Membership Growth

News Briefs: Cyberattack Targets UnitedHealth’s Change Healthcare

Change Healthcare, which UnitedHealth Group acquired in October 2022, has been targeted by a cyberattack. UnitedHealth said in a regulatory filing that on Feb. 21 it discovered “a suspected nation-state associated cyber security threat actor” had gained access to some of Change Healthcare’s information technology systems, and the firm reacted by isolating the affected systems. According to the latest update on a website dedicated to information about the incident, as of Feb. 23 “the disruption is expected to last at least through the day.” All other systems across UnitedHealth Group’s enterprise are operational, and the company said in the filing that it’s working with security experts and law enforcement to address the incident. “The cyberattack against UnitedHealth Group, one of the largest U.S. commercial prescription processors, is credit negative for the company, as financial and reputational impacts may ensue,” Moody’s Investors Service Vice President and Senior Credit Officer Dean Ungar said in a statement emailed to reporters about the incident.

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CenterWell Pharmacy Exec: New App Targets Digitally Savvy Seniors

Like its competitors, Humana Inc.’s evolution from a pure-play health insurer to a highly diversified health care firm came with a rebranding. To that end, Humana Pharmacy — the company’s mail-order and retail pharmacy brand — in 2022 became CenterWell Pharmacy, nestled under the company’s CenterWell health services subsidiary. Now, that division not only has a new name, but also a new app.

The app — which is available to CenterWell Pharmacy members covered by Humana’s Medicare Advantage and Part D plans — represents a “total redesign,” with increased personalization capabilities and a streamlined approach to prescription management, the firm said in a Feb. 20 press release.

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Latest Earnings Reports Suggest MA Insurers Aren’t ‘Out of the Woods’

As the second batch of publicly traded insurers posted fourth-quarter and full-year 2023 financial results, continued utilization pressures in Medicare Advantage remained a prominent theme during earnings calls held in the first two weeks of February. Such pressures prompted Humana Inc. to slash its outlook for 2024, but this month only CVS Health Corp.’s Aetna lowered its adjusted earnings per share (EPS) guidance, while The Cigna Group — which is planning to sell its relatively small MA business — raised its outlook.

CVS Health Corp. on Feb. 7 reported fourth-quarter adjusted EPS of $2.12 and full-year adjusted EPS of $8.74. Consolidated revenue grew 11.9% year over year to $93.8 billion, while revenue for the Health Care Benefits segment, which includes Aetna’s MA business, increased 16% to nearly $27 billion. CVS Health said it added 1.3 million members in 2023, which reflected growth across multiple product lines.

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HCSC’s Planned Purchase of Cigna’s MA Assets Will Boost Fast-Growing Segment

After reportedly vying with Elevance Health, Inc. for the purchase of The Cigna Group’s Medicare Advantage business, Health Care Service Corp. (HCSC) will buy Cigna’s MA, Medicare Supplemental, Medicare Part D and CareAllies assets for a total transaction value of $3.7 billion. HCSC has been aggressively growing its MA business through service area expansions; the addition of Cigna’s MA lives would boost its current share of the segment from 0.62% to 2.40%, according to AIS’s Directory of Health Plans.

In a press release unveiling the deal, the Chicago-based insurer said the acquisition will accelerate its growth in “an important market segment” and “bring many opportunities to HCSC and its members — including a wider range of product offerings, robust clinical programs and a larger geographic reach.” HCSC is customer-owned, meaning policyholders and not stockholders are the owners, and it is an independent licensee of the Blue Cross and Blue Shield Association. Its Blues plans currently enroll 204,638 members across five states: Illinois, Montana, New Mexico, Oklahoma and Texas.

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As MAOs Post 4Q Financials, Elevated MLRs Pressure 2024 Outlook

As the first round of fourth-quarter and full-year 2023 financial results were reported by publicly traded insurers in January, modest enrollment growth during the recently concluded Annual Election Period (AEP) and continued utilization pressures were prominent Medicare Advantage themes during earnings calls. Although analysts were particularly concerned with results posted by Humana Inc., which notably moved up its earnings release date, some maintained that the MA-focused insurer remains poised for long-term growth in the sector.

Humana Inc. on Jan. 25 introduced 2024 adjusted earnings per share (EPS) guidance of “approximately $16” — compared with the Wall Street consensus of $29.14. But that was after a regulatory filing indicated that inpatient utilization was higher than expected in the fourth quarter of 2023, primarily during November and December, “as well as a further increase in non-inpatient trends, predominantly in the categories of physician, outpatient surgeries, and supplemental benefits, which emerged with the November and December paid claims data.” Humana’s stock plummeted after the disclosure, and the impact reverberated throughout the managed care sector, denting the share values of competitors including CVS Health Corp. and Elevance Health, Inc.

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Moody’s Report Shows Margins Declining, but Is the Sky Falling for MA?

While publicly traded insurers’ fourth-quarter and full-year 2023 earnings reported thus far have highlighted concerning trends in Medicare Advantage, a new report from Moody’s Investors Services suggests that the MA market even prior to the current climate is showing “signs of weakening.” Nevertheless, with per-member earnings far greater than in other sectors, MA can still be profitable when properly managed and will stay competitive, suggests an analyst with the credit ratings firm.

Among the 10 insurers rated by Moody’s — which account for approximately two-thirds of all MA members — aggregate earnings stemming from MA decreased by 2% from $10.8 billion in 2019 to $10.6 billion in 2022, the most recent year available. During that same period, the aggregate MA earnings margin fell from 4.9% to 3.4% and earnings per member dropped by 28% ($732 to $526). While those earnings remain higher compared to other segments, earnings per member in the Medicaid and commercial segments increased, leading to an overall decline of 2.7% to $216 per member, according to the Jan. 23 Moody’s report.

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News Briefs: CMS Appeals to Public for More Medicare Advantage Data

The Biden administration on Jan. 25 released a Request for Information to seek feedback about the best way to enhance Medicare Advantage data capabilities and increase public transparency. In a press release, HHS pointedly noted that “transparency is especially important now that MA has grown to over 50% of Medicare enrollment, and the government is expected to pay MA health insurance companies over $7 trillion over the next decade.” To that end, the agency said it’s seeking data-related input on aspects of the MA program including access to care, prior authorization, provider directories and networks, supplemental benefits, marketing; care quality and outcomes, value-based care arrangements and equity, and “healthy competition in the market, including the effects of vertical integration and how that affects payment.”

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News Briefs: MedPAC Member Says MA Report Smacks of ‘Attack Journalism’

A recent status report on the Medicare Advantage program presented by analysts with the Medicare Payment Advisory Commission led one MedPAC member to accuse leadership of producing a negative report for partisan political purposes. According to a MedPage Today writeup of a recent MedPAC public meeting, Brian Miller, M.D., of Johns Hopkins University said the report “appears to be slanted to arrive at a foregone conclusion in order to set up and provide political cover” before CMS issues its annual rate notice and “reads like attack journalism.” The report, which was presented on Jan. 12, showed that national market concentration in MA is nearing the Herfindahl-Hirschman Index (HHI) “highly concentrated” threshold, which the Dept. of Justice and the Federal Trade Commission use to review mergers. According to the presentation, the three largest MA insurers combined enroll 58% of MA members and in a typical market enroll roughly 80% of beneficiaries. That report also suggested that MA coding continues to generate excess payments relative to fee-for-service Medicare. Specifically, the MedPAC analysis of CMS enrollment and risk score files estimated that coding intensity will drive payments to MA organizations of $54 billion this year, up from $47 billion in 2023. “It is not lost on me that this discussion is occurring immediately prior to the CMS Medicare Advantage rate notice,” stated Miller, according to a transcript of the meeting. “The Chair has noted that he is in regular communication with CMS leadership. This gives the appearance that MedPAC as an independent and thoughtful policy organization is being hijacked for partisan political aims.” CMS’s annual preliminary rate notice is due out by Feb. 1.

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News Briefs: Cigna May Be Close to Selling MA Business to Health Care Service Corp.

The Cigna Group may sell its Medicare Advantage business to Health Care Service Corp. for between $3 billion and $4 billion, according to the Wall Street Journal. After Cigna and Humana Inc. reportedly abandoned their rumored talks of combining, Bloomberg last month reported that HCSC and Elevance Health, Inc. were competing to buy Cigna’s MA segment. Sources close to the matter said Cigna is in “exclusive talks” with HCSC, which operates Blue Cross and Blue Shield plans in five states, the Wall Street Journal reported on Jan. 3.

After securing an amended credit agreement with JP Morgan, Bright Health Group, Inc. on Jan 1. finalized the previously announced sale of its Medicare Advantage assets to Molina Healthcare, Inc. The technology-driven startup on Dec. 29 said an amendment to its credit facility with JP Morgan would reduce the final repayment amount by roughly $30 million to approximately $298 million. With the close of the MA sale — which involves the California plans Brand New Day and Central Health Plan — the company has eliminated its secured debt and will use the remaining proceeds of the sale to “provide a solid foundation” for advancing its NeueHealth accountable care organization business, according to a Jan. 2 press release. Molina in December said it would buy the MA plans for approximately $425 million, down from the originally announced $510 million; analysts speculated the discount had to do with underperformance in Bright’s MA business due to heightened Medicare utilization trends in 2023.The deal nets Molina 121,863 MA members, boosting its membership by 115%, according to AIS’s Directory of Health Plans.

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2023 Year in Review: Top Medicare Advantage Payers by Enrollment

Nearly 32 million people were enrolled in Medicare Advantage plans as of December 2023, up from about 29.5 million in December 2022, according to AIS’s Directory of Health Plans. And while the six national carriers led by UnitedHealthcare currently enroll 69.8% of the market, regional Blues affiliates, provider-sponsored payers and other locally focused insurers have largely continued to grow alongside them. Tech-enabled startup insurers, meanwhile, saw some of the most explosive gains — and losses — in 2023. See the year-end enrollment wrap-up in the graphics below.

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