Kaiser posts net loss of $961M in Q1

https://about.kaiserpermanente.org/our-story/news/announcements/kaiser-foundation-health-plan-and-hospitals-q1-2022-financial-update

Q1 2022 and Q1 2021 financial summary

$ in millions, except %Q1 2022Q1 2021
Total operating revenues$24,197$23,185
Total operating expenses$24,269$22,155
Operating income (loss)($72)$1,030
Operating margin(0.3%)4.4%
Total other income and expense (loss)($889)$1,003
Net income (loss)($961)$2,033
Capital spending$872$906

For the quarter ending March 31, 2022, Kaiser Foundation Health Plan, Inc., Kaiser Foundation Hospitals, and their respective subsidiaries (KFHP/H) reported total operating revenues of $24.2 billion and total operating expenses of $24.3 billion compared to total operating revenues of $23.2 billion and total operating expenses of $22.2 billion in the same period of the prior year. There was an operating loss of $0.07 billion, or (0.3%) of total operating revenues, for the first quarter of the year compared to operating income of $1.0 billion, or 4.4%, in the first quarter of 2021.

During the first quarter of 2022, a surge in COVID-19 cases — the steepest since the start of the pandemic — led to a substantial increase in the demand for related care and testing. COVID-19 expenses drove an additional $1.4 billion in expenses. Those expenses, along with the costs of providing care to our members that was deferred earlier in the pandemic, were the primary drivers of additional expenses. In the first quarter of 2022, Kaiser Permanente cared for more than 688,000 patients with COVID-19, including more than 26,000 hospitalized patients, performed 2.5 million COVID-19 diagnostic tests, supplied 1.3 million COVID-19 home tests, and administered 1.4 million vaccine doses. In addition, like the rest of the industry, Kaiser Permanente experienced significant increases in labor costs during the first quarter of 2022, compared to the same period last year and when compared to year-end 2021.

“I am incredibly proud of the extraordinary people of Kaiser Permanente, who have stepped up time and time again to provide high-quality care and service to our members and communities during unparalleled challenges,” said chair and chief executive officer Greg A. Adams. “While in the first quarter, the ongoing effects of the pandemic strained our workforce, communities, and operations, our operating model, which provides both care and coverage, enabled us to continue providing that care even in the face of an unprecedented omicron surge and industrywide labor shortage. Our underlying operating performance remains solid and aligned with expectations.”

In the category of other income and expense, the quarterly loss totaled $889 million, driven largely by investment losses, compared to $1.0 billion in income in the same period of the prior year. For the quarter, there was a net loss of $961 million compared to net income of $2.0 billion in 2021.

Capital spending

Capital spending in the first quarter totaled $872 million compared to $906 million in the same period of the prior year. During the first 3 months of 2022, Kaiser Permanente opened a new, 220,000-square-foot medical facility in Timonium, Maryland, that features 24-hour advanced urgent care and a 24-hour pharmacy, along with an ambulatory surgery center.

“While the increase in pandemic-related expenses, overall rising costs, and investment market losses impacted our finances this quarter, Kaiser Permanente navigated this challenging time providing high-quality care and continued investing in our integrated model including ongoing capital investments to best serve our members. We controlled discretionary spending, optimized COVID-19 testing, addressed surgical backlogs, and managed outside medical expenses,” said executive vice president and chief financial officer Kathy Lancaster. “As we face the ongoing uncertainty and prolonged effects the pandemic is having on the health care industry, we are well positioned to continue delivering high-quality, affordable care and remain vigilant stewards of resources entrusted to us in this dynamic environment.”

Membership

Membership as of March 31, 2022, was 12.6 million, reflecting a growth of more than 88,000 members since December 31, 2021. Medicaid enrollees accounted for almost 33,000 of Kaiser Permanente’s new members.

Q1 2022 and Q1 2021 financial summary

$ in millions, except %Q1 2022Q1 2021
Total operating revenues$24,197$23,185
Total operating expenses$24,269$22,155
Operating income (loss)($72)$1,030
Operating margin(0.3%)4.4%
Total other income and expense (loss)($889)$1,003
Net income (loss)($961)$2,033
Capital spending$872$906

UnitedHealth was this quarter’s most profitable payer—again

https://www.fiercehealthcare.com/payers/unitedhealth-was-quarters-most-profitable-payer-again

Each of the six major national payers exceeded Wall Street’s expectations for profit in the first quarter, with UnitedHealth Group out in front as the most profitable company.

The health insurance giant continues its streak of profitability in the first quarter, earning $5 billion in profit. The next-highest company, CVS Health, earned $2.3 billion in profit.

UnitedHealth executives said that the company saw double-digit growth at both UnitedHealthcare, its health plan arm, and Optum. Optum, in particular, has been a bright spot for growth over the past several quarters.

UHG also beat the Street for revenue, bringing in $80.1 billion. That’s a hike of nearly $10 billion compared to the first quarter of 2021, where the company brought in $70.2 billion.

CVS came in second on profit and also on revenue, bringing in $76.8 billion. That’s a double-digit revenue increase from its first-quarter 2021 haul of $69.1 billion. 

Revenues were up across its business lines, including a 9% increase at CVS Pharmacy despite a downturn in COVID-19 vaccinations and testing volume in the quarter. Revenues at Aetna, the company’s health plan wing, were up by 12.8%.

Anthem slots in at third place for profitability, earning $1.8 billion in the quarter. That’s up from $1.7 billion in the prior-year quarter. The insurer also had the fourth-highest revenue in the quarter, earning $38.1 billion.

Cigna lands in fourth place for profit and third place for revenue in the quarter, according to its report released Friday. It earned $1.18 billion in profit for the quarter, up from $1.16 billion a year before.

Revenues at Cigna hit $44 billion, up from $41 billion in the first quarter of 2021.

Humana earned $930 million in profit for the quarter for the fifth-highest earnings among the six companies. Its profits increased from $828 million in the first quarter of 2021. The insurer does land last on the list in revenue, with $24 billion for the quarter.

Centene is in sixth for profitability, earning $849 million for the quarter. That’s up from $699 million in the first quarter of 2021. Centene earned $37.2 billion in revenue for first quarter of 2022, up from $30 billion in the prior-year quarter.

Insurtech Bright Health stumbles amid fast growth

The Minneapolis-based insurer was fined $1M by the Colorado Department of Insurance for failing to complete basic health plan functions, including paying claims, communicating with members, and processing consumer payments. Bright claims its rapid growth, along with COVID-related challenges, contributed to its failures in the Colorado individual and family plan market, where it serves about 50,000 enrollees.

But there are also signs of other problems. After posting $1.2B in losses in 2021, Bright laid off five percent of its employees in March, and says it plans to exit the individual market in six states, which make up less than five percent of its revenue. Bright is instead focusing on integrating its provider arm, NeueHealth, into its insurance business in fast-growing markets like Texas, North Carolina, and Florida.  

The Gist: While Bright, along with other insurtechs, has garnered attention with promises of an enhanced customer experience and lower costs, its stumbles with basic health plan functions in Colorado may signal more systemic problems. This news could deter health systems and other providers from partnering with the insurer. 

After years of hype, most insurtechs still have minimal market share, and most have yet to turn a profit. Unless performance improves, it may not be long before Bright, Oscar, and others become acquisition targets for larger, more established players.

Insurer under fire for millions in unpaid claims

Anthem has captured the attention of multiple hospitals and health systems across the U.S. as allegations of underpayment and inappropriate denials accumulate.

The insurer has been forced to pay millions already and continues to face off with providers.

Anthem is facing allegations of $70 million in unpaid claims from Portland-based MaineHealth. The health system said earlier this year that its flagship hospital, Maine Medical Center, would no longer contract with the insurer after its contract expires next year. Jeffrey Barkin, MD, president of the Maine Medical Association, said other providers in the state are leaving Anthem for the same reason.

In Georgia, the state insurance commissioner fined Anthem Blue Cross Blue Shield $5 million in March for failing to pay in a timely manner, delays in loading provider contracts and inaccurate provider directories.

VCU Health in Richmond, Va., said last year that 40 percent of its claims with Anthem were more than 90 days old and the insurer owed $385 million, according to the Richmond Times-Dispatch. The Virginia Hospital and Healthcare Association said Anthem has hundreds of millions of dollars in late and unpaid claims to hospitals across the state.

Eleven Indiana hospitals have also had trouble with Anthem. The hospitals alleged Anthem’s reimbursement system added a $50 triage fee and asked for additional patient records to avoid denial for 60 to 70 percent of thousands of emergency room claims from 2017-20. The hospitals alleged the strategy breached their contract with Anthem because hospitals are required to stabilize all patients requesting emergency services. A federal arbiter recently ordered Anthem to pay $4.5 million to the hospitals and said the insurer cannot use its list of diagnostic codes to downgrade or deny claims.

The Indiana hospitals are still counting the denied claims and said they are owed $12 million from Anthem due to downgraded claims.

The American Hospital Association accused Anthem of asking for prior authorizations for routine surgeries as roadblocks to patient care in a letter sent to the insurer last year. In 2021, 53 percent of Anthem’s medical bills for the second quarter were unpaid, amounting to $2.5 billion, according to the Times-Dispatch report.

Why insurers, health systems are breaking up

Insurers and health systems across the U.S. have been at odds during the most recent cycle of contract negotiations, and terminated contracts are affecting thousands of patients.

As hospitals continue to recover financially from the COVID-19 pandemic and deal with higher supply costs and employee wages, many organizations have tightening margins and hope to negotiate higher rates with insurers as a result. Hospitals are also pointing to rising inflation as a reason for needing higher rates.

One recent example is Fort Lauderdale, Fla.-based Broward Health’s public breakup with UnitedHealthcare. Thousands of the insurer’s beneficiaries went out of network with Broward April 1 after the two sides failed to agree on a new contract. Broward reportedly asked UnitedHealthcare for a pay increase to the same level UnitedHealthcare pays other South Florida health systems.

UnitedHealthcare said Broward’s rate increase request would amount to 88 percent higher reimbursement for its providers in the next four years, which the insurer said was “unreasonable.” Negotiations continue, but patients are out of network in the meantime.

Blue Cross & Blue Shield of Mississippi and the University of Mississippi Medical Center let their contract expire April 1 after they failed to agree on pay rate increases, according to the Clarion Ledger. The medical center treated more than 50,000 patients in the 18 months before the contract expiration.

LouAnn Woodward, MD, vice chancellor for health affairs and dean of the medical center’s school of medicine, said the health system wants “fair reimbursement” from Blue Cross & Blue Shield to reinvest in its facilities and programs. The insurer said the medical center wanted a 30 percent overall rate increase, including a 50 percent increase for some services, according to the newspaper report.

Physician groups and surgery centers aren’t immune from insurer conflicts. Blue Cross Blue Shield of Illinois terminated its contract with Springfield (Ill.) Clinic late last year, knocking 100,000 beneficiaries out of network.

What is an insurance company in 2022?

https://mailchi.mp/7788648545f0/the-weekly-gist-february-25-2022?e=d1e747d2d8

The largest health insurers are quickly becoming vertically integrated healthcare organizations that span the care and coverage continuum. While 2021 was a mixed year for these companies as healthcare volumes bounced back, their diversified portfolios helped cushion losses from higher claims.

The graphic above analyzes revenue growth by segment for the five largest insurers across the last two years. On average the insurance and pharmacy benefit management components of the companies grew at nine percent, while care delivery and integrated health services grew at much higher rates. UnitedHealth Group (UHG) and Anthem boasted the highest year-over-year revenue growth, driven by UHG’s Optum subsidiary and Anthem’s integrated health services.

Cigna and CVS Health each earned less than a quarter of their total revenue from their insurance arms last year. While Humana lags the others in topline revenue, it has assembled a robust portfolio of care delivery investments and partnerships, surpassed only by UHG. 

As antitrust scrutiny on vertical integration increases (case in point: the DOJ is now challenging UHG’s acquisition of Change Healthcare), insurers will face the hard task of integrating their portfolio of service—and demonstrating that they deliver value to consumers and patients.

UnitedHealth was 2021’s most profitable payer

UnitedHealth Group was the most profitable payer in 2021, bringing in more than double the profit of its next-closest competitor with $17.3 billion in earnings.

CVS Health recorded the second-highest profit for the year among six major national insurers, earning $7.9 billion. CVS did bring in the highest revenue for the year, though, edging out UnitedHealth with $292.1 billion.

UHG reported $287.6 billion in revenue for 2021, according to the company’s earnings report.

Both healthcare giants expect to top $300 billion in revenue this year, according to their forecasts.

UnitedHealth was also the fourth quarter’s most profitable company, raking in $4.1 billion, which matched what its competitors earned combined, according to the filings. 

UnitedHealth Group’s results represented significant growth over both the full-year and fourth quarter of 2020. According to its earnings report, this was driven in part by gains in Medicare Advantage and Medicaid at UnitedHealthcare as well as another quarter of double-digit growth at Optum.

CVS was also the next-highest earner in Q4, with $1.3 billion in profit on $76.6 billion in revenue. UHG was just behind on revenue with $73.7 billion.

CVS Health executives said that the retail business outperformed expectations in the fourth quarter amid increased demand for COVID-19 tests and booster shots. 

The healthcare giant performed 32 million tests and 59 million vaccine doses over the course of the year, with 8 million tests and 20 million vaccinations reported in the fourth quarter alone.

While CVS and UnitedHealth duked it out for the top spot, all six of the big national payers were profitable for 2021, though Humana did post a $14 million loss for the fourth quarter.

Centene Corporation lands in sixth place for the year in profitability, bringing in $1.3 billion in profit on $126 billion in revenue. It also reported $599 million in profit for Q4.

Humana earned $2.9 billion for the year and $83.1 billion in revenue despite the Q4 loss, according to the company’s earnings report. Executives said the insurer braced for headwinds related to COVID-19 during the year and also saw disappointing growth in new Medicare Advantage members.

As a result, Humana has kicked off a $1 billion value creation effort to reinvest in its core MA business in hopes of bouncing back from the underwhelming enrollment during the annual period.

Centene has been conducting a similar project throughout the year in an effort to streamline its operations.

Anthem and Cigna fall in the middle of the pack, according to our review. They both reported about $1.1 billion in profit for Q4, though Cigna was ahead with $45.7 billion in revenue.

Cigna reported $174.1 billion in revenue and $5.4 billion in profit for the year, and on its earnings call noted that a major growth opportunity moving forward its Evernorth subsidiary, which includes a slew of businesses such as Express Scripts, Accredo and MDLive.

Anthem earned $6.1 billion in profit on $138.6 billion in revenue for the year, and executives shrugged off concerns about the Medicare Advantage market, saying its performance in open enrollment met expectations. In addition, it’s seeing growth at its in-house pharmacy benefit manager, IngenioRx, as it expands clientele.

Florida physician convicted of $110M fraud

Report from the Department of Justice Fraud & Abuse Control for 2017 sheds  light upon the importance of compliance - The Coding Network

A Florida physician was convicted Feb. 10 for his role in a healthcare fraud scheme that involved billing health insurance companies for $110 million in medically unnecessary services, according to the Justice Department

Mark Agresti, MD, of Palm Beach, Fla., unlawfully billed insurers for $110 million of drug testing services that were medically unnecessary. The patients who received the unnecessary drug tests were residents of Good Decisions Sober Living in West Palm Beach. Dr. Agresti was the medical director of the facility, according to the Justice Department. 

“Patients at GDSL were required to submit to excessive, medically unnecessary urine drug tests as a condition of residency approximately three or four times per week,” the Justice Department said. “These [urinalysis] drug tests cost as much as $6,000 to $9,000 per test.”

According to evidence presented at trial, Dr. Agresti also had Good Decisions Sober Living patients sent to his own medical practice to fraudulently bill for services. 

Dr. Agresti was convicted of 11 counts of healthcare fraud and one count each of conspiracy to commit healthcare fraud and wire fraud. He is scheduled to be sentenced April 21. 

MA payers cutting premiums to attract enrollees

Last week, we examined how the fast-growing Medicare Advantage (MA) market remains heavily concentrated among a handful of large carriers. But amid this concentration, consumers have more options than ever before, both in terms of carriers and plans, as shown in the graphic below. 

The average MA enrollee can now choose from among 39 health plans offered by nine different payers, the majority of which feature $0 insurance premiums. An increasing number of plans also now offer a variety of non-medical benefits. 

Landing an MA consumer soon after they become eligible is critical for carriers, as more than seven in 10 Medicare beneficiaries stick with the plan they have year after year. While this “stickiness” may suggest enrollees are satisfied with their current coverage, it also calls into question whether the MA marketplace is actually working as intended. 

With another revenue boost to MA plans proposed for 2023, competition between plans—as well as consolidation among carriers—will continue to heat up, especially as the number of Medicare-eligible Americans will increase by nearly 50 percent over the next three decades.

Single-payer healthcare bill faces key decision in California

New Single-Payer Bill Intensifies Newsom's Political Peril | Kaiser Health  News

The California Assembly is poised to vote on a bill Jan. 31 that aims to create a single-payer healthcare system in the state — the bill’s first major battle since a funding proposal for the program was introduced Jan. 6 — according to KTVU FOX 2

The state’s plan to create a universal healthcare system involves two bills — AB 1400 and ACA 11 — that would implement and subsequently fund the program, dubbed CalCare. The Assembly is expected to only vote on AB 1400 on Jan. 31.

The Assembly must pass the bill Jan. 31 if it hopes to pass the single-payer framework bill by the end of the year. If the bill passes in the Assembly, it would then need approval in the Senate and from voters. 

The plan is being met with public pressure that believes the system would “create a new and exorbitantly expensive government bureaucracy.” Lawmaker opposition also largely focuses on the bill’s cost, which would be between $314 billion and $391 billion annually, according to KTVU. The bill’s funding counterpart, ACA 11, proposes to pay for it with a tax increase on businesses and high-earning individuals. 

However, proponents argue that CalCare would cost less than the state’s current system, which equates to $517 billion when considering both taxes and household spending.