Health Plan Weekly

Integrated insurer-provider Kaiser Permanente (KP) will acquire Geisinger Health, the Pennsylvania-based integrated health system and health insurance plan, as part of a new Kaiser venture that will aim to take over other regional nonprofit hospital systems. That new venture, Risant Health, will be an independent division of Kaiser and seek to orient its subsidiary hospital systems toward payer-agnostic, value-based reimbursement. Experts tell AIS Health, a division of MMIT, that the deal accelerates and intensifies the ongoing trend of multistate, cross-market hospital system consolidation.

According to Kaiser spokesperson Stephen Shivinsky, Geisinger is the inaugural member of Risant Health, “a new nonprofit organization created by Kaiser Foundation Hospitals to expand and accelerate the adoption of value-based care in diverse, multi-payer, multi-provider community health system environments….Risant Health will operate separately and distinctly from Kaiser Permanente’s core integrated care and coverage model while building upon Kaiser Permanente’s 80 years of expertise in value-based care.”

Recent weeks have brought both good and bad news for insurtechs, with Bright Health Group, Inc. appointing a new chief financial officer, putting its last health insurance asset up for sale, and disclosing that it’s being sued by a provider group for unpaid claims. Clover Health Investments Corp., meanwhile, revealed that it will outsource its core insurance operations to a technology vendor, cut 10% of its workforce, and settle one of a series of shareholder lawsuits filed against the company.

Industry observers tell AIS Health, a division of MMIT, that the net effect of those developments isn’t yet clear, but one thing is certain: The Bright and Clover sagas are far from over.

Based on estimates from the Congressional Budget Office, a new KFF analysis predicts that House Republicans’ Medicaid work requirements proposal would leave 1.7 million enrollees ineligible for Medicaid. The analysis noted that states could continue to cover enrollees who run afoul of work requirements, but they would have to cover 100% of their costs without federal help. If states did go that route, they could collectively face $10.3 billion worth of new costs in 2024. Republicans included Medicaid work requirements provisions in debt-ceiling legislation that passed the House on April 26, although the measure is not expected to clear the Democrat-controlled Senate.

Blue Cross Blue Shield of Michigan and Blue Cross and Blue Shield of Vermont, the largest health insurers in their respective states, have struck an agreement that will see the Vermont Blues plan become a subsidiary of BCBS of Michigan. The nonprofit companies said in a May 1 news release that this deal “is an affiliation, not an acquisition, which means there is no financial exchange between the organizations.”

The plans’ boards of directors have approved the agreement, which still needs to be approved by state regulators. A BCBS of Michigan spokesperson tells AIS Health that the regulatory process “will take several months to complete.” If the deal closes, the insurers will share technology platforms and other service offerings, among other collaborations.

Kaiser Permanente unveiled plans to acquire Geisinger Health and make it the first member of a new value-based nonprofit health organization called Risant Health, if the deal gains regulatory approval.

Kaiser Permanente’s health insurance products cover more than 11 million people in eight states and the District of Columbia, according to AIS’s Directory of Health Plans. Combined, Kaiser’s seven regional managed care plans form the largest provider-sponsored insurer, enrolling 28.1% of all provider-sponsored lives. It is the largest insurer in the commercial risk market, with over 9 million members. It also ranks as the fifth-largest Medicare Advantage health plan in the nation.

Here’s how major U.S. health insurers performed financially in the fourth quarter of 2022. Health Plan Weekly subscribers can access more health plan financial data — including year-over-year comparisons of leading health plans’ net income, premium revenue, medical loss ratios and net margins. Just email support@aishealth.com to request spreadsheets for current and past quarters.

Although the managed care earnings season kicked off with concerns about rising medical costs, equities analysts appeared optimistic about Humana Inc.’s prospects after the insurer reported its first-quarter 2023 financial results on April 26. They seemed particularly impressed by Humana’s performance during the Annual Election Period (AEP) and Open Enrollment Period (OEP) for Medicare Advantage customers.

Humana’s first-quarter results “brought forth a positive preliminary look at 2024 MA rates, strong MLR [medical loss ratio] upside aided by favorable development, and 2023 AEP/OEP details that draw a positive look into the composition of members, retention, and margins,” SVB Securities analyst Whit Mayo wrote in an April 26 note to investors.

Republicans in the U.S. House of Representatives have passed legislation that would require about one-third of Medicaid enrollees to be employed or looking for work, which would be a radical shift in the safety net program’s mission and operations. Although the bill has little chance of becoming law, given Democrats’ control of both the Senate and White House, many health care policy experts have been quick to name work requirements’ many downsides — and one health insurance trade group denounced the proposal.

The work requirements proposal narrowly passed the House on April 26 in a party-line vote. It’s part of H.R. 2811, the Limit, Save, Grow Act of 2023, a bill that is Republicans’ latest offer in ongoing negotiations with congressional Democrats and the Biden administration over raising the federal debt limit, which is projected to reach the current limit in July. The work requirements proposal is one part of a broader package of austerity measures. In a notable break with past work requirements policies, including those of the Trump administration, the H.R. 2811 proposal would make work requirements a part of the Medicaid program in every state. The Trump administration’s Medicaid work requirements policy required states to implement such programs through Section 1115 waivers, which allow states to waive certain Medicaid rules in order to test “budget-neutral" policy approaches aimed at better serving Medicaid populations.

Centene Corp. exceeded earnings projections during the first quarter of 2023 and raised its guidance, moves that were made possible by growth in Affordable Care Act exchange enrollment. But the carrier cut its guidance for 2024, mainly due to capital costs related to scaling up its Medicare Advantage business. One Wall Street analyst was sanguine on the results and praised the firm’s “conservatism” in approaching Medicaid redeterminations, which will have a disproportionate impact on the Medicaid-focused insurer compared to other commercial insurance peers.

Centene took in $35 billion in revenues during the first quarter of 2023, and delivered $1.16 billion in adjusted net earnings, which amounted to adjusted diluted earnings per share (EPS) of $2.11, a figure that beat the Wall Street consensus projection of $1.98. Total quarterly premium and operating revenues increased by 2% year over year, while adjusted quarterly net earnings increased by 8.2% year over year. Medical loss ratio (MLR) was 87%, down from 87.3% in the first quarter of 2022. Management reduced its 2024 full-year EPS projection to $6.60 or higher.

CMS on April 27 proposed new regulations that would “establish tangible, consistent access standards” in Medicaid as well as create “a consistent way to transparently review and assess Medicaid payment rates across states.” The new policies are included in two notices of proposed rulemaking — the Ensuring Access to Medicaid Services NPRM and the Managed Care Access, Finance, and Quality NPRM. Of note for the managed care industry, the proposed regulations would create national maximum standards for certain appointment wait times for Medicaid or Children’s Health Insurance Program (CHIP) managed care enrollees, CMS said. They would also create stronger state monitoring and reporting requirements related to access and network adequacy for Medicaid or CHIP managed care plans, and require states to conduct “independent secret shopper surveys” of Medicaid or CHIP managed care plans to verify compliance with appointment wait time standards and to identify where provider directories are inaccurate. Among other provisions, the NPRMs would additionally require states to conduct annual enrollee experience surveys for each Medicaid managed care plan, and establish a framework for states to implement a Medicaid or CHIP quality rating system, which CMS calls a “one-stop-shop” for enrollees to compare Medicaid or CHIP managed care plans based on quality of care, access to providers, covered benefits and drugs, cost, and other plan performance indicators.