Insurers attributed lower-than-expected medical utilization to bad weather—if patients can’t get to the doctor because of a snowstorm, then insurers have fewer medical claims to pay. But analysts seemed wary about attaching too much credence to this explanation, and UnitedHealth Group, Aetna and others said they expect cost trends to rise over the course of the year.
Aetna, for one, saw a decline in hospital bed days over last year as well as fewer physician visits. And, unlike WellPoint, Aetna did not see evidence of higher acuity among patients.
“We suspect WellPoint will be analyzing these higher acuity claims more to make sure that hospitals aren’t finding new ways to charge patients more to try and make up for the drop in commercial bed days,” Citi senior analyst Carl McDonald said in an investor note.
Beyond positive utilization trends, insurers reported that new federal rules on how they spend member premium dollars are having little adverse impact on earnings. A provision of the Patient Protection and Affordable Care Act requires insurers, beginning this year, to spend 80% to 85% of member premium dollars on direct medical care and quality improvement activities.
Starting in 2012, insurers must give members rebates for the difference if they do not meet these medical-loss ratios. Insurers reported ratios at or within reach of the federal requirements, and said they do not expect the rebates to significantly affect their bottom lines.
For instance, Michael Wiederhorn, analyst at Oppenheimer, wrote in an investor note that although definitions on the rebates are still being evaluated, “we believe the impact will be negligible” for Aetna.
Some insurers reported enrollment growth among young adults, spurred by a provision in the federal reform law requiring employers to allow young adults up to age 26 to be added to their parents’ health plans. The provision went into effect Sept. 23, 2010, though most employers did not have to add the new dependents to their rolls until January. WellPoint reported that the provision added nearly 292,000 new members in the first quarter, to a total of nearly 34.2 million members nationwide.
WellPoint and Aetna also touted their accountable care organization pilot programs, and expressed a commitment to expanding these new relationships with providers. Aetna, which in March announced an ACO initiative with the Carilion Clinic in Roanoke, Va., is “determined to be a leader” in this area, Mark Bertolini, chairman, CEO and president of Aetna, said during an investor call.