Health Plan Weekly

On April 26, the Biden administration released a final rule which, in addition to strengthening the Affordable Care Act’s antidiscrimination protections, attempts to address rising concern about health insurers’ use of artificial intelligence, algorithms and other tools to make care and coverage decisions. 

Managed care experts say that the new regulation — titled Nondiscrimination in Health Programs and Activities — likely won’t catch insurers off guard given the scrutiny they are already receiving about their use of AI. However, “they’re going to have to look carefully at their use of any kind of automated tools,” predicts Harvey Rochman, a litigation partner at Manatt, Phelps & Phillips, LLP. “There’ll be a large focus on the kinds of automated tools that plans can use in various aspects of their work, from claims to utilization management.” 

CVS Health Corp.’s poor Medicare Advantage results in the first quarter of 2024 made the diversified health care and retail company the object of Wall Street’s ire. Analysts were highly critical of the firm’s performance, and the company’s stock price declined sharply on May 1, the day that the results were released. 

CVS Chief Financial Officer Thomas Cowhey said during a May 1 earnings call that CVS’s MA segment is poised to “lose a significant amount of money this year.” 

CVS’s MA care utilization was notably high, even compared to other listed insurers, who have also had to muddle through high utilization in MA over the past year. According to a press release on the firm’s first-quarter results, medical loss ratio (MLR) for the entire health benefits division during the quarter was 90.4%, up 5.8% year over year.  

In its first quarter results, The Cigna Group’s low care utilization numbers and focus on stock repurchases garnered the commercial insurance giant positive reviews from Wall Street analysts — despite a net first-quarter loss that executives attributed that loss to a $1.8 billion writedown on Cigna’s VillageMD joint venture with Walgreens Boots Alliance Inc. Cigna also raised its full-year adjusted earnings per share (EPS) guidance by $0.15. 

Cigna lost $277 million in the first quarter due to the VillageMD writedown, compared to a $1.2 billion profit in the first quarter of 2023. However, total revenue increased, with the firm taking in $57.2 billion for the first quarter, a year-over-year increase of over $10.7 billion. EPS for the first quarter of this year will be -$0.97. However, full-year EPS guidance increased to $28.40, in large part because Cigna posted a first-quarter medical loss ratio (MLR) of 79.9%, down 140 basis points year over year. 

Higher-than-expected medical loss ratios (MLRs) in Medicaid were a common — albeit minor — pain point for both Centene Corp. and Molina Healthcare, Inc. when the companies reported their first-quarter 2024 financial results.  

Centene, which reported its quarterly results on April 26, recorded an MLR of 90.9% for its Medicaid line of business, which was higher (worse) than the Wall Street consensus estimate of 90.3%.  

Chief Financial Officer Andrew Asher said during the company’s earnings call that the figure was “a little higher in the quarter than we expected as we continue to work through the appropriate matching of rates and acuity in the short-term.”