At the same time that Aetna U.S. Healthcare announced a gain in its first-quarter operating profits, the company said it expects to exit the Medicare HMO business in some cities.
The Blue Bell, Pa.-based insurer said last week that it's reviewing its options "on a market-by-market basis" and would announce its decisions by July 1.
This won't be Aetna U.S. Healthcare's first exodus. The company has pulled out of several major markets this year and last, forcing almost 64,000 Medicare HMO members to find new coverage or return to traditional Medicare. It's a common tactic among insurers that complain the Medicare HMO business is a money-losing proposition.
Aetna U.S. Healthcare had 676,000 Medicare HMO enrollees in the first quarter ended March 31, an almost 24% increase from the year-ago quarter. Overall, the company has 19.5 million members.
News of the pullout comes amid a largely favorable earnings report.
Aetna U.S. Healthcare announced it had operating profits of $131.8 million for the quarter, a 24% jump from the year-ago quarter.
The increase in earnings, the company said, was primarily a result of its $1 billion purchase of Prudential HealthCare last year.
The company's parent, Hartford, Conn.-based Aetna, saw its net income decline slightly during the first quarter to $169.4 million from $169.6 million in the year-ago quarter.
However, the parent saw a 16% jump in its operating earnings to $184 million in the quarter, compared with $158.4 million in the year-ago quarter.
Aetna recently settled a lawsuit with the Texas attorney general by agreeing to end incentives that reward doctors for sticking to stringent medical budgets.
Critics said the practice encouraged doctors to restrict care (April 17, p. 30).