The pandemic isn’t hurting health care companies

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The pandemic isn't dampening Wall Street's view of health care - Axios

The S&P index of top health care companies finished Monday higher than where it opened the year, Axios’ Bob Herman reports.

The big picture: A global coronavirus pandemic, social unrest, mass unemployment, and the halting of medical procedures haven’t been enough to derail Wall Street’s rosy view of the health care industry.

Where things stand: The coronavirus started to affect the economy toward the tail end of the first quarter, but the health care industry was relatively unscathed.

  • Among the 109 publicly traded health care companies tracked by Axios, first-quarter profits exceeded $50 billion, good for a 7.4% net profit margin.
  • Pharmaceutical companies and health insurers generated the highest returns. Wall Street believes drug companies stand to benefit from potential coronavirus treatments or vaccines.
  • The stock price of Gilead Sciences, for example, is up 18% so far this year, partially on the assumption its coronavirus drug, remdesivir, will produce billions of dollars of revenue — even though the drug has showed only modest benefit for patients.

Between the lines: The second quarter likely will be worse, as the brunt of the coronavirus lockdown was felt in April and May. But normal operations have already started resuming for some health care sectors, regardless of the virus’ spread.

 

 

 

 

COVID-19 could cost insurers up to $547B through 2021: report

https://www.fiercehealthcare.com/payer/report-covid-19-could-cost-insurers-up-to-546b-over-next-two-years?mkt_tok=eyJpIjoiWlRnNU16RmxOemM1WXpWaSIsInQiOiJ0TFFnRkR2OUVoQjY5SXArbjU0ZXVmcjJaMFdNWXZ6cXBHOGQxVzZ1dkxhMHJVK0t3dmRtcUVicFIrVDdlMUJPY3doWlQzeVN0VVZxakdnUFBHY2w2a0VVQ0s2WFI1anhqR2xvSFBtMDZZcVlaYVwvK2xlRWdcL01uQmFRVTA0VGtMIn0%3D&mrkid=959610

COVID-19 could cost insurers up to $547B through 2021: report ...

The estimated costs for treating COVID-19 could add up as much as $547 billion for private insurers from 2020 to 2021 depending on the rate of infection, an updated report found.

The report, released Monday from consulting firm Wakely and commissioned by insurance lobbying group America’s Health Insurance Plans (AHIP), looks at the utilization of medical services associated with a COVID-19 infection and the costs for such services. The analysis is restricted to insurers operating in commercial, Medicare Advantage and Medicaid managed care markets.

Wakely estimates that the pandemic could cost insurers between $30 billion and $547 billion.

The report explores the costs of COVID-19 based on a series of potential infection rates, which represent the total population infected. The study modeled infection rates based on 10%, 20% and 60%, while acknowledging that the true infection rate could be far lower.

Wakely then looked at the total costs the plan is liable to cover based on each infection rate.

A 10% rate would lead to a total cost of $30 billion to $92 billion from 2020 to 2021, and a rate of 20% would be $60 billion to $182 billion.

But an infection rate of 60% would cost insurers the greatest, with a range of $180 billion to $547 billion.

“We assume that a higher volume of COVID related services will be incurred in 2020 and lower volume in 2021, distributing approximately 75% of the total services to 2020 and 25% to 2021,” the study said.

Wakely notes it did not model any long-term costs for treating people recovering from COVID-19 infections.

The firm also didn’t factor in vaccine mitigation in 2021 nor a scenario in which large-scale infections occur throughout 2021.

While private insurers have waived cost-sharing for COVID-19 treatments, it remains unclear how long the waivers will last. Anthem and Molina announced Monday they will extend their cost-sharing waivers through the rest of 2020.

The report is an update to an earlier one distributed by Wakely back in March at the onset of the pandemic. That report pegged the total COVID-19 costs between $56 billion and $556 billion.

The main reason for the decline is Wakely factored in deferred care due to the pandemic.

Wakely also reduced the overall assumed rate of hospitalizations for COVID-19-infected individuals to align with more recent studies. But the estimated unit cost for a hospital admission also increased, based on survey data from AHIP members.

People have been putting off necessary care for fear of going to a doctor’s office, and hospital systems have canceled or postponed elective surgical procedures for months.

Hospitals have slowly started to resume elective procedures, but only after installing stringent requirements on cleaning and testing.

Insurers are bracing for a wave of healthcare utilization some time later this year or in 2021 to deal with this pent-up demand.

The deferred care costs would differ based on the infection rate of the virus.

“We assumed, particularly for higher infection rate scenarios, that there may be limited capacity to make up care in 2021,” the report said.

 

 

 

 

Insurers are refunding surplus revenues now, rather than later

https://www.healthcarefinancenews.com/news/insurers-are-refunding-surplus-revenues-now-rather-later?mkt_tok=eyJpIjoiTldabE9UTTFZbU16TkRneSIsInQiOiI1djBwUWV6SVpzNlJtRUJEdXBEcEM1UkdGZWtvYTZpdkZ5V1NkTHhpNVFnVFwvR2FJSGlDTVVDcE5lTGtmTDhHY0hWQ05XU1NQNWt3UjRRYUtCOVZtS1ZoNG9SN2wxNU1xYmJVT1k5YWptY2hYVVBObCszNVhiREVFSERNT1hxRkMifQ%3D%3D

Why Your Health Insurer May Owe You Money - Consumer Reports

Insurers will be issuing a total of about $2.7 billion in refunds, estimates the Kaiser Family Foundation.

The COVID-19 pandemic’s postponement of elective surgeries and regular care has created a surplus in revenue for insurers due to lower spending.

Health plans are mandated to spend at least 80% of their revenues on medical care. When they make more than that, they have to give money back to the purchasers.

Insurers are doing this now, rather than later, according to the Advisory Board’s practice manager Rachel Sokol, who spoke during the company’s weekly meeting on the impact of COVID-19 to payers.

Insurers want to create immediate value for members, instead of waiting for 2021, she said.

“That’s why we’re seeing the premium discounts now,” Sokol said.

Among those insurers refunding money, UnitedHealthcare said it would provide more than $1.5 billion in initial assistance, including customer premium credits, because its members have been unable to access routine or planned care due to the COVID-19 pandemic.

UnitedHealthcare has seen a lower volume of medical care being delivered than it anticipated when it set premiums.

Commercial fully insured individual and employer customers will get credits ranging from 5% to 20% – depending upon the specific plan – which will be applied to premium billings in June.

WHY THIS MATTERS

Insurers are mandated to provide refunds, but also they want to motivate members to return for regular care, to prevent more costly and complex outcomes later.

While hospitals have taken a financial hit from COVID-19, the major health insurers have shown minimal impact.

In fact, insurers could see a benefit to earnings in 2020 as medical services decline, according to Moody’s Investors Service.

THE LARGER TREND

Under the Affordable Care Act, insurers are required to rebate some premiums to their customers if medical claims fall short of expectations, based on a three-year average of medical costs.

The Medical Loss Ratio of the Affordable Care Act requires insurance companies that cover individuals and small businesses to spend at least 80% of their premium income on healthcare claims and quality improvement, leaving the remaining 20% for administration, marketing, and profit.

The MLR threshold is higher for large group insured plans, which must spend at least 85% of premium dollars on healthcare and quality improvement, according to the Kaiser Family Foundation.

Insurers may either issue rebates in the form of a premium credit or a check payment and, in the case of people with employer coverage, the rebate may be shared between the employer and the employee, Kaiser said.

Using preliminary data reported by insurers to state regulators and compiled by Market Farrah Associates, Kaiser estimates that insurers will be issuing a total of about $2.7 billion across all markets – nearly doubling the previous record high of $1.4 billion last year.

 

 

 

 

Insurers face uncertainty in setting 2021 premiums

https://www.healthcarefinancenews.com/news/insurers-face-uncertainty-setting-2021-premiums?mkt_tok=eyJpIjoiTldabE9UTTFZbU16TkRneSIsInQiOiI1djBwUWV6SVpzNlJtRUJEdXBEcEM1UkdGZWtvYTZpdkZ5V1NkTHhpNVFnVFwvR2FJSGlDTVVDcE5lTGtmTDhHY0hWQ05XU1NQNWt3UjRRYUtCOVZtS1ZoNG9SN2wxNU1xYmJVT1k5YWptY2hYVVBObCszNVhiREVFSERNT1hxRkMifQ%3D%3D

What To Do When Faced With Career Uncertainty

Insurers need to project the future cost of delayed elective procedures and total expenses of COVID-19 care.

While health insurers have saved money by the cancellation of elective surgeries and many are currently refunding excess revenue under the Medical Loss Ratio, premiums for the 2021 plan year are still in question.

There is a lot of uncertainty, America’s Health Insurance Plans said. Without comprehensive data, insurers are working to estimate 2021 healthcare costs and must base their rates on projected costs, AHIP explained in an infographic.

It is too soon to know what the real healthcare costs of COVID-19 will be. Also, delayed elective and non-urgent care will likely be delivered – and paid for – later.

That care could be more complex and costly because it was delayed, AHIP said.

WHY THIS MATTERS

Insurers are working to meet state deadlines to file 2021 premiums in the individual market.

THE LARGER TREND

Federal law requires insurers to spend 80-85 cents of every premium dollar on medical services and care. The rest, under the Medical Loss Ratio, may go towards administrative expenses, regulatory costs, federal and state taxes, customer service and other expenses.

The COVID-19 pandemic’s postponement of elective surgeries and regular care has created a surplus in revenue for insurers due to lower spending, which many are refunding now.

ON THE RECORD

“COVID-19 has had a very real impact on the economic, physical, and mental health of millions of Americans,” said Jeanette Thornton, senior vice president of Product, Employer, and Commercial Policy at AHIP.  “Our members are working through this uncertainty to strengthen access to affordable care as the fight against the coronavirus continues. COVID-19 dramatically changed the healthcare landscape–in 2020 and for years to come.

 

 

 

 

UPMC latest hospital system to report Q1 loss due to COVID-19

https://www.healthcaredive.com/news/upmc-latest-hospital-system-to-report-q1-loss-due-to-covid-19/578907/

Complaint: UPMC uses nonprofit dollars to build for-profit ...

Dive Brief:

  • UPMC reported a small operating loss but higher revenues for the quarter ending March 31. The Pittsburgh-based regional healthcare system attributed the red ink to the COVID-19 pandemic and suggested the next quarter could be even tougher.
  • The healthcare services division “experienced significant reductions in patient volumes during the last two weeks” of the quarter, representing about a $150 million loss in revenue for that time period, UPMC said in its unaudited financial statement posted Friday. The system said it is receiving about $255 million from the Coronavirus, Aid, Relief, and Economic Security Act.
  • UPMC’s health insurance plan also saw increased revenue due to a significant rise in its membership, but its operating income dropped by 56%.

 

Dive Insight:

UPMC, which operates 40 hospitals in Pennsylvania, New York and Ohio, has been growing steadily in recent years. However, its growth in the first quarter collided head-on with the COVID-19 pandemic.

The system posted a $41 million operating loss on revenues of $5.5 billion, according to the financial report. For the first quarter of 2019, it reported an operating profit of $44 million on revenue of $5.1 billion. The system did not disclose its net numbers.

Investment losses reached nearly $800,000, compared to a gain of more than $224,000 in the prior-year period.

While overall outpatient revenue increased 1% during the quarter, revenue from physician services was down 3% while hospital admissions and observations dropped by 4%.

UPMC is the latest nonprofit healthcare provider to report losses blamed on COVID-19, although its numbers are not as big as those reported by Kaiser Permanente and CommonSpirit Health, both of which reported quarterly losses exceeding $1 billion apiece.

UPMC did note in a statement that its business was moving back toward normal in recent weeks.

“During the COVID-19 crisis, UPMC’s leaders, scientists, clinicians and front-line workers throughout our … system were prepared to care for the potential surge of COVID-positive patients while also safely providing essential, life-saving care to our non-COVID patients,” Edward Karlovich, UPMC’s interim chief financial officer, said in a statement. “However, many patients who had scheduled surgeries and procedures before the crisis postponed their care. With assurances that all our facilities are safe for all patients and staff, we are seeing our patients returning for their essential care that had been postponed and our current volumes are beginning to approach near-normal levels.”

The system also noted that it was sitting on $7 billion in cash and liquid investments. It reported 99 days cash on hand.

UPMC’s insurance division remained in the black, but was under strain. Its operating income was $39 million — compared to $89 million for the first quarter of 2019. However, membership grew by 7% during the quarter to 3.8 million enrollees.

 

 

 

 

Insurers continue to pay rebates while providers struggle

https://mailchi.mp/f2774a4ad1ea/the-weekly-gist-may-22-2020?e=d1e747d2d8

Reform Brings More Health Insurance Rebates | Bankrate.com

Blue Cross Blue Shield of Michigan became the latest health insurer to announce plans to refund money to its enrollees, as reimbursement for healthcare services dropped in the wake of the coronavirus pandemic, with many hospitals and physicians curtailing operations. The company will return $100M to enrollees, in the form of premium discounts and refunds, and said it might increase that amount later in the year depending on how quickly health spending picks up again.

UnitedHealthcare (UHC), Cigna, and Humana are among the other insurers who have recently announced similar plans, with UHC alone slated to give back $1.5B to purchasers. Under the Affordable Care Act, plans must spend between 80 and 85 percent of the premiums they collect on medical care, depending on the segment of the market they cover, and must return excess profits to purchasers if they do not. Insurers are getting ahead of this requirement by returning money now to their employer and individual-market customers.

Meanwhile, some industry observers have begun to question why insurers, who have weathered the pandemic in good financial shape, are not spending more to stabilize the operations of struggling hospitals and physicians in their networks. For instance, Harvard researchers Leemore Dafny and Michael McWilliams proposed this week that insurers extend a “primary care boost” of 50 percent to their payments to doctors through the end of this year. Getting plans to act in concert to support providers will prove to be challenging, of course, and the temptation to free-ride on others’ generosity and instead “spend” excess premium dollars to return cash to customers may prove too strong for its public relations and loyalty benefits.

Or perhaps there are more Machiavellian motives at play: allowing physician practices to suffer financially could result in lower practice valuations, as insurers set their sights on further “vertical integration” plays in the months to come.

 

 

 

Employers seeking a “source of truth” for coronavirus guidance

https://mailchi.mp/f2774a4ad1ea/the-weekly-gist-may-22-2020?e=d1e747d2d8

What Is Truth? | Psychology Today

As states begin to reopen, employers need guidance to ensure safe, COVID-free operations, and are beginning to call local health systems for advice on how to manage this daunting task. Providing this support is uncharted territory for most systems, and they’re learning on the fly as they bring back shuttered outpatient services and surgery centers themselves. This week we convened leaders from across our Gist Healthcare membership to share ideas on how to assist employers in bringing businesses safely back online—and to discuss whether the pandemic might create broader opportunities for working with the employer community.

It’s no surprise some companies are hoping that providers can step in to test their full workforce, but as several systems shared, “Even if we thought that was the right plan, testing supplies and PPE are still too limited for us to deliver on it now.” Better to support businesses in creating comprehensive screening strategies (with some offering their own app-based solutions), coupled with a testing plan for symptomatic employees.

Health systems have been surprised by the hunger for information on COVID-19 among the business community. Hundreds of companies have registered for informational webinars, hosted by systems through their local chambers of commerce. They’re excited to receive distilled information on local COVID-19 impact and response. As one leader said, the system isn’t really creating new educational content, but rather summarizing and synthesizing CDC, state and local guidance.

Business leaders are looking for “a source of truth” from their local health system amid conflicting guidelines and media reports. Case in point: employers are asking about the need for antibody testing, having been approached by testing vendors and feeling pressure from employees. Guidance from system doctors provides a plain-spoken interpretation on testing utility (great for looking at a population, meaningless right now for an individual), and helps them make smarter decisions and educate their workforce.

Health systems are hopeful that helping employers through the coronavirus crisis will lay the foundation for longer-term partnerships with employers, allowing them to continue to provide benefits through lower cost, coordinated care and network options. 

Timing is critical, and it may be smaller businesses that have the ability to change more quickly. Large companies have mostly locked in their benefits for 2021, whereas many mid-market businesses are looking for alternative options now.

Worksite health, telemedicine, and direct primary care arrangements are all on the table. One system surveyed local brokers and employers and found that 20 percent of mid-market employers are open to narrow-network partnerships. “The number seems low,” they reported, “but it’s up from five percent last year, a huge jump.” For systems seeking direct partnerships with employers, there’s a window of opportunity right now to find those businesses committed to continuing to offer benefits, who are looking for a creative, local alternative—and to get that first Zoom meeting on the calendar.

 

 

 

National insurer stocks: Where UnitedHealth, Anthem & 5 others stand year to date

https://www.beckershospitalreview.com/payer-issues/national-insurer-stocks-where-unitedhealth-anthem-5-others-stand-year-to-date.html?utm_medium=email

3 Numbers That Make UnitedHealth Stock a Buy | The Motley Fool

Some of the nation’s largest commercial payers have seen their stocks fall slightly this year, while others have seen gains despite new pressures presented by the COVID-19 pandemic.

Here is an update on how the stocks of seven commercial payers are performing year to date as of May 20 at 2 p.m. CT:

1. Molina Healthcare: Up 32.9 percent to $177.23
2. Humana: Up 7.9 percent to $391.80
3. Centene Corp.: Up 5.7 percent to $65.40
4. UnitedHealth Group: Down 1.4 percent to $288.85
5. Anthem: Down 6.7 percent to $280.81
6. Cigna: Down 7.8 percent to $189.31
7. CVS Health (Aetna): Down 14.7 percent to $63.29

AHIP to insurers: Extend approvals for surgeries postponed by COVID-19

https://www.beckershospitalreview.com/payer-issues/ahip-to-insurers-extend-approvals-for-surgeries-postponed-by-covid-19.html?utm_medium=email

New AHIP chief: Insurers are watching single-payer proposals closely

America’s Health Insurance Plans, the national trade association for health insurers, is telling members to extend prior authorizations for elective surgeries and procedures that were postponed due to COVID-19.

Some payers, like Anthem and UnitedHealthcare, have already extended prior authorizations for procedures that were delayed to curb COVID-19 exposure and to conserve medical resources for patients with the virus. AHIP’s board of directors is encouraging more health insurers to extend approvals for surgeries and procedures that were authorized before the national emergency declaration March 13.

“These grace periods will enable surgeries and procedures to be scheduled and performed without having to be re-authorized,” AHIP said. “Because circumstances will vary significantly by geography based on the incidence of COVID-19 and the availability of clinical resources, we encourage approvals to be valid for at least 90 days or until local backlogs are cleared.”

 

Now Is the Time to Address Surprise Billing

https://www.medpagetoday.com/blogs/marty-makary/86455?xid=fb_o&trw=no&fbclid=IwAR1boFFgBZuSqJ9-1728UdSFeIK790TTXNeoJJ9mky9jCKbGyQ_G4jqwrfk

Tips to avoid surprise medical bills

The doctor-patient relationship is being undermined.

Private equity companies have spent millions in dark money to stall and effectively kill all versions of surprise billing reform. But this week, the issue will come before Congress again. Legislation was introduced Tuesday in the House that, among other things, would further assist hospitals with more relief funds. With this potential third disbursement of federal dollars comes an opportunity to finally address the embarrassing problem of surprise billing that has eroded the public trust in our great medical profession.

Physicians across the country are now signing a letter urging leaders of Congress to address surprise billing once and for all. I have already signed this letter and encourage you to consider doing so as well.

One reason the medical profession is the greatest profession in the world is that patients put their faith and trust in us. But 64% of Americans now say they have avoided or delayed medical care for fear of the bill. As more and more patients lose faith in the system, the doctor-patient relationship is being undermined by surprise billing and the modern-day business practices of price gouging and predatory billing. In fact, these egregious practices have become part of the business model of some private equity groups, which seek to replace physician autonomy with corporate medicine.

Our system today is unnecessarily complicated and works against patients’ interests by putting them in the middle of a finger-pointing blame game, which leaves them holding the bag. It doesn’t make sense for us to accept people with open arms, treat their ailment, and then ruin their lives financially. Medical science is a bastion of scientific and intellectual genius. We can fix this problem. Already, some efforts are advancing price transparency by creating a transparent marketplace for patients.

I’ve spent many years looking at the systematic cost issues that face our health system and patients. Simply put, the lack of fairness and transparency in pricing and billing practices has created financial toxicity and increased the general mistrust of the medical system for millions of Americans. No one designed it to be this bad. In fact, we have good people working in a bad system. When I explain details of pricing, billing, and collections with doctors and hospital leaders, they are invariably shocked and furious to learn how out of control their billing offices have gotten in overcharging patients and shaking people down for more than a reasonable amount for a service.

The current COVID-19 crisis is a stark reminder of the gaps in our health system that exacerbate the pressures facing providers and patients. Many Americans are getting crushed right now. Despite many years of debate in Washington and bipartisan agreement that something must be done, there is still no federal protection in place to safeguard consumers from an egregious surprise medical bill if they need emergency care or have limited options. The reality is that special interests — including the very private equity firms that stand to benefit financially from these exploitative business practices — continue to spend millions to maintain the status quo.

It’s time for a bipartisan compromise to end the non-transparent game of surprise medical billing. It’s time that Congress takes meaningful action to protect patients during this COVID-19 crisis and finally address this issue. Congress has solutions on the table that would bring much greater fairness and transparency to the healthcare system, protect patients from these predatory charges, and ensure that physicians are paid fairly for our services, as we deserve. It’s time we put an end to the cycle of financial toxicity and rebuild the great public trust in the medical profession.