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Following on the heels of UnitedHealthcare, Highmark weighs whether staying on the exchange marketplace will be viable.
Another insurer is reporting significant revenue losses on the Affordable Care Act (ACA) exchanges.
Highmark Health recently reported a loss of $438 million, which includes a loss on the government business-Medicare, Medicaid and the ACA-of $655 million and a gain on the commercial business of $217 million.
Highmark’s ACA enrollment is down more than 40%, from about 350,000 to under about 200,000.
“These losses are unsustainable for anyone,” Karen Hanlon, executive vice president and chief financial officer, Highmark Health, tells Managed Healthcare Executive. “Ensuring that the ACA market is viable for the future is a goal for Highmark Health and a responsibility that should be shared by the entire healthcare community. We cannot regress and put the health of 12.7 million people at risk.
“It is essential we get the right premium rates, the right care delivery networks, and the right care management programs in place to stabilize the market so that it can sustain itself,” Hanlon says.
“We’ve seen this from other insurers stating that they have lost money on the exchange business,” says Managed Healthcare Executive Editorial Advisor Joel Brill, MD, chief medical office at Predictive Health. “Some are dropping out, others are tightening their belts and staying in.”
According to Hanlon, approximately 90% of Highmark’s government loss is attributable to the ACA business, which is well above the loss incurred in 2014 because of:
• Higher enrollment in the products, increased utilization of services;
• Unfavorable restatements of the 2014 amounts due to the risk adjustment and reinsurance provisions of the ACA program;
• The plan’s conservative position on the risk corridor due from the federal government; and
• The recording of a premium deficiency reserve on the business.
“Highmark maintained a consistent bottom line year over year, despite our continued conservative accounting approach in 2015 related to the federal government’s reneging on its commitments and making only fractional reimbursement of the ACA risk corridor monies,” Hanlon says. “Had we received those reimbursement funds, Highmark would have had profitable financial performance in 2015.”
Steps continue to be taken to recover the risk corridor funding and Highmark has met with government officials regularly over the past year to discuss how they plan to honor their commitment to support the ACA, according to Hanlon.
Meanwhile, UnitedHealthcare recently announced it will not sell on the Georgia or Arkansas insurance exchanges in 2017. This move isn’t surprising, considering that United had already told investors that their exchange plans weren’t doing as well as they had hoped.
“We are constantly evaluating the dynamics of the ACA market,” says Hanlon. “By mid-year, we will determine to what extent we will participate in the 2017 ACA market. It is critical that the federal government keep its commitment to plans that voluntarily offered ACA coverage in the initial years despite unprecedented levels of uncertainty about enrollment and a continually challenging political environment.”
Without assurances that these obligations will be met or adequate rates and continued flexibility in product and network design, Hanlon says that the health plan may have to reconsider participating in some, or all ACA markets.
Meanwhile, Highmark says that it is “aggressively” addressing the challenges of the ACA.
“Our objective is to stabilize the ACA market, right-size our product portfolio and move towards an appropriate level of overall ACA membership, through which we anticipate margin improvements,” Hanlon says.
To date, Highmark has:
• Made rate adjustments in some markets;
• Reduced or eliminated broker commissions to encourage appropriate coverage selection;
• Developed a care management program to help ACA members holistically manage their care;
• Made modest revisions to physician and hospital reimbursements for services provided to ACA members;
• Ensured appropriateness and consistency in the special enrollment qualification process.
“For 2016, we achieved what we believe is the appropriate level of membership in our ACA individual plans,” Hanlon says. “The plan modifications we made in the fall right-sized our ACA individual membership, including a significant reduction in the number of plans offered in all markets.”