Health Plan Weekly

UnitedHealth Group faces a crisis as the fallout from the hack of its Change Healthcare subsidiary continues to spread. The firm is rumored to have paid $22 million to the hackers who may have caused the breach, even as it faces falling stock prices, federal actions to stabilize provider reimbursement, payer operations disrupted by the hack, and legal risk.

A civil suit has already been filed against UnitedHealth due to the cyberattack, and the scale of the disruption may strengthen enforcement action resulting from a newly revealed federal antitrust investigation into UnitedHealth. Because of the cyberattack, payments to thousands of providers have stalled, causing a liquidity crisis for some practices. The hack also may have exposed thousands of other health care entities to data breaches. UnitedHealth’s stock price dropped from $521.97 on Feb. 21 (the day the breach was disclosed) to $478.78 at the close of business on March 7.

While reinsurance programs have become popular among states hoping to stabilize their individual insurance markets, a new study makes a compelling case that the premium reductions attributed to such programs may not be as helpful as they seem.

States can apply for and implement reinsurance programs via Section 1332 waivers, which allow them to waive certain Affordable Care Act rules in order to test marketplace innovations — provided they adhere to strict guardrails. Reinsurance works by subsidizing insurers’ highest-cost claims, allowing them to charge lower premiums overall.

Speaking at two health care investment conferences on March 5, executives at three major health insurance companies noted that they had been affected by the ongoing cyberattack on Change Healthcare, the nation’s leading processor of medical claims. However, they noted that it is still too early to assess how the Change attack will affect their first-quarter results.

The companies — CVS Health Corp., Elevance Health, Inc. and Humana Inc. — each reaffirmed their financial guidance for the year while addressing investors. They admitted, though, that they do not have as much information on claims and utilization as usual due to the Change outage that was discovered on Feb. 21.

Here’s how major health insurers’ stock performed in February 2024. Elevance Health, Inc. had the highest closing stock price among major commercial insurers as of Feb. 29, 2024, at $501.25. Humana Inc. had the highest closing stock price among major Medicare insurers at $350.32.

Change Healthcare is the target of an ongoing cyberattack that is causing significant disruption for providers and pharmacists that rely on the UnitedHealth Group subsidiary to process claims, payments and authorizations.

While two prominent credit-rating firms say the incident likely won’t affect the credit worthiness or earnings outlook of UnitedHealth’s overall enterprise, one industry expert says the Change cyberattack does still pose risks for the company — and puts similarly diversified health insurers on notice.

“There’s just no guarantee that anybody’s going to be entirely safe from cyberattacks,” says Dean Ungar, a vice president and senior analyst at Moody’s Investors Service. “I think this does serve as a wake-up call or reminder to everyone in the industry…Even those [firms] that weren’t hit probably took this opportunity to take another look at what they’re doing and make sure that they’re protected — to the extent that you can be.”

Part of a long-running lawsuit filed by Elevance Health, Inc. against The Cigna Group, over what Elevance considers inappropriate contract practices by Cigna's Express Scripts PBM, entered mediation mandated by the Second Circuit Court of Appeals, according to court documents and Elevance’s latest 10-K filing with the Securities and Exchange Commission (SEC). Elevance was seeking to recover $14.8 billion in damages and is now appealing a district court judge’s dismissal of its remaining claim.

David Kaufman, an attorney at Laurus Law Group LLC, says that the mediation mandated by the Second Circuit is unlikely to do much to satisfy Elevance.

Since the Supreme Court overturned Roe v. Wade last year, 8% of large firms offering health insurance to their employees reduced or expanded their coverage for abortion. That’s according to an analysis of KFF’s Employer Health Benefits Survey, which found that 3% of firms whose largest plan does not cover abortion or covers it under limited circumstances reduced or eliminated coverage for abortion. Meanwhile, 12% of firms whose largest plan covers abortion in most or all circumstances added or expanded abortion coverage. KFF defined large employers as those with at least 200 workers.

U.S. health insurance companies’ capitalization levels are expected to increase this year but at a lower rate than last year, according to an AM Best report released on Feb. 29. The credit rating firm noted that the growth should slow because many insurers are seeing less profitability in their Medicare Advantage and managed Medicaid books of businesses. The report found the growth in net premiums written by health insurers increased 10% in 2022 and 7.6% through the first three quarters of last year.

The U.S. Dept. of Justice (DOJ) has opened an antitrust investigation into UnitedHealth Group, according to an internal company document shared with AIS Health and a Wall Street Journal report citing unnamed people familiar with the matter.

Federal regulators are reportedly seeking information about how the Minnesota-based company’s UnitedHealthcare insurance arm interacts with the many provider acquisitions that its Optum division has made in recent years — and how that relationship affects competition.

One health care economist says that while many unanswered questions remain, the result of a different investigation into provider consolidation suggests that the DOJ’s probe of UnitedHealth could end in an antitrust lawsuit.

With respective increases of 10.8% and 10.7% in 2023, health care spending on prescription drugs and home health care rose the fastest out of seven health care categories analyzed in a recent Altarum report.

Total national health care expenditures grew by 6.2% last year, while gross domestic product (GDP) increased by 6.3% year over year. In December 2023, health care spending accounted for 17.2% of GDP and has remained below 17.5% since January 2022. About 84% of health spending was attributed to personal health care, half of which was spent on hospital care and physician and clinical services.

More than half — 52% — of adults covered by commercial insurance deal with social risk factors that can raise health care costs, according to a Feb. 20 white paper from UnitedHealth Group and the Health Action Council (HAC). UnitedHealth and HAC executives say that the report’s findings can help health plans and plan sponsors be more proactive in addressing social determinants of health (SDOH)-related needs in commercial populations.

Some SDOH challenges faced by the commercially insured population include social isolation and problems with finances, food, and housing, per the report. Twenty-six percent of the studied group faced one SDOH risk, 16% faced two SDOH risks and 10% faced three or more.