Health Plan Weekly

Cigna Corp.’s new segment Evernorth, which includes the company’s Express Scripts PBM business, drove strong third-quarter earnings that beat analysts’ expectations.

At the same time, the insurer’s medical loss ratio (MLR) ticked up to 82.6% from a very low 70.5% in the second quarter, as utilization of medical services bounced back from the depressed levels seen early in the COVID-19 pandemic.

by Jinghong Chen

As a result of the COVID-19 pandemic, national health spending dropped significantly starting in March 2020, relative to 2019 levels. But by August, spending levels bounced back to normal, with just a 0.2% increase year over year, according to a report by the nonprofit research and consulting organization Altarum. Almost all major health spending categories saw decreases in August compared to the same time last year, while expenditures on prescription drugs and home health care went up 5.5% and 7.0%, respectively. Spending on prescription drugs is the only category in which August spending exceeds its January level, recovering to be 2.6% higher than in January.

While Humana Inc., like other health insurers, has seen its profits swell as members avoided non-coronavirus-related care during the pandemic, the company is making it crystal clear that those financial gains will be erased before the year is over — even if the use of medical services doesn’t fully bounce back.

“We continue to expect our results for the second half of 2020, including an anticipated loss in the fourth quarter, to entirely offset the significant outperformance experienced in the first half of the year that resulted from historically low medical utilization levels,” Chief Financial Officer Brian Kane said during Humana’s Nov. 3 earnings call to discuss third-quarter results, according to a transcript from The Motley Fool.

A final rule published on Oct. 29 requires health insurers and health plans in the individual and group markets to reveal the rates they negotiate with providers for health care services. The regulation was condemned by insurers, who argued it would drive up prices, but praised by one interest group representing self-insured health plans, which asserted the rule will improve competition and lower premiums. Industry experts say it’s too soon to draw across-the-board conclusions about the rule’s impact, and observe it is ripe for legal challenge.

To comply with the rule, starting on Jan. 1, 2023, health plans must offer members online shopping tools that allow them to see the negotiated rate between their provider and their plan, as well as a personalized estimate of their out-of-pocket cost for 500 of the most shoppable items and services. Effective one year later, those shopping tools will have to show the costs for all remaining items and services. Insurers must also meet a Jan. 1, 2022, deadline to “make publicly available standardized and regularly updated data files, which would open new opportunities for research and innovation to drive improvements within the healthcare market.”

With the outcome of the presidential contest still technically up in the air, perhaps the most consequential outcome of the 2020 general elections for the health insurance industry is that no one political party is likely to control the White House and both chambers of Congress.

Officially, the new makeup of Congress may not be cemented until a runoff election takes place in Georgia for one or more Senate seats, yet as of press time it appeared that Democrats will retain control of the House of Representatives while Republicans will hang on to a slim majority in the Senate. Meanwhile, as of press time former Vice President Joe Biden and President Donald Trump were both still in the running to win control of the White House, though Biden was winning in the electoral-vote tally and took the lead in some key battleground states.