UnitedHealth, Humana see unexpected rise in Medicare Advantage costs

The largest Medicare Advantage insurers are looking to cut benefits, raise premiums and make other structural changes to their plans next year to make up for higher than projected Medicare spending this year.

Humana disclosed in a Securities and Exchange Commission filing on Friday that patient stays, emergency department visits, outpatient surgeries and dental services are coming in at higher than expected levels. Humana also pointed out that its Medicare Advantage Enrollment has grown faster than anticipated, especially among those who are newly eligible for the program. Humana has previously noted that new Medicare beneficiaries are less than profitable than those switching from other Medicare Advantage carriers because their risk codes have not yet been collected.

Humana expects higher cost trends to persist throughout the year, and aims to offset them by dipping into investment income and reserves and cutting some administrative tasks. The company considered these costs in its Medicare Advantage bids for the next plan year, which were due with regulators on June 5.

The company did not immediately respond to a request for an interview.

Carrier Humana, the Second Largest Medicare Advantage With 5.6 Million Members, Gains an Experience 11.1% enrollment growth For the current plan year, higher than the industry average. UnitedHealth Group is Largest Medicare Advantage Carrier With 7.5 million members. UnitedHealth Group and Humana combine for 46.5% market share in the lucrative Medicare Advantage market.

UnitedHealth Group also reported that its Medicare Advantage members were scheduling more doctor visits than anticipated. Older adults are “significantly more” than expected in outpatient centers for hip, knee, heart and other surgical procedures after care was deferred during the COVID-19 pandemic, Chief Financial Officer John Rex said during the Goldman Sachs Global Healthcare Conference. are returning at “higher than” rates. Wednesday.

“There are some indications that it looks like a little bit of an increase in demand, or a delay in demand, being satisfied,” Rex said.

UnitedHealth Group reassured investors that it had enough reserves to cover medical expenses, and that it priced in these trends in its Medicare Advantage bids for 2024. The company did not immediately respond to an interview request.

Medicare Advantage underwriters don’t just consider utilization growth when structuring bids for the coming year.

Regulators tighten how private Medicare plans audited, paid for and reviewed for quality, which some insurers say they will reduce complementary benefits, The Centers for Medicare and Medicaid Services also tinkered with risk-adjustment models, although both United Health Group And Humana said its three-year phase gives them enough time to adapt.

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