relationship should be. To the extent that we visited, we visited dynamically. But, that's typically carried by the employer through an unmed relationship or otherwise. It also reminds you that 85% of our commercial business is self-funded. So, we act as a fiduciary. I mean in cases where individual employers want assistance relative to that, we're proactively supporting through that lens. But we do not see that as (a), likely in the immediate future even relative to engagement on these topics this week, or (b), a needle mover for us given the makeup of our portfolio of businesses.

Great, thank you.

Thank you, Mr. Rhyee. Our next question is from Lance Wilkes with Bernstein. Your line is open.

Yes, good morning, Brian and David. So let me just pull up a little on the strategic capital deployment, and if you could just talk to maybe two dimensions on that? Appreciate your earlier comments. As you were talking about bricks and mortar being of less interest and specifying of the areas in virtual home and remote monitoring et cetera that were of interest, maybe you can just call out the distinction? Maybe I am putting too emphasis on physician practice as being bricks and mortar and excluding them as an area of focus. And then similarly if it's in Evernorth, will be more focused on providing these services to employers and health plans? Or, how much of the focus is providing these services to risk bearing primary care or other value based care sorts of companies? Thank you.

Hey, Lance. Good morning. It's David. I'll start with the latter portion of your question first. So, as we evolve our capabilities both the present states, but evolve our capabilities, you should think about in general all that happens within Evernorth. It happens within Evernorth as it relates to a platform of services to serve health plans, to serve corporate clients, to serve governmental agencies, and to offer services to, as you articulated, risk bearing or performance based healthcare delivery systems. And you should think about Cigna's U.S. Medical portfolio as a consumer of those services. Now clearly an important development partner, but a consumer of those services as another client of Evernorth. As it relates to the first portion of your question, I think your basic framing of it is right. And so, if just reiterate it and step it up a notch, our view is that the U.S. is not in need of more physical proximity and physical plant to serve the population in general, especially in urban and suburban areas. We obviously have additional need states relative to rural areas in that standpoint. Secondly, the consumer behavior in a variety of areas including healthcare has reinforced desire not an acceptance, but a desire for bringing care and services to me in a real-time basis in a highly personalized basis, therefore virtual care coordination, and obviously that's augmented with clinical staff, but it's bringing the service to the individual and an immediate real-time basis so long as it could be longitudinally managed and coordinated effectively. And then, the last point I want to be really clear on, our view of it is as a complimentary aspect to the care delivery system, not as addition to remediation play, but as a complimentary aspect, because to make it work properly, it needs to be connected back into the healthcare delivery system. And we have many examples of it working today in our approach to virtual, both for medical as well as behavioral. We just see the ability to ramp it significantly given both the demand and the acceptance, and then the tool availability.

Okay, thanks.

Thank you, Mr. Wilkes. Our last question will come from Scott Fidel with Stephens. Your line is open, sir.

Okay. Thanks. Good morning, guys. I had a question just maybe helping us to think about the Medicare advantage margin progression that you're thinking about for 2021 in 2022 and particular maybe if you can call out, I don't know maybe within that $25 headwind from COVID just how you're, what you're thinking specifically about the impact from the lower raps in 2022, which I guess would probably impacting you a bit more just because of all the enrollment growth, the 18% growth that you had in MA just last year, but then as we go into 2022 how much sort of improvement in margin you could potentially get as you normalize the raps. And then also it looks like we have a pretty solid base rate update from CMS as well in terms of that 4% plus.

Good morning, Scott. It's Brian. A few components to your question there, and just broadly the way I would encourage you to think about it is, we're on a multi-year growth turning for this business, right? And we're a year or two of our geographic and product expansion with the expectation of 10% to 15% annual growth. Really happy with the 18% growth we put up in '20. AND well on track to achieve 10% to 15% and '21. The margin profile tends to vary for a few different reasons. One is when we go into a new market, there tends to be a build-up in terms of investments, in people, in marketing before the customers start to come in. Two is when we rate a new customer, typically there's a bit of a ramp relative to profitability from a durational standpoint due to the risk adjustment coding, which you've appropriately called out. Thirdly, due to the unique nature of 2020 and the COVID-19 headwinds that we faced, the results of lower utilization, right? So as a result of that, we were not able to get all of the risk adjustment codes that we would in a normal year, if you will. We factored all that in due to 2021 outlook, the $1.25 earnings per share headwinds that we've called out here. A component to that is associated with Medicare advantage and it's associated with lower revenue that we would have otherwise anticipated having. So, as you kind of step forward as David said in the beginning 2022 and thereafter, we expect some of that will work itself out. And we're not going to give you exact 2022 guidance here today, that's the way I would encourage you to think about the margin profile.

Okay, thanks.

Thank you, Mr. Fidel. I will now turn conference back over to Mr. David Cordani for closing remarks.

Thank you. So just to wrap up, I'd like to highlight a few key points from today's discussion. First, I'm very proud of the way in which our colleagues supported the needs of our stakeholders throughout this pandemic, while also ensuring that we delivered on our shareholder commitment. We delivered solid 2020 financial results, including revenue and EPS growth and outstanding free cash flow. And our strong 2020 performance and the strength of our businesses give us confidence that we will achieve continued attractive growth in 2021 and beyond driven by a significant increase in revenue, ongoing profit growth, and very attractive cash flow performance. We thank you for joining our call today, and we look forward to going into more depth with you around our growth plans at our Investor Day, which is slated for March 8. Have a good day.

Ladies and gentlemen, this concludes Cigna's fourth quarter 2020 results review. Cigna Investor Relations will be available to respond to additional questions shortly. A recording of this conference will be available for 10 business days following this call. You may access the recorded conference by dialing 866-451-8962 or 203-369-1203. There is no passcode required for this replay. Thank you for participating. We will now disconnect.