Healthcare giant UnitedHealth Group (UHG) addressed multiple critical issues impacting the Medicare Advantage (MA) market during its recent earnings call. While the industry grapples with the ongoing cyberattack’s repercussions, UHG also provided insights into utilization trends, risk adjustment data validation updates, and the recently finalized 2025 MA rate notice.
UHG holds a significant position within the insurance industry. Notably, they were the first to raise concerns last year regarding a surge in healthcare resource utilization by seniors, impacting the medical loss ratios of several companies. In their previous quarter’s call, UHG executives attributed this utilization rise to a combination of factors: increased COVID-19 admissions, a rise in respiratory syncytial virus (RSV) vaccinations, and a return to elective care procedures that were postponed during the pandemic.
However, during the recent call, President and Chief Financial Officer John Rex offered positive news. “The winter seasonal activity we discussed with you in January, particularly related to strong vaccine uptake, higher respiratory illness incidents and related physician office visits has subsided,” he stated. He further elaborated that “overall inpatient care activity also remains within our expectations.” indicating a return to more typical healthcare utilization patterns with the winter season behind them.
The financial impact of the cyberattack was also addressed. UHG’s first-quarter medical loss ratio (MLR) – the percentage of premium dollars spent on medical care – was 84.3%. This figure reflects a temporary pause in certain care management activities as part of the cyberattack response, resulting in roughly $340 million in additional costs. Additionally, UHG established an $800 million claims reserve to address potential disruptions caused by the hack, further impacting the MLR. For comparison, UHG’s MLR in the first quarter of 2023 was 82.2%.
Despite these temporary setbacks, CEO Andrew Witty emphasized that “overall care patterns are consistent with what we anticipated last year heading into 2024” and aligned with guidance issued in November. He expressed confidence, stating, “with the weather-related effects receding, the company isn’t seeing anything additional that it would call out as unexpected around utilization.”
UHG’s experience reflects a broader trend within the MA market. Many insurers with substantial MA operations reported similar utilization spikes in the last quarter of 2023 and anticipated these trends to persist into early 2024.
Beyond utilization concerns, UHG leadership also addressed ongoing adjustments related to risk adjustment data validation (RADV) and the finalized 2025 MA rate notice, which has been criticized by industry groups for reducing funding.
Witty outlined a three-year response plan to the RADV updates, aligning with the phased implementation schedule established by the Centers for Medicare & Medicaid Services (CMS). He expressed confidence that this approach will strengthen the company’s competitive position. “Our strategy continues to focus on providing as much stability as possible in the reduced funding environment,” Witty said, “improving outcomes and experiences for the consumers we’re privileged to serve, and delivering the performance you expect from us.”
While specifics regarding 2025 expectations were not disclosed, Tim Noel, CEO of UnitedHealthcare Medicare and Retirement, acknowledged that the finalized rate notices align with some of UHG’s recommendations to CMS. He emphasized ongoing communication with CMS regarding further improvements to the MA distribution environment. “It’s a little bit early to comment on how this might rebalance some of the channel mix,” Noel said, “as still some questions on how some of the key elements of that will be rolled out.” He concluded by stating they are awaiting further details before providing specifics on how these changes will impact their go-to-market strategy in 2025.
This update from UHG provides valuable insights into the current state of the MA market. hile the cyberattack has undoubtedly caused disruption, healthcare utilization trends appear to be normalizing. Additionally, industry stakeholders like UHG remain engaged with regulators like CMS to navigate policy changes and ensure a sustainable future for the MA program.
