Health Plan Weekly

Humana’s Slashed Earnings Outlook Stuns Analysts

Although a recent Humana Inc. regulatory filing had already prepared the market for a lackluster fourth-quarter earnings report, Wall Street analysts appeared to be shellshocked on Jan. 25, when the Medicare Advantage-focused insurer detailed just how much of a financial hit it expects to take from an unanticipated care utilization surge.

“Worst case scenario plays out,” Justin Lake of Wolfe Research wrote in a note to investors published shortly after Humana released its financial results — which included a newly revised 2024 adjusted earnings per share (EPS) outlook of “approximately $16.”

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© 2024 MMIT

National Health Care Spending Growth Returned to Pre-COVID Levels in 2022

Total U.S. health care spending increased by 4.1% in 2022, hitting $4.5 trillion, according to CMS. The growth rate appeared to return to the average annual rate of the 2010s, while the share of the gross domestic product (GDP) devoted to health care (17.3%) also fell to pre-pandemic levels.

The rise in overall health care expenditures reflected faster growth in spending for administration costs, retail prescription drugs and long-term services from 2021 to 2022, which was offset by a decline in federal public health spending, according to an analysis by KFF. As the pandemic entered its third year, public health spending dropped by $33 billion compared to 2020.

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© 2024 MMIT

News Briefs: CMS Appeals to Public for More Medicare Advantage Data

The Biden administration on Jan. 25 released a Request for Information to seek feedback about the best way to enhance Medicare Advantage data capabilities and increase public transparency. In a press release, HHS pointedly noted that “transparency is especially important now that MA has grown to over 50% of Medicare enrollment, and the government is expected to pay MA health insurance companies over $7 trillion over the next decade.” To that end, the agency said it’s seeking data-related input on aspects of the MA program including access to care, prior authorization, provider directories and networks, supplemental benefits, marketing; care quality and outcomes, value-based care arrangements and equity, and “healthy competition in the market, including the effects of vertical integration and how that affects payment.”

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© 2024 MMIT

UnitedHealth Aims to Take ‘Guess Work’ Out of Assessing Health, Well-Being Offerings

Numerous companies have developed health and well-being apps and programs, making it difficult sometimes for companies to assess them and choose which ones to offer their employees. With this problem in mind, UnitedHealthcare recently rolled out UHC Hub, a platform that helps self-insured employers select and purchase health and well-being programs.

The vendors participating in the UHC Hub include Teladoc Health, a leading telehealth company; Noom, a subscription-based app for weight management and healthier living; and Cleo, a company that offers support for parents and caregiving.

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© 2024 MMIT

Final Rule Could Reduce Improper Prior Authorization Denials in Medicaid

A rule recently finalized by CMS may address widespread problems with Medicaid prior authorization identified in an HHS Office of Inspector General (OIG) report, industry experts say. However, they suggest that to truly solve the problem of improper coverage denials, states and Congress must limit managed care organizations’ leeway in such matters.

The CMS Interoperability and Prior Authorization Final Rule, released on Jan. 17 and scheduled for publication in the Feb. 8 Federal Register, should help providers and patients better understand why a given request was rejected, experts tell AIS Health, a division of MMIT. The rule requires MCOs to share precise, specific reasons for denials and make those decisions faster. Most provisions in the final rule also apply to Medicare Advantage organizations, state Medicaid and Children’s Health Insurance Program fee-for-service programs, and Affordable Care Act plans sold on the federally facilitated exchanges. Additionally, the regulation includes interoperability and data transparency provisions.

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© 2024 MMIT

In Strong Fourth Quarter, Elevance Avoids Utilization Spike

Elevance Health, Inc. reported stronger results for its 2023 fourth quarter earnings than its other publicly traded managed care peers so far, driven by relatively low utilization across its diverse mix of business lines. The results received positive reviews from Wall Street analysts, who contrasted the strong results with other carriers’ struggles.

Elevance, the for-profit Blue Cross and Blue Shield affiliate formerly known as Anthem, experienced lower care utilization than other managed care heavyweights like UnitedHealth Group and Humana Inc. — something that analysts were quick to note in their coverage of Elevance’s results. Elevance has substantive business in commercial insurance, Medicare and Medicaid.

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© 2024 MMIT

Utilization Angst Gives Humana, UnitedHealth a Tough Start to 2024

If the market reactions to a Humana Inc. regulatory filing and to UnitedHealth Group’s latest earnings report are any indication, concerns about elevated care utilization that cropped up in the second half of 2023 have followed health insurers into the new year.

While Humana had already expected that heightened medical care use among its senior enrollees would continue through the rest of 2023, “actual fourth quarter results reflect an additional increase in Medicare Advantage medical cost trends,” the company said in a Jan. 18 filing with the Securities and Exchange Commission.

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© 2024 MMIT

Senate Introduces Price Transparency Bill but Leaves Out Site Neutrality

A bipartisan group of senators has introduced price transparency legislation crafted by the Committee on Health, Education, Labor and Pensions (HELP) that would require plans and providers to publish all of their negotiated rates, codify the Transparency in Coverage (TiC) rule, make data-sharing rules more specific and stringent, and increase fines for noncompliance with data sharing requirements. However, the legislation does not include any site neutrality requirements, although one D.C. insider says that policy is still under discussion in the Senate.

The Senate bill, S-3548, comes on the heels of the House of Representatives passing the Lower Costs, More Transparency Act in December. The House bill would also codify the TiC rule, make data-sharing requirements stricter and increase fines for noncompliance to as much as $10 million. However, unlike the Senate bill, the House bill would include a tentative step toward site neutrality by barring providers from charging facility fees to Medicare for provider-administered drugs given to patients in outpatient departments. The new Senate bill also does not include any PBM reforms — the Senate Finance Committee has taken the lead on that issue.

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© 2024 MMIT

Employers Increasingly Opt for Self-Funded Health Plans

The share of employer-sponsored health insurance (ESI) enrollees who are in self-funded plans — meaning the employer, rather than an insurer, collects premiums and bears responsibility for paying claims — increased to 60% in 2021 from 55% in 2015, according to a recent Health Affairs study.

Based on 2015 and 2021 Clarivate Interstudy enrollment data, researchers found that in 80.5% of U.S. counties in 2021, the majority of ESI enrollees were in self-funded health plans. Over the years, 78.2% of counties saw growth in the share of ESI enrollees in a self-funded plan. Generally, that growth was concentrated in states with a lower percentage of self-funded plan enrollees in 2015.

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© 2024 MMIT

COVID’s Not Over: Fitch, S&P Say Pandemic Forces Are Still Hitting Insurers

Although 2024 seems far removed from the height of the COVID-19 pandemic, the ripple effects associated with that disruptive global crisis are still influencing how this year will turn out for the U.S. health insurance sector, two top credit ratings firms predict.

“We’re calling it the pandemic hangover,” says Brad Ellis, senior director in Fitch Ratings' North American insurance rating group.

“I think this year might be the last year we’re seeing what we call pandemic-related effects on the industry,” adds James Sung, director of insurance ratings at S&P Global.

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© 2024 MMIT