Cost trends ex­pected to rise

Earn­ings are strong de­spite re­form, in­sur­ers say

Modern Healthcare - - The Week In Healthcare - Re­becca Vesely

De­spite head­winds brought by fed­eral health re­form, ma­jor in­sur­ers have re­ported strong earn­ings and raised 2011 fore­casts in re­cent weeks. First-quar­ter earn­ings re­ports from top pub­licly traded health in­sur­ers showed con­tin­ued low provider uti­liza­tion trends, de­spite the eco­nomic re­cov­ery, and lit­tle ad­verse ef­fects from the ear­li­est pro­vi­sions of the re­form law.

Unit­edHealth Group, Wel­lPoint, Aetna, Hu­mana, Cigna and Health Net all raised their full-year earn­ings guid­ance as a re­sult. Unit­edHealth Group, the largest in­surer by rev­enue, is now fore­cast­ing 2011 rev­enues ap­proach­ing $101 bil­lion.

In­sur­ers at­trib­uted lower-thanex­pected med­i­cal uti­liza­tion to bad weather—if pa­tients can’t get to the doc­tor be­cause of a snow­storm, then in­sur­ers have fewer med­i­cal claims to pay. But an­a­lysts seemed wary about at­tach­ing too much cre­dence to this ex­pla­na­tion, and Unit­edHealth Group, Aetna and oth­ers said they ex­pect cost trends to rise over the course of the year.

Aetna, for one, saw a de­cline in hos­pi­tal bed days over last year as well as fewer physi­cian vis­its. And, un­like Wel­lPoint, Aetna did not see ev­i­dence of higher acu­ity among pa­tients.

“We suspect Wel­lPoint will be an­a­lyz­ing these higher acu­ity claims more to make sure that hos­pi­tals aren’t find­ing new ways to charge pa­tients more to try and make up for the drop in com­mer­cial bed days,” Citi se­nior an­a­lyst Carl McDon­ald said in an in­vestor note.

Be­yond pos­i­tive uti­liza­tion trends, in­sur­ers re­ported that new fed­eral rules on how they spend mem­ber pre­mium dol­lars are hav­ing lit­tle ad­verse im­pact on earn­ings. A pro­vi­sion of the Pa­tient Pro­tec­tion and Affordable Care

Newspapers in English

Newspapers from USA

© PressReader. All rights reserved.