Contract Awards

TRICARE Program at a Glance

The U.S. Dept. of Defense recently awarded $136 billion in contracts for its TRICARE program that provides health care benefits to military service members, retirees and their families. The contract award for the West region went to TriWest Healthcare Alliance of Phoenix, which is partnering with Regence health plans and Health Care Service Corp. to administer the program. Humana Government Business Inc. will continue to serve the East region when the next contracts begin in 2024. Currently, Health Net Federal Services LLC, a subsidiary of Centene Corp., covers the West region with about 2.8 million beneficiaries, and Humana covers the East region with more than 6.8 million enrollees. In 2024, six states in the East region — Arkansas, Illinois, Louisiana, Oklahoma, Texas and Wisconsin, with a total of 1.5 million beneficiaries — will transfer to the West region in order to balance out the number of beneficiaries served by the two regions.

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News Briefs: UnitedHealth Group Reported Full-Year Revenue Growth of 13%, Maintained ’23 Guidance

Reporting financial results for the quarter and year ending Dec. 31, 2022, UnitedHealth Group on Jan. 13 said full-year revenues grew 13% year over year to $324.2 billion, and earnings from operations rose 19% to $28.4 billion. The company ended the year with an 82.0% medical loss ratio, which was consistent with projections provided at its annual Investor Day. The UnitedHealthcare segment reported full-year revenues of $249.7 billion, up 12% from the prior year, and operating earnings of $14.4 billion, up 20% from 2021. Those results were largely driven by growth in the number of people served, including an additional 615,000 in Medicare Advantage; overall MA enrollment exceeded 7.1 million at the end of 2022. UnitedHealth also reported adjusted earnings per share of $22.19 for full-year 2022 and maintained guidance of adjusted EPS between $24.40 and $24.90 for 2023.

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News Briefs: UnitedHealth’s 4Q Earnings Beat Street Estimate

UnitedHealth Group kicked off the managed care sector’s latest round of financial results on Jan. 13 by reporting fourth-quarter and full-year 2022 adjusted earnings per share (EPS) of $5.34 and $22.19, respectively. The company’s adjusted EPS for the prior quarter beat the Wall Street consensus estimate of $5.17, and its medical loss ratio of 82.8% was just a hair higher (worse) than the consensus projection of 82.7%. The firm also reported that its full-year revenues of $324.2 billion grew 13% compared to 2021, “with double-digit growth at both Optum and UnitedHealthcare.”

Nearly 15.9 million people have signed up for Affordable Care Act exchange coverage since the start of open enrollment on Nov. 1, CMS reported on Jan. 11. “This record-breaking enrollment represents a 13% increase over last year, including over 3 million people new to the Marketplaces,” the agency said in a press release. As in prior enrollment snapshots, the 15.9 million enrollment figure includes signup data from both the federal and state-based marketplaces. In the 33 states using the HealthCare.gov platform, there were 11.9 million plan selections through Jan. 7, 2023, while the 18 state-based exchanges reported 4 million plan selections through Dec. 31, 2022. Americans in most states have until Jan. 15 to sign up for marketplace coverage for 2023, unless they qualify for a special enrollment period.

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With New TRICARE Pacts, Defense Dept. Pledges to Learn From Past Contractor Squabbles

Right before the holidays, the U.S. Dept. of Defense (DOD) offered a gift to Humana Inc., renewing its contract to manage health care services for TRICARE beneficiaries via a new $70.9 billion pact that begins in 2024. Yet Centene Corp. received an unwelcome surprise when it learned that its current TRICARE contract will expire at the end of 2023 and then move to a company called TriWest Healthcare Alliance.

Meanwhile, the new contracts appear aimed at addressing troubles that have dogged the military health care program in the past, such as rocky contractor transitions and concerns about continuity of care for families that change locations much more often than their civilian counterparts. In addition to active-duty service members and their families, TRICARE serves retirees and their families, survivors, and certain former spouses.

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TRICARE Program at a Glance

The U.S. Dept. of Defense recently awarded $136 billion in contracts for its TRICARE program that provides health care benefits to military service members, retirees and their families. The contract award for the West region went to TriWest Healthcare Alliance of Phoenix, which is partnering with Regence health plans and Health Care Service Corp. to administer the program. Humana Government Business Inc. will continue to serve the East region when the next contracts begin in 2024. Currently, Health Net Federal Services LLC, a subsidiary of Centene Corp., covers the West region with about 2.8 million beneficiaries, and Humana covers the East region with more than 6.8 million enrollees. In 2024, six states in the East region — Arkansas, Illinois, Louisiana, Oklahoma, Texas and Wisconsin, with a total of 1.5 million beneficiaries — will transfer to the West region in order to balance out the number of beneficiaries served by the two regions.

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News Briefs: Almost 5.5M Sign Up for Marketplace Plans

Nearly 5.5 million people have selected health plans since the Affordable Care Act open enrollment period began on Nov. 1, CMS said in its latest marketplace enrollment update. That total captures signups on HealthCare.gov through Dec. 3 and through Nov. 26 for the state-based marketplaces, and it represents an 18% increase compared to the same time period last year. So far 22% of total plan selections have been from individuals who are new to the marketplaces, while 78% are returning customers, CMS said. The open enrollment period lasts through Jan. 15 for HealthCare.gov states and most state-based marketplaces.

Blue Shield of California — which lost its bid to continue to serve California’s Medicaid managed care program — plans to lay off 373 employees by Jan. 25, Modern Healthcare reported. The decision from California’s Dept. of Health Care Services came in August after the state held its first competitive bidding process for Medi-Cal contracts. Blue Shield was not chosen — prompting the insurer to later sue the state — while Elevance Health’s Anthem Blue Cross Partnership Plan, Centene Corp.’s Health Net and Molina Health Care were selected to participate in varying service areas across 21 counties. The layoffs represent a small portion of Blue Shield’s total workforce of 7,800, Modern Healthcare noted, and the cuts are mostly concentrated at the insurer’s Sacramento-area offices.

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States Seek Integrated Services and Health Equity in Pending Medicaid RFPs

The latest round of current and upcoming state requests for proposals (RFPs) is continuing a sea change toward integrated care and greater health equity in managed Medicaid programs. Several states are redesigning their programs altogether, with a focus on integrating physical and behavioral health, as well as addressing social determinants of health. New Mexico’s new Turquoise Care program will combine physical health, behavioral health and long-term care services, while Oklahoma will incorporate managed care into its Medicaid program for the first time in 2023. Notably, the state is soliciting bids from both MCOs and provider-led entities to integrate physical health, behavioral health and prescription drug services. Moreover, Georgia and Virginia both hinted at upcoming program changes as they prepare to release RFPs within the next year, with Georgia recently asking stakeholders how it could improve health care in underserved communities. Texas, meanwhile, in the second quarter of 2023 will unveil what’s sure to be a hotly contested RFP — its managed care plans currently serve more than 5 million people. See an overview of key RFPs that are expected to be issued or awarded in the coming months in the table below.

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IngenioRx, Centene Contract Switch Take Spotlight in PBMs’ 3Q Earnings Calls

Although Centene Corp.’s decision to contract with Cigna Corp. rather than CVS Health Corp. for PBM services loomed large during major health insurers’ third-quarter earnings conference calls, it wasn’t the only PBM-related discussion worth noting.

For example, during Elevance Health, Inc.’s earnings call on Oct. 19, executives offered some insights about how the firm’s in-house PBM IngenioRx is carving out a niche in the marketplace.

“We are, as you know, trying to be a different PBM,” Peter Haytaian, Elevance’s president of Diversified Business and IngenioRx, said in response to an analyst’s question about the PBM’s progress selling its services to self-insured employers that already contract with Elevance.

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Cigna’s New PBM Contract With Centene Brings Up-Front Capital Costs

Centene Corp. recently announced that it will shift the bulk of its pharmacy benefits business to Cigna Corp.’s Express Scripts PBM; while discussing Cigna’s latest quarterly results, the carrier’s executives told Wall Street analysts that the deal will likely be a drag on profitability in 2023. Health care insiders tell AIS Health, a division of MMIT, that regulatory compliance, temporarily elevated staffing needs, tech-related capital costs and manufacturer contracting transitions are the likeliest sources of overhead that the deal will generate.

Cigna executives told investors during a Nov. 3 conference call that the Centene deal, which analysts generally praised, would have some start-up costs. Centene Chief Financial Officer Drew Asher said during an Oct. 25 conference call with investors that “we have about $40 billion plus or minus of gross [drug] spend, and almost all of that is [currently] with Caremark,” CVS Health Corp.’s PBM. Cigna CEO David Cordani said that the deal will cover “approximately 20 million Centene members.”

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Centene Posts Solid 3Q Results Despite Wall Street Concerns

Centene Corp. managed to beat Wall Street’s earnings expectations in the third quarter of 2022 while also reporting lower-than-expected Medicare Advantage Star Ratings and MCO contract struggles in California and Florida, two of the Medicaid-focused carrier’s largest states by enrollment. Reviews from Wall Street analysts were mixed, with financiers praising Centene’s continued efforts to spin off its PBM business but raising concerns over the contract disputes and the looming resumption of Medicaid eligibility redeterminations.

The insurer reported $1.30 in adjusted earnings per share (EPS), beating the Wall Street consensus projection of $1.24. Membership grew by 322,400 to over 26.7 million total members during the quarter, raising the year’s cumulative enrollment growth to nearly 950,000 members. Executives project an end-of-year EPS of $5.65 to $5.75, slightly up from a previous projection of $5.60 to $5.75. Centene’s medical loss ratio was 88.3%, and its total revenues reached $35.9 billion in the quarter, up 11% compared with the third quarter of 2021.

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