Health Plan Weekly

Large employers, mindful of the effects of the pandemic on their workers’ wellbeing, accelerated plans for virtual health care and mental health services due to COVID-19, according to the 2022 Large Employers’ Health Care Strategy and Plan Design Survey conducted by the Business Group on Health (BGH).

At the same time, 15% of employers postponed efforts to drive care delivery reform, such as centers of excellence, accountable care organizations and high-performance networks, the survey found.

After the New York Times published an investigation into newly public negotiated rates between hospitals and insurers — and concluded that insurers have “little incentive” to negotiate lower costs — top industry trade group AHIP hit back with a blog post claiming that the article “spotlights a lot of numbers with little context, no clarity for patients, and no insight that helps anyone shop for care.”

Industry observers and health care economists who spoke to AIS Health, a division of MMIT, appear to be split on the issue of whether health plans are actually bad negotiators.

Health insurers have begun to phase out the COVID-19 treatment cost-sharing waivers that they have had in place for most of the pandemic. As vaccines have become broadly available in the U.S., insurers are starting to see the novel coronavirus as a “normal” disease — and plan sponsors like Delta Air Lines Inc. are beginning to see health benefits as another means to steer employees toward vaccination.

During most of 2020 and the first half of this year, most carriers took on the full cost of COVID-19 treatment for their fully insured members, waiving copays and other cost sharing. Many self-funded employer plan sponsors did the same. However, both types of health plans have begun to make COVID-19 care a normal health benefit with standard hospitalization and outpatient cost sharing applied.

✦ UnitedHealth Group will acquire fellow Minnesota-based health plan PreferredOne from University of Minnesota-affiliated provider Fairview Health Services, according to the Minneapolis Star-Tribune. UnitedHealth will take on nearly 280,000 members, according to AIS Health’s Directory of Health Plans. PreferredOne’s main emphasis is on the self-funded employer market, with approximately 230,000 lives enrolled in that book. Terms were not disclosed, though the Star-Tribune reported that “the financial impact from the sale [to Fairview] is ‘north of $100 million.’”

✦ The Dept. of Justice on Aug. 7 forged a timing agreement with UnitedHealth and Change Healthcare Inc., indicating how long the investigation into their proposed transaction will last. The two firms will file additional information with DOJ, and they have also agreed not to complete the transaction before Jan. 13, 2022 — unless DOJ concludes its investigation and authorizes the deal before then. The agreement came amid ongoing rumors that DOJ would sue to block the deal.

The return of some deferred care and an uptick in COVID-19-related utilization weighed on the financial results of a variety of managed care companies during the second quarter of 2021 — a trend that was also evident among a quartet of newly public startup insurers. However, the performance of Alignment Healthcare, Inc., Bright Health Group, Inc., Clover Health Investments Corp. and Oscar Health, Inc. across various metrics paints a more complicated picture.

All four insurers posted net losses in the second quarter and saw their medical loss ratios (MLRs) increase — some dramatically so (see infographic, p. 8). Oscar’s MLR, for example, jumped from 60.7% in the second quarter of 2020 to 82.4% in the most recent quarter. Medicare-focused Clover saw its net loss increase from $5.4 million in the second quarter of 2020 to $317.6 million during the same period in 2021, while its MLR rose year over year from 70% to 111%. And fellow Medicare Advantage startup Alignment Healthcare went from posting an $8.3 million profit during last year’s second quarter to losing $44.7 million in the most recent quarter.