health care utilization

Recognizing the “promise and peril” of artificial intelligence, President Joe Biden in October issued an executive order advancing a coordinated approach to ensuring the safe and responsible use of AI across multiple sectors. While HHS puts together a task force aimed at developing a regulatory action plan regarding the use of AI in health care, the White House on Dec. 14 unveiled the names of 28 payer and provider organizations committed to ensuring the safe and appropriate use of AI. Those included Medicare Advantage plan operators, such as CVS Health Corp., Allina Health (which has a cobranded PPO with CVS Health’s Aetna), Devoted Health, Geisinger, Health First (Florida), Oscar Health, Inc. and Premera Blue Cross.

The third quarter of 2023 saw digital health funding and deals decline to some of the lowest levels seen in years, according to CB Insights’ third-quarter 2023 State of Digital Health report. But some bright spots exist, including early-stage and megaround deals, said speakers from the company during a Nov. 9 webinar titled Digital Health in Q3’23: Global Activity & Emerging Trends.

The main takeaway from the quarter, said Chris Sekerak, intelligence analyst II for CB Insights, is that “digital health funding is the lowest since 2016,” with “$3 billion in equity funding across 247 deals,” representing a 14% quarter-over-quarter (Q0Q) funding decline. For a third straight quarter, digital health deals decreased, with a 33% QoQ drop most recently in deals, the lowest amount in almost 10 years.

In a Nov. 15 rule proposing policy and technical changes for the 2025 Medicare Advantage and Part D plan year, CMS made numerous changes aimed at protecting beneficiaries from “predatory marketing” and ensuring they enroll in the MA plans that best meet their needs. And depending on how plans execute these new provisions, some have the potential to impact Star Ratings, industry experts observe. At the same time, the rule proposed several methodological enhancements, clarifications and operational updates to the 2025 Star Ratings.

For example, CMS provided an update on its plans to include the Universal Foundation of quality measures that would align across all CMS programs and to provide a “building block to which programs will add additional aligned or program-specific measures.” As part of this plan, CMS said it has submitted the Initiation and Engagement of Substance Use Disorder Treatment (IET) Part C measure to the Measures Application Partnership (MAP) for review as a measure under consideration. Additionally, CMS indicated that it will submit three other Universal Foundation measures — Adult Immunization Status, Depression Screening and Follow-Up, and Social Need Screening and Intervention, which are now reported as display measures — to MAP prior to proposing the use of those measures in future rulemaking.

Continuing a theme of protecting consumers and ensuring appropriate use of Medicare dollars, the Biden administration on Nov. 6 released its annual rule proposing policy and technical changes for the Medicare Advantage and Part D program. The 2025 MA and Part D proposed rule contains provisions aimed at improving access to behavioral health, streamlining enrollment options for dual eligibles, encouraging biosimilar product substitution, and assessing the impact of prior authorization policies on health equity. But some of the rule’s most detailed proposals centered on two hot-button program areas: supplemental benefits in MA and misleading marketing practices.  

Rising utilization in Medicare Advantage caught the attention of investors earlier this year after UnitedHealth Group disclosed an increase in outpatient care utilization in June, followed by Humana Inc.’s revelation that it was also seeing elevated medical costs due to an increased use of services. When reporting second-quarter 2023 earnings this summer, several insurers indicated that they were able to factor such trends into their bids for the 2024 plan year. Now, it appears that insurers’ rich supplemental benefit offerings continue to drive costs, as both CVS Health Corp. and Humana attributed elevated medical loss ratios (MLRs) in the third quarter to higher-than-normal uptake of benefits such as dental and flexible spending cards.

The Cigna Group posted results for the third quarter of 2023 that impressed Wall Street, driven by a lower-than-expected medical loss ratio (MLR). However, Cigna executives faced questioning from analysts on potential PBM regulations.

Cigna enjoyed relatively low care utilization, with MLR at 80.5%, beating the Wall Street consensus projection by 12 basis points. The managed care division’s adjusted revenues were $12.7 billion, up 14% year over year.

“Our medical care ratio was better than expectations, driven by our U.S. commercial business. More specifically, our favorable [MLR] performance was a reflection of ongoing disciplined pricing and continued affordability initiatives,” said Cigna Chief Financial Officer Brian Evanko during a Nov. 2 earnings call.

Humana Inc.’s stock dipped after its third-quarter 2023 earnings report, with analysts largely blaming the firm’s revised estimate of its full-year medical loss ratio (MLR). The Medicare Advantage-focused insurer said that while it had been expecting health care utilization to stabilize, instead it continued at the elevated level that Humana first started noticing earlier in the year.

“This morning, we reported that our insurance segment benefit ratio exceeded expectations by 40 basis points due to higher medical costs in our Medicare Advantage business,” Chief Financial Officer Susan Diamond said during the company’s Nov. 1 earnings call. “We continue to experience an increase in COVID admissions in the third quarter, whereas our forecast previously assumed that this would occur in the fourth quarter.”

In the third quarter, CVS Health Corp. performed well overall, but the firm’s health insurance division was a drag on profits due to higher-than-expected utilization, especially in Medicare Advantage. However, a big gain in MA Star Ratings could bode well for the firm’s health benefits division going forward.

CVS faced a higher-than-expected medical loss ratio (MLR) in its health benefits division, Aetna, exceeding the Wall Street consensus by 140 basis points. That high utilization primarily took place in Aetna’s MA book of business, according to CVS executives.

Blue Cross Blue Shield of North Carolina plans to acquire all 55 North Carolina locations of FastMed, an urgent care provider in which it had a minority investment, according to an Oct. 20 press release. Experts tell AIS Health, a division of MMIT, that the deal is a smart move, as long as Blue Cross NC has a sound strategic approach to operating the clinics.

Insurers have acquired plenty of providers in recent years, but larger, publicly traded insurance companies have led that charge. The deal stands out for two clear reasons: First, Blue Cross NC is a regional carrier — albeit a large one, with 2.3 million covered lives, according to AIS’s Directory of Health Plans. Second, most payer acquisitions of providers have not targeted urgent care operations.

In 2024, the average monthly premium for a benchmark silver plan on the federal Affordable Care Act exchange will rise by 4% compared to 2023, CMS revealed on Oct. 25. Premiums for a benchmark plan, or the average second-lowest-cost silver tier plan, are used to calculate advance premium tax credits (APTC) that rise in tandem with premium rates. CMS noted that the year-over-year benchmark plan premium increase of 4% between 2023 and 2024 is the same as the increase seen between 2022 and 2023. Also continuing next year will be enhanced subsidies that make ACA exchange plans much more affordable than they were before the American Rescue Plan Act (ARPA) of 2021. To that end, the average benchmark plan rate after premium tax credits are applied, for a 40-year-old at 150% of the federal poverty level, will continue to be $0 in 2024 — compared to $55 before ARPA was enacted.