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MCO – Elevance Health Reports $1.3 Billion Profit And Insurer Ups Forecast Once Again

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The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.

[MM Curator Summary]: Elevance profits are down YOY, but revenues from non-Medicaid lines of business are increasing.

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Elevance Health reported a third quarter profit of $1.29 billion as the health insurer added health … [+] plan members despite a big dip in Medicaid enrollment due to the end of a pandemic-era coverage provision.

Elevance Health

Elevance Health reported a third quarter profit of $1.29 billion as the health insurer added new customers despite a big dip in Medicaid enrollment due to the end of a pandemic-era coverage provision.

Elevance, which sells government and commercial health insurance including Blue Cross and Blue Shield plans in 14 states, Wednesday reported third quarter profits decreased nearly 20% to $1.29 billion compared to $1.6 billion in the year-ago quarter. The dip in net income was due largely to an “operating loss of $741 million in the company’s “corporate & other segment” executives said was driven by “business optimization charges.”

“In the third quarter, we completed a strategic review of our operations, assets, and investments to enhance operating efficiency, refine the focus of our investments in innovation and optimize our physical footprint,” the company said in its earnings report. “This resulted in a net charge of $697 million, comprised of the write-off of certain information technology assets and contract exit costs, a reduction in staff including the relocation of certain job functions, and the impairment of assets associated with the closure or partial closure of data centers and offices.”

Still, revenue jumped 7% to $42.8 billion as overall health plan enrollment grew and the company’s Carelon health services business performed well.

Elevance’s membership grew by 42,000, or 0.1%, to 47.3 million as of September 30, 2023 compared to a year ago.

The growth was driven primarily by “growth in BlueCard, Affordable Care Act health plans, and Medicare Advantage membership, partially offset by attrition in Medicaid due to the resumption of eligibility redeterminations and a new entrant into one of our state Medicaid programs in the third quarter, as well as declines in our Employer Group risk-based business,” Elevance said in its third quarter earnings report.

The end of the U.S. Public Health Emergency in May after three years of the Covid-19 pandemic is impacting health insurers that have a significant business administering Medicaid coverage for states, which are conducting so-called “Medicaid redeterminations.” Medicaid redetermination, also described as Medicaid renewal or Medicaid recertification, is essentially when people are asked to show they are qualified for such coverage.

During the third quarter of 2023, medical membership decreased by 664 thousand driven by attrition in Medicaid due to the aforementioned dynamics,” Elevance said in its report.

Still, Elevance’s profits and continued growth are figured in the company’s forecast for increased profits with adjusted net income now expected to be “greater than $33.00 per share.” That is more than an earlier forecast for adjusted net income of company “greater than $32.85” per share.

“Elevance Health delivered another quarter of solid performance reflecting the strength and balance of our diversified portfolio of businesses, our continued investments in innovation and growth, and our relentless focus on affordability, simplicity, and customer experience,” said Elevance Health president and chief executive Gail K. Boudreaux. “With affordability a paramount concern for all payors and a more uncertain forward-looking operating environment, we took action during the third quarter that will enhance our ability to act nimbly and operate efficiently.”

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MCO- Medicaid Managed Care Organizations face scrutiny over prior authorization denials

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The article below has been highlighted and summarized by our research team. It is provided here for member convenience as part of our Curator service.


[MM Curator Summary]: The scrutiny on MCO denials and prior auths continues.



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A recent review of Medicaid Managed Care Organizations (MCOs) has revealed concerning trends in approving prior authorization requests for services. In 2019, MCOs denied one out of every eight requests for prior authorization of services, according to a report by the Office of the Inspector General (OIG).

Among the 115 MCOs examined in the review, 12 exhibited denial rates for prior authorization requests that exceeded 25 percent—twice the overall rate. This discrepancy in approval rates highlights potential disparities in access to essential healthcare services for Medicaid enrollees.

Despite the high number of denials, many state Medicaid agencies reported that they did not routinely review the appropriateness of MCO denials. Additionally, many still needed to have mechanisms in place to collect and monitor data on these decisions. More robust oversight is required, potentially allowing inappropriate denials to go undetected within the Medicaid-managed care system.

The OIG has recommended measures to improve enrollee protections and state oversight of prior authorization denials in Medicaid-managed care in response to these findings. These include:

States must regularly review the appropriateness of a sample of MCO prior authorization denials.

• Mandating States to collect data on MCO prior authorization decisions.

• Issuing guidance to states on utilizing MCO prior authorization data for oversight.

• States must implement automatic external medical reviews of upheld MCO prior authorization denials.

In their official response, the Centers for Medicare & Medicaid Services (CMS) did not indicate concurrence with the first four recommendations. However, they agreed with the recommendation to collaborate with States to identify and address MCOs that may be issuing inappropriate prior authorization denials.

Senator Robert Casey (D-Pa.), who chairs the Senate Special Committee on Aging and U.S. Representative Frank Pallone, Jr. (D-N.J.), Energy and Commerce Committee ranking member, has voiced concerns about the potential prioritization of MCOs’ financial interests over the needs of patients seeking care. “I’m deeply troubled by reports that Medicaid managed care plans denied an average of one out of every eight requests for treatment, more than double the rate of service denials in Medicare Advantage,” Pallone said in an earlier statement.

“Medicaid is a lifeline for over 80 million people, including children, people with disabilities, seniors, and hardworking families,” he continued. “This report strongly suggests that some private insurance plans, which states have contracted with to provide health care coverage to their residents, may be improperly denying access to critical services to maximize their profits.”

In a letter to the OIG, Casey emphasized the role of insurance companies in administering Medicaid benefits through MCOs, which receive fixed fees known as “capitated payments.”

Casey noted that independent watchdogs have consistently raised concerns about the MCO model, which may incentivize insurers to limit payments and deny coverage. He highlighted that MCOs have expanded significantly, becoming the “dominant delivery system” for Medicaid, providing coverage to over 67 million Americans, or 84 percent of Medicaid enrollees.

The senator noted that the OIG’s national evaluation of Medicaid MCOs, published in July, examined 115 plans with a minimum of 10,000 enrollees operating across 37 states and managed by seven companies. For example, the report found that, on average, MCOs denied 12.5 percent of requests for prior authorization in 2019, with notable variations from state to state and among different companies and plans.

Casey said one insurer in 13 states exhibited denial rates ranging from 5 percent to 29 percent. In California, denial rates for various MCOs ranged from 7 percent to 29 percent. The OIG report also identified 2.7 million individuals enrolled in MCOs with 25 percent or higher denial rates. Notably, one Illinois plan had a denial rate of 41 percent, while two other plans in Georgia and Texas denied one-third of claims.

Casey has called for a thorough examination of the MCO system to ensure that patients enrolled in Medicaid have unfettered access to the services they are entitled to. Additionally, he has urged the CMS to provide robust oversight to safeguard the interests of enrollees in receiving the care they need.

“When patients are denied coverage of medically necessary services, they often face tight timelines to file actionable appeals,” Casey said. “Assuming such appeals are filed in a timely manner, the process can be complicated and time-consuming, creating barriers that can make it difficult for Medicaid enrollees to seek recourse.”