Health Plan Weekly

Elevance Health, Inc. posted solid results in the first quarter of 2024 and announced an agreement to build a new primary care-focused provider unit with financing from private equity firm Clayton, Dubilier and Rice LLC (CD&R). Wall Street analysts were positive about the results, praising the firm’s relatively low care utilization — an area where other health insurers have struggled in recent quarters. 

Elevance has been busy with dealmaking in recent months. The CD&R deal, announced April 15, will see the private equity firm and Elevance combine what a CD&R press release termed “certain care delivery and enablement assets of Elevance Health’s Carelon Health and CD&R portfolio companies, apree health and Millennium Physician Group” into a “payer-agnostic” primary care provider focused on value-based contracting, including for patients covered by commercial insurance. It will serve 1 million patients from its inception. 

More than 20 million people lost their Medicaid or Children’s Health Insurance Program (CHIP) coverage as of April 11, 2024, according to data released by states and CMS on the Medicaid eligibility redetermination process. Medicaid enrollment peaked at 94.5 million in April 2023, when states were permitted to resume disenrolling people from Medicaid who no longer qualify after a multiyear pause during the COVID-19 public health emergency.

States have reported Medicaid renewal outcomes for two-thirds of Medicaid/CHIP enrollees, as of April 2024, according to KFF’s Medicaid Enrollment and Unwinding Tracker. Overall, about one-third of enrollees with a completed renewal lost their Medicaid coverage, and 69% of those coverage losses were due to procedural reasons — meaning individuals didn’t return their renewal form within a specific time frame or the state was unable to reach them. Disenrollment rates varied significantly across states, ranging from 57% in Utah to 12% in Maine.

Since last summer, major health insurers’ reports of unusually high outpatient care utilization have proven to be a thorn in the industry’s side — inflating medical loss ratios and forcing Humana Inc. to significantly downgrade its 2024 earnings outlook. And according to some Wall Street analysts, the trend isn’t likely to go anywhere soon. 

With the COVID-19 pandemic winding down, “grandma has been locked in her house for the last three years; she’s ready to go on a cruise and she wants that new hip, she needs that new knee,” Deutsche Bank Managing Director George Hill said during the annual Wall Street Goes to Washington Roundtable on April 8, hosted by the Brookings Institution. That increased demand, he said, “has resulted in a surge in outpatient orthopedic procedures that we’ve seen, particularly among seniors, particularly impacting the Medicare Advantage books of business.” 

Medicaid managed care organizations’ compliance with mental health parity laws and regulations varies widely by state, according to an HHS Office of Inspector General (OIG) report and industry experts. The wide range and, in some cases, widespread noncompliance with parity laws will be the subject of possible new regulations in Medicaid managed care. 

The OIG report is an early sign that the Biden administration intends to train its sights on state Medicaid agencies and their MCOs’ mental health parity compliance, which would follow several years of heightened scrutiny on commercial plans’ compliance with mental health and substance use disorder (SUD) parity rules. MCOs and states may squirm when they start their time in the hot seat: OIG found that in eight studied states, “states and their MCOs did not conduct required parity analyses…and all eight states may not have ensured that all services were delivered to MCO enrollees in compliance with [mental health]/SUD parity requirements.” OIG also pointed a finger at CMS, blaming the agency for not scrutinizing states’ enforcement of parity rules.