In its second quarter 2024 earnings report, Humana Inc. said it now expects individual Medicare Advantage membership growth of approximately 225,000 this year, up from its previous projection of approximately 150,000. The insurer on July 31 reported adjusted earnings per share of $6.96, which was higher than internal and Wall Street projections but down from its prior year EPS of $8.94, and Humana reaffirmed its adjusted EPS guidance of “approximately $16.00.” It also maintained its full-year medical loss ratio guidance of “approximately 90 percent,” which “prudently allows for the higher net inpatient costs observed in the second quarter to continue for the remainder of the year,” according to prepared remarks from Jim Rechtin, president and CEO. During a July 31 conference call to discuss the results, Rechtin added that the company has seen some “modest claims pressure in Medicaid” but does not expect it to impact full-year results. The company’s Medicaid membership is on track to grow by 250,000 lives and reach roughly 1.5 million members by the end of the year. That increase is primarily driven by new contracts in Oklahoma and Indiana, as well as growth in Humana’s Ohio Medicaid business, and partially offset by the redetermination process that is mostly completed. Its active Medicaid footprint is now nine states.

Molina Healthcare, Inc. has agreed to pay $350 million to acquire ConnectiCare, a subsidiary of EmblemHealth that covers about 140,000 medical lives in Connecticut. The July 23 announcement occurred one day before Molina reported second-quarter earnings results that beat Wall Street analysts’ projections. The ConnectiCare deal is expected to close in the first half of next year and is subject to regulatory approvals.

Centene Corp., meanwhile, reported second-quarter financial results on July 26 that underscored the elevated cost trends it’s seeing in its dominant Medicaid segment. Like other insurers, Centene is feeling the effects of a higher-acuity risk pool created by the exodus of millions of people from the Medicaid rolls since states restarted routine eligibility checks last spring. Still, other positive developments for Centene led one Wall Street analyst to declare its quarterly performance “mixed.”

Here’s how major health insurers’ stock performed in June 2024. Elevance Health, Inc. had the highest closing stock price among major commercial insurers as of June 28, 2024, at $541.86. Humana Inc. had the highest closing stock price among major Medicare insurers at $373.65.

Despite reporting a strong balance sheet for the second quarter of 2024, Elevance Health, Inc. faced a selloff that seemed to be prompted by higher-than-expected utilization in the insurer’s Medicaid book of business. On July 17, the day that Elevance reported its results, its stock price dropped by $32.21 over the full day of trading, a 5.82% decrease, to settle at $520.93 — despite year-over-year increases in operating gain and operating margin, as well as better-than-expected medical loss ratio (MLR) performance.

Elevance took in $43.2 billion in operating revenue in the quarter, down $200 million year over year. Its operating gain increased by $200 million year over year to $2.8 billion, and operating margin increased by 0.3% year over year to 6.4%. Elevance posted an MLR of 86.3%, below the Wall Street consensus of 86.4%.

Although multiple Wall Street analysts deemed UnitedHealth Group’s second-quarter financial results “messy,” they also suggested that the company’s near-term stumbling blocks are largely eclipsed by the prospects of a more favorable 2025.

The “messy” moniker — used by Bernstein Research’s Lance Wilkes, Raymond James’ John Ransom and Wells Fargo’s Stephen Baxter — largely refers to UnitedHealth’s adjusted medical loss ratio (MLR) of 84.5% in the quarter. During UnitedHealth’s July 16 earnings conference call, Chief Financial Officer John Rex said that figure included an impact of 40 basis points, or $290 million, related to the suspension of some care management activities after the Change Healthcare cyberattack that hit the claims-processing subsidiary earlier this year.

Of all privately insured markets, Medicare Advantage had the highest gross margins per member in 2023, reaching $1,982, according to a new analysis from KFF on insurers’ financial performance. Margins have been consistently higher in MA than other sectors over the past decade. KFF pointed out that while gross margins are generally one good indicator of financial performance, they do not necessarily mean higher profitability, as gross margins do not account for any administrative costs or tax liabilities. Researchers analyzed data compiled by Mark Farrah Associates based on information provided by insurers to the National Association of Insurance Commissioners.

After considering stakeholder feedback on its draft second guidance for the Medicare Prescription Payment Plan, CMS on July 16 released final guidance that gives plans more flexibility around identifying Part D enrollees who are likely to benefit from the M3P. Starting next year, the M3P requires stand-alone Prescription Drug Plans and Medicare Advantage Prescription Drug plans to give enrollees the option to pay out-of-pocket prescription drug costs in the form of capped monthly payments versus paying the full amount at the pharmacy. After finalizing its first guidance in February, CMS released a draft of the second installment, with a public comment period that ran from Feb. 15 through March 16. CMS in a July 16 memo to plan sponsors said it received more than 100 responses from a broad range of stakeholders, including patient advocates, data vendors, Part D sponsors and pharmacy benefit managers, and it made several clarifications and changes in response. Those included clarifying that it does not expect Part D plans that exclusively charge $0 cost sharing for covered Part D drugs to all plan enrollees to offer members the option to spread out their OOP costs through the M3P and giving plans the option to send an election request form with the member’s ID card mailing or separately in a different mailing. The agency also will allow plans to develop their own strategies for ongoing outreach during the plan year to enrollees who are likely to benefit from the M3P. CMS on July 16 also released a final set of model and standardized materials to support Part D sponsors in meeting their education, outreach and communications requirements for the program.

CMS’s recent revision of Medicare Advantage Star Ratings made some health insurers, especially CVS Health Corp.’s Aetna, big winners in the eyes of Wall Street. A number of insurers received higher bonus payments from CMS for the 2024 plan year after the revision, and others were able to resubmit their bids for the 2025 plan year on more favorable terms.

The changes are the result of the rulings in lawsuits brought by SCAN Health Plan and Elevance Health, Inc. against CMS. In the SCAN lawsuit, the U.S. District Court for the District of Columbia found that CMS’s failure “to follow its own regulation” resulted in the not-for-profit MA insurer receiving an incorrect 2024 Star Rating, which cost the plan nearly $250 million in quality bonus payments (QBPs) for 2025. That same court also ruled separately that CMS must recalculate Elevance subsidiary Anthem Blue Cross and Blue Shield of Georgia’s Star Ratings.

Just days after the Supreme Court issued rulings overturning a longstanding legal framework that gives federal agencies the benefit of the doubt when interpreting ambiguous legislation, the U.S. District Court for the Northern District of Texas granted plaintiffs’ request for a stay to prevent CMS from implementing new agent and broker provisions in Medicare Advantage this fall. Since CMS finalized the 2025 MA and Part D rule that included new caps on administrative payments to agents and brokers by MA organizations and a ban on anticompetitive terms in MAO contracts with agents, brokers and third-party marketing organizations, at least three complaints have been filed challenging CMS’s implementation of the new provisions that take effect Oct. 1. According to a July 3 opinion signed by U.S. District Judge Reed O’Connor, the court agreed to stay the effective date of the fixed-fee and contract-terms restriction in the final rule until the issues can be fully briefed and heard by the court. The parties must submit a joint schedule for summary judgment briefing by no later than July 17. “Of note, the Court declined to grant a stay with respect to the regulatory changes on the sharing of beneficiary information,” Helaine Fingold, partner at the law firm Epstein Becker & Green, P.C., tells AIS Health, a division of MMIT. “Keep in mind that this does not mean that the plaintiffs will definitely win (or definitely lose, as to the sharing of beneficiary information provision) upon the Court’s full consideration of the issues. It does, however, indicate that the plaintiffs were able to convince the Court that they are likely to prevail (or not) on the merits.”

Here’s how major U.S. health insurers performed financially in the first quarter of 2024. 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.