Higher-than-expected medical loss ratios (MLRs) in Medicaid were a common — albeit minor — pain point for both Centene Corp. and Molina Healthcare, Inc. when the companies reported their first-quarter 2024 financial results.

Centene, which reported its quarterly results on April 26, recorded an MLR of 90.9% for its Medicaid line of business, which was higher (worse) than the Wall Street consensus estimate of 90.3%.

Chief Financial Officer Andrew Asher said during the company’s earnings call that the figure was “a little higher in the quarter than we expected as we continue to work through the appropriate matching of rates and acuity in the short-term.”

In its first quarter results, The Cigna Group’s low care utilization numbers and focus on stock repurchases garnered the commercial insurance giant positive reviews from Wall Street analysts — despite a net first-quarter loss that executives attributed that loss to a $1.8 billion writedown on Cigna’s VillageMD joint venture with Walgreens Boots Alliance Inc. Cigna also raised its full-year adjusted earnings per share (EPS) guidance by $0.15.

Cigna lost $277 million in the first quarter due to the VillageMD writedown, compared to a $1.2 billion profit in the first quarter of 2023. However, total revenue increased, with the firm taking in $57.2 billion for the first quarter, a year-over-year increase of over $10.7 billion. EPS for the first quarter of this year will be -$0.97. However, full-year EPS guidance increased to $28.40, in large part because Cigna posted a first-quarter medical loss ratio (MLR) of 79.9%, down 140 basis points year over year

CVS Health Corp.’s poor Medicare Advantage results in the first quarter of 2024 made the diversified health care and retail company the object of Wall Street’s ire. Analysts were highly critical of the firm’s performance, and the company’s stock price declined sharply on May 1, the day that the results were released.

CVS Chief Financial Officer Thomas Cowhey said during a May 1 earnings call that CVS’s MA segment is poised to “lose a significant amount of money this year.”

CVS’s MA care utilization was notably high, even compared to other listed insurers, who have also had to muddle through high utilization in MA over the past year. According to a press release on the firm’s first-quarter results, medical loss ratio (MLR) for the entire health benefits division during the quarter was 90.4%, up 5.8% year over year.

For Medicaid-focused insurers facing the headwinds of the post-pandemic disenrollment backlog, a contract win can cause a major sigh of relief. That’s particularly true for Centene Corp., the largest managed Medicaid insurer in the U.S., which held onto three state contracts in Michigan, New Hampshire and Florida in recent months. Shares of Centene were up 3.5% following its April 12 win in Florida, where it currently serves 1.46 million members, according to AIS’s Directory of Health Plans (DHP).

Awards from Kansas and Georgia — where Centene is an incumbent — are expected to be announced in the coming weeks. Texas, meanwhile, is in the middle of a procurement process that could mean a plan switch for about 1.8 million beneficiaries. And it could spell the end of Centene’s winning streak. CEO Sarah London at the Barclays Global Healthcare Conference, held in March, said the company was “disappointed” in the scoring of its most recent Texas proposal, and planned to protest any contract loss. “I would say the biggest concern for the program overall is the idea that the results are going to force 1.8 million Medicaid members in Texas, which is a state that has a very high choice rate, to choose a different place,” London continued.

As Medicare Advantage insurers contemplate 2025 bids in an unfavorable funding environment, select firms that reported first-quarter 2024 earnings at press time indicated their preference for margin recovery versus growth and the likelihood of service area/benefit reductions next year.

For the quarter ending March 31, 2024, CVS Health Corp. on May 1 reported consolidated revenues of $88.4 billion, reflecting year-over-year revenue growth of 3.7% that would have been larger if not for a decline in the Health Services segment. Meanwhile, first quarter adjusted earnings per share (EPS) dropped from $2.20 a year ago to $1.31, which the company attributed to utilization pressure in the Health Care Benefits segment’s MA business. That segment’s medical loss ratio (MLR) was 90.4%, compared with 84.6% in the prior-year quarter, while higher-than-expected medical costs of approximately $900 million — primarily driven by MA — were due to seasonal factors or items specific to the quarter, the company clarified.

Testifying before the U.S. House Committee on Energy and Commerce, HHS Inspector General Christi Grimm identified Medicare Advantage risk adjustment and durable medical equipment as two areas at risk for fraud and improper payments. The current MA payment structure, which adjusts payments based on the relative health of beneficiaries, “creates an incentive for managed care plans to make patients appear sicker simply to claim payments to which they are not entitled,” she told representatives during the April 16 hearing. She noted that OIG identified MA overpayments across 33 audits totaling more than $500 million, an amount that “is likely just the tip of an iceberg.” She said these issues raise questions about the accuracy of the data and whether patients are receiving needed treatment. In addition, OIG’s work looking at Medicaid managed care demonstrates that “states need better, more useful data that would ensure states are not paying for deceased enrollees or paying for an enrollee who has moved to another state,” she said. OIG is “struggling to keep up” with the pace of the growing health care industry and is “declining 300 to 400 viable fraud cases per year because we don’t have the agents to work them,” she added.

With Humana Inc.’s share price slumping in recent months, one Wall Street analyst points out that conditions may be better than ever for a possible takeover of the Medicare Advantage insurer by The Cigna Group.

“The math now works for a [Cigna] + [Humana] fusion even with [Humana’s] lower EPS [earnings per share],” wrote Jefferies analyst David Windley in an April 22 note to investors. The two managed care giants were rumored to be in talks to combine at the end of 2023, but the Wall Street Journal reported on Dec. 10 that the firms were walking away from the deal. But that was before Humana cut its full-year EPS outlook when reporting its fourth-quarter 2024 results earlier this year, citing a trend of higher-than-expected utilization that has bogged down the MA-focused carrier’s results since the beginning of 2023.

Here’s how major U.S. health insurers performed financially in the fourth quarter of 2023. 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.

Although Humana Inc. beat Wall Street’s expectations with its first-quarter 2024 earnings per share (EPS), the recently finalized 2025 Medicare Advantage and Part D rate notice nonetheless cast a shadow over the insurer’s longer-term financial projections and thus dimmed analysts’ enthusiasm.

In fact, Humana withdrew its 2025 EPS guidance of $6 to $10, with CEO Bruce Broussard partially blaming the move on the “significant difference between the final rate notice and our previous funding assumption.”

When CMS on April 1 released its final rate projection for MA and Part D plans, the agency said it anticipates plans will see a net revenue increase of 3.70% next year. But that figure did not improve compared to the projected rate increase — despite the industry’s urging — and it represents a 0.16% payment decrease excluding the assumption that MA risk scores will increase by an average of 3.86%. 

Although UnitedHealth Group is facing a host of headwinds — including responding to a massive cyberattack and managing elevated care utilization — Wall Street analysts largely deemed its first-quarter earnings report on April 16 “better than feared,” albeit with a few asterisks.

The cyberattack in question started in February and targeted UnitedHealth’s Change Healthcare division. It significantly disrupted providers’ ability to file claims and receive reimbursement, spurring UnitedHealth to issue short-term loans to some affected providers and temporarily suspend prior authorization for certain services, among other remediation measures.