CVS Struggles Financially; Undertakes $2 Billion In Cost-Cutting
CVS slashed its full-year guidance in its Q2 investor call and has begun a multi-year initiative to generate as much as $2 billion in savings. CVS has been hit by very high utilization in its Medicare Advantage (MA) line and plans to shed about 10% of its Medicare lives in 2025. Its overall medical loss ratio (MLR) is about 90% through 1H 2024.
Its Aetna line is performing so poorly that it terminated its recently-hired Aetna president and CVS Health CEO Karen Lynch will take over day-to-day control. She formerly was president of the unit and knows it well. CVS missed its revenue target but exceeded its margin expectations with $1.8 billion in Q2. CVS’ MA line has negative margins now, but the benefit reductions and contraction it plans in 2025 will return it to 4% to 5% MA margins over time. Lynch also committed to vigorous education and defense of its pharmacy benefits manager.
Additional articles: https://www.fiercehealthcare.com/payers/cvs-ceo-karen-lynch-take-helm-aetna-amid-ongoing-utilization-spike and https://www.modernhealthcare.com/finance/cvs-health-earnings-aetna-president-brian-kane-ceo-karen-lynch and https://www.healthcaredive.com/news/aetna-president-out-cvs-medicare-advantage-woes/723513/ and https://www.beckerspayer.com/payer/cvs-second-half-of-2024-could-be-even-worse-for-medicare-advantage.html and https://www.beckerspayer.com/executive-moves/aetna-president-out-after-disappointing-financial-results.html and https://www.beckerspayer.com/payer/payers-pledge-defense-of-their-pbms.html
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#medicareadvantage #partd #aetna #cvshealth
https://www.fiercehealthcare.com/payers/cvs-kicks-multiyear-2b-cost-cutting-effort
Oscar Health Reports Second Quarterly Profit And Increases Guidance
Insurtech and Exchange-focused Oscar Health reported a second consecutive month of quarterly net profit in its Q2 earnings. Oscar had net income of $56.2 million for the quarter, a $71.7 million improvement year over year. Its revenue was $2.2 billion, a 46% increase from last year. Former Aetna CEO Mark Bertolini took over the helm at Oscar and has done a tremendous job getting to profitability. The medical loss ratio (MLR) is in the low 80s as well.
The company raised its full-year guidance. Oscar’s report comes on the heals of positive news from insurtechs Clover Health and Alignment Healthcare as well. All three are public, while the other Insurtech success story, Devoted Health, is private.
#insurtechs #medicareadvantage #exchanges
https://www.fiercehealthcare.com/payers/two-row-oscar-health-announces-second-quarterly-net-profit
Health Plans Shed Prior Authorizations
Reacting to huge regulatory scrutiny and reforms of prior authorization (PA), plans are now rethinking their approaches.
UnitedHealthcare will launch a national program Oct. 1 for physicians to override PA requirements. The gold card program will apply to commercial, individual exchange and Medicare Advantage plans and allow certain physician practices to not submit PAs for certain medical, behavioral and mental health services. Providers that hit at least 92% PA approval rates for two consecutive years are eligible.
Medicaid-dominant L.A. Care Health Plan has cut 24% of its PA requirements as well.
Many states are passing mandatory gold-card requirements, taking away the discretion from health plans. But states only have cognizance over certain commercial coverage.
Additional article: https://www.modernhealthcare.com/insurance/la-care-health-plan-cuts-prior-authorization-requirements
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#priorauthorization #healthplans #goldcarding
— Marc S. Ryan
