Cigna Corp. on Nov. 4 reported a higher-than-expected medical loss ratio (MLR) for the third quarter of 2021, which the company blamed on rising medical costs from COVID-19 care and from high utilization among customers who signed up for Affordable Care Act exchange plans during the pandemic special enrollment period. However, equities analysts were not overly concerned, noting that most investors saw the “MLR miss” coming and that Cigna did beat Wall Street consensus estimates for its quarterly earnings.
Only a small number of physician specialties paid commercial health insurance plans over 150% more than Medicare payment rates for healthcare services, according to a recent Urban Institute study based on data from FAIR Health’s private health insurance claims database from March 2019 to February 2020. Anesthesia received the highest markup, at 330% of Medicare rates. Meanwhile, many specialties, such as cardiology, cardiovascular surgery, general surgery and orthopedics, received modest commercial payment rates that were 130% to 150% above Medicare rates.
Humana Inc.’s earnings for the third quarter beat Wall Street projections, but the firm lowered its end-of-year guidance, citing COVID-19 costs. The Medicare Advantage-focused payer’s executives also said it would sell off much of its hospice operations, touted the firm’s acquisitions in home care and said they are actively looking for more home health and primary care providers to purchase.
CVS Health Corp. beat earnings projections for the third quarter, with PBM subsidiary Caremark a main driver of profitability. Aetna, the firm’s health insurance subsidiary, was also profitable, but its results disappointed Wall Street analysts. CVS executives also doubled down on the firm’s growing primary care strategy and indicated they may seek transactions in that space.
✦ Politan Capital Management LP, a new hedge fund led by longtime activist investor Quentin Koffey, plans to use its $900 million stake in Centene Corp. to replace several of the carrier’s board members, the Wall Street Journal reported on Nov. 3. Politan hopes to increase margins at the insurer, which have been lower than those at other large carriers. According to the Journal, Politan wants to put former WellCare CEO Kenneth Burdick and former Anthem, Inc. Chief Financial Officer Wayne DeVeydt on Centene’s board.
When the annual open enrollment period for Affordable Care Act exchange plans kicks off on Nov. 1, consumers will be shopping in a market that is experiencing a surge of insurer competition and consequently, a dizzying array of plan choices.
“The number of plans that people are seeing is increasing dramatically,” David Anderson tells AIS Health, a division of MMIT. Anderson is a research associate at the Duke-Margolis Center for Health Policy who studies the ACA marketplaces.
Humana Inc. and Blue Shield of California recently became the latest payers to ink deals with prior authorization (PA) and billing tech vendors, following a national trend. Experts tell AIS Health that such deals by insurers are key to managing utilization and spending; improving patients’ and providers’ experiences; and complying with federal mandates for interoperability, price transparency and cost estimation — and could be a strategic differentiator for proactive carriers.
Centene Corp. reported solid results for the third quarter of 2021, achieving Medicare and Medicaid membership increases and raising revenue guidance for the full year. To Jefferies analyst David Windley, the company’s results “reflect an improvement from a messy 2Q.”
COVID-19-related costs, a headwind called out in Centene’s second-quarter earnings call, peaked in August. Their decline continued in October. “Similar to peers, [Centene’s management] noted an offset dynamic between rising COVID costs and declining non-COVID utilization due to Delta,” Windley noted. Centene was able to manage through this challenge with steady Medicaid and Medicare performance.
✦ The Biden administration released a diminished version of its proposed spending package, and several health care policies coveted by progressive Democrats — including drug price reform — are among the items that got cut. Critically, Medicare drug price negotiation is not included in the so-called “Build Back Better framework.” However, House Speaker Nancy Pelosi (D- Calif.) reportedly was working on a last-ditch effort to include some drug-pricing provisions. The package would extend the expanded tax credits for Affordable Care Act exchange premiums, made available during the pandemic, to 2025, and Medicare would be expanded to include hearing benefits, but would not include vision or dental.
While two separate administrations have now specified that health insurers must cover, without cost sharing, all COVID-19 tests used for individual diagnostic purposes, one trade group says that health plans are still getting stuck with the bill for workplace-related testing — and the problem is only going to get worse.