health care utilization

In the first quarter of 2024, annual growth in health care spending exceeded the levels seen before the COVID-19 pandemic. Yet hospital inpatient admissions, on a per capita basis, remained lower than pre-pandemic levels, reflecting a shift to outpatient centers, according to a recent Peterson-KFF Health System Tracker analysis.

As many elective hospitalizations were canceled or delayed at the beginning of the pandemic, health care spending dipped in late 2019 and early 2020. Shortly after that, year-over-year growth in health services spending rebounded to pre-pandemic levels and remained high, with double-digit growth since early 2023. Nursing and residential care facilities spending saw year-over-year growth ranging from 10.0% to 13.4% since the beginning of 2023.

David Cordani, CEO of The Cigna Group, made it clear during a Sept. 5 presentation at the Morgan Stanley Healthcare Conference that the firm doesn’t view the elevated medical costs facing health insurers this year as a threat to its diversified portfolio.

Cigna Healthcare, the firm’s health insurance business, in the “recent timeframe” has been able to deliver “good, predictable” medical loss ratios (MLRs), Cordani said, referring to a closely watched metric that shows the percentage of premiums spent on medical claims.

During the Wells Fargo Healthcare Conference on Sept. 4, executives from Centene Corp. and Humana Inc. shared new details about how the headwinds facing their Medicaid and Medicare businesses are expected to play out. And within those updates, there was both good and bad news.

Centene Chief Financial Officer Drew Asher said during his presentation that the firm is “continuing to get Medicaid pressure,” largely due to the resumption of routine eligibility checks that restarted last spring after a multiyear pause during the COVID-19 pandemic. Centene discussed the issue at length during its second-quarter earnings call in July, “and so you might ask, all right, what’s changed in the last month and a half?” Asher said. 

With tens of millions of enrollees now dropped from the Medicaid rolls, a group of 189 health care organizations have taken another step they hope will add permanency to the program. The coalition, organized by the Association for Community Affiliated Plans (ACAP) and Families USA, sent a letter on Aug. 13 to congressional leaders calling for 12-month continuous enrollment for adults enrolled in Medicaid and the Children’s Health Insurance Program (CHIP).

They asked for support of the Stabilize Medicaid and CHIP Coverage Act, which was introduced in the House by Rep. Debbie Dingell (D-Mich.) in September 2023 and in the Senate by Sen. Sherrod Brown (D-Ohio) the next month.

Echoing a proposal championed by the Biden administration, Democratic presidential candidate Kamala Harris said recently that if elected, she hopes to apply a $35 out-of-pocket cap on insulin to everyone in the country — not just those on Medicare. But newly published research into state out-of-pocket insulin cost caps raises questions about how much of an impact such a policy would make.

So far, 25 states and Washington, D.C., have passed legislation capping patients’ monthly out-of-pocket costs for insulin, with upper thresholds set between $25 and $100. Those caps apply only to state-regulated health insurance plans. Meanwhile, the Inflation Reduction Act (IRA) capped Medicare enrollees’ monthly out-of-pocket costs for insulin at $35, effective in 2023.

Even after health plans were given the option to expand pre-deductible coverage in certain health plans, medication adherence didn’t significantly improve, according to a recent issue brief from the Employee Benefit Research Institute (EBRI).

Yet while the impact was minimal for most medications, Paul Fronstin, Ph.D., one of the report’s authors, says adherence was already high for the members evaluated, and the majority of insurers introduced copayments and/or coinsurance when expanding pre-deductible coverage.

So far, 2024 has proven to be an eventful year for publicly traded health insurers — and not always in a good way.

Indeed, during the most recent quarter CVS Health Corp. made waves by adjusting its earnings outlook downward for the third time this year and dismissing the short-tenured president of its Aetna health benefits division due to ongoing Medicare cost pressures.

Other publicly traded firms, including Humana Inc. and Elevance Health, Inc., offered better second-quarter performances, but still saw their share prices fall amid investors’ concerns about how medical costs will shake out in the second half.

In a Paperwork Reduction Act (PRA) notice issued on Aug. 9, CMS informed Medicare Advantage organizations of its plans to collect more granular information on service-level decisions, including both initial determinations and appeals. Sources say this approach aligns with CMS’s continued focus on health equity and transparency, and it could lead to greater oversight of prior authorization decisions.

To plan sponsors, the transmittal should not have come as a surprise, given that the 2024 MA and Part D rule finalized in April affirmed CMS’s authority to collect detailed information from MA organizations and Part D plan sponsors. “An example of increased data collection could be service level data for all initial coverage decisions and plan level appeals, such as decision rationales for items, services, or diagnosis codes to have better line of sight on utilization management and prior authorization practices, among many other issues,” CMS stated in that rule.

When CVS Health Corp. announced on Aug. 7 that Aetna President Brian Kane was leaving after less than a year on the job, it highlighted how severe the company’s struggles in its health benefits segment have become. The decision also drew mixed reactions from Wall Street analysts.

Barclays’ Andrew Mok wrote in an Aug. 7 note that Kane’s departure was “a big surprise” and added that Kane “was widely viewed as the fixer for the Medicare Advantage business,” which has been a drag on earnings.

“The accountability here is questionable and the change casts significant uncertainty on whether the company was able to capture developing cost trend pressure in 2025 Medicare bids,” Mok wrote.

While most of the largest managed care organizations have recently reported higher-than-expected utilization that negatively impacted their second-quarter results, the three publicly traded “insurtechs” did not have the same issues.

Ari Gottlieb, principal of health care consulting firm A2 Strategies who has often criticized the financial performance and management of Alignment Healthcare, Inc., Clover Health Investments Corp. and Oscar Health, Inc., tells AIS Health the insurtechs “all posted pretty good quarters” and are headed in the right direction.