Health Plan Weekly

Despite reporting a strong balance sheet for the second quarter of 2024, Elevance Health, Inc. faced a selloff that seemed to be prompted by higher-than-expected utilization in the insurer’s Medicaid book of business. On July 17, the day that Elevance reported its results, its stock price dropped by $32.21 over the full day of trading, a 5.82% decrease, to settle at $520.93 — despite year-over-year increases in operating gain and operating margin, as well as better-than-expected medical loss ratio (MLR) performance. 

Elevance took in $43.2 billion in operating revenue in the quarter, down $200 million year over year. Its operating gain increased by $200 million year over year to $2.8 billion, and operating margin increased by 0.3% year over year to 6.4%. Elevance posted an MLR of 86.3%, below the Wall Street consensus of 86.4%. 

Although multiple Wall Street analysts deemed UnitedHealth Group’s second-quarter financial results “messy,” they also suggested that the company’s near-term stumbling blocks are largely eclipsed by the prospects of a more favorable 2025. 

The “messy” moniker — used by Bernstein Research’s Lance Wilkes, Raymond James’ John Ransom and Wells Fargo’s Stephen Baxter — largely refers to UnitedHealth’s adjusted medical loss ratio (MLR) of 84.5% in the quarter. During UnitedHealth’s July 16 earnings conference call, Chief Financial Officer John Rex said that figure included an impact of 40 basis points, or $290 million, related to the suspension of some care management activities after the Change Healthcare cyberattack that hit the claims-processing subsidiary earlier this year.  

Citing a Medicare Payment Advisory Commission (MedPAC) estimate that the government pays about 22% more for Medicare Advantage enrollees than it would if they were enrolled in traditional Medicare, participants in a July 10 panel discussion all agreed that the way MA plans are paid needs to be fixed. However, those panelists — each with ties to MedPAC — had very different views about what those changes should look like, underscoring how difficult it will be to get stakeholders to agree on any reforms even as scrutiny of MA intensifies. 

“What’s the diagnosis — in other words, what problem are we trying to solve?” Francis Crosson, M.D., queried during the Virtual Fifth National Medicare Advantage Summit, which was livestreamed from July 9-12. “Is it that the current MA payment methodology is fatally flawed and must be replaced now? Or, MA costs the Treasury too much compared to traditional Medicare? Or, MA costs too much because of a broken risk adjustment process, which if fixed, would solve the cost problem?” 

A new paper published in BMC Health Services Research by researchers from the University of Colorado found that national provider directories are highly inaccurate — yet another data point confirming payers’ self-described difficulties assembling accurate provider directories. One of the paper’s authors tells AIS Health, a division of MMIT, that he thinks the problem is unlikely to be solved soon. 

The paper compared providers listed in the online directories of five large insurers (UnitedHealth Group, Elevance Health, Inc., The Cigna Group, CVS Health Corp.’s Aetna, and Humana Inc.) to the Medicare Provider Enrollment, Chain, and Ownership System (PECOS) database — and found that more than 70% of all studied provider data was not consistent across insurers.