Health Plan Weekly

Fixes for the beleaguered arbitration process set up as part of the No Surprises Act (NSA) have begun to circulate in recent months as the health care sector grapples with a daunting backlog of unresolved Independent Dispute Resolution (IDR) cases. Policy experts say that modest tweaks should fix most problems, despite denouncements of IDR from providers and some members of Congress, and they point out that the NSA seems to have achieved its primary goal of protecting patients from exorbitant, unexpected bills for out-of-network emergency care. 

Still, there are problems with IDR in its current form, which is made clear by the large and growing backlog of undecided cases. According to a December report from the Government Accountability Office (GAO), parties submitted nearly 490,000 disputes between April 2022 and June 2023, closing only 38.6% of those cases. That means about 300,000 cases are still unresolved.  

Although a “healthy minority” of states have the authority to conduct enhanced reviews of proposed premium rates — in which they evaluate the rates that health insurers negotiate with providers — just a small handful are doing so, according to a new analysis.  

A variety of barriers are preventing state regulators from fully flexing their rate-review muscles, including industry opposition, according to one of the researchers who produced the analysis. And although that opposition historically has included insurers, there’s an argument to be made that the sector should change its tune. 

“I think the health plans should embrace this kind of regulation, because when you look at the hospital sector and how increasingly consolidated it is, and how so many hospitals and health systems are using their market power to demand ever-higher reimbursement rates in the commercial market…health plans are really powerless to push back, because these hospitals are must-have participating providers” in health plan networks, says Sabrina Corlette, co-director of Georgetown University’s Center on Health Insurance Reforms (CHIR).  

CVS Health Corp. on Feb. 7 lowered its earnings per share (EPS) guidance for 2024, citing high Medicare Advantage cost trends. Wall Street analysts expected the announcement because other insurers, such as UnitedHealth Group and Humana Inc., previously mentioned MA costs as a potential drag on their profits. Meanwhile, The Cigna Group, reporting its fourth-quarter and full-year 2023 results on Feb. 2., increased its EPS guidance for this year and received favorable views from analysts. 

CVS projects an adjusted EPS of at least $8.30 this year, down from its previous guidance of at least $8.50 that the company disclosed during its investor day on Dec. 5. The company had an adjusted EPS of $8.74 in 2023. 

Centene Corp.’s results for the fourth quarter of 2023 were largely positive, earning mild praise from Wall Street analysts. While Centene was the latest health insurer to face higher-than-expected Medicare Advantage utilization, executives claimed that the firm’s MA performance was far less worrisome than that of its peers — an argument that analysts seemed to accept. 

Centene’s Medicare medical loss ratio (MLR) for the quarter was an eye-popping 95.3%, up from 87.5% in the fourth quarter of 2022, an increase of 780 basis points (bps). According to Jefferies analyst David Windley, that figure was 510 bps above Wall Street consensus projection for Centene’s Medicare book of business. However, during a Feb. 6 earnings call, Centene CEO Sarah London and Chief Financial Officer Drew Asher both insisted that the high MLR figure was not a reason for concern, was not caused by the same factors that drove high MLRs for MA peer firms like Humana Inc., and was accounted for in 2024 guidance. 

Most states have authority to review premium rates for comprehensive, Affordable Care Act-compliant health plans in the individual and small group markets, while only a few have such authority in the large group market, according to an analysis published by the Georgetown University Center on Health Insurance Reforms. Additionally, the analysis found that while a “healthy minority of states” have the authority to question the rates that insurers negotiate with providers and suppliers, many struggle to actually do so.

The ACA, enacted in 2010, established the health insurance rate review program that requires the review and disclosure of “unreasonable” rate increases. As of August 2023, 43 states have authority to review and require changes to or disapprove proposed rates in the individual market, whereas only 26 states had such authority in 2010. Eight states — Arizona, California, Idaho, Indiana, Missouri, Montana, Texas and Wisconsin — have authority to require insurers to review proposed rates in the individual market, but they cannot require changes or disapprove the rates. Thirty-eight states currently have prior authority over rates in the small group market.