Its third-quarter challenges stemmed from 60,600 MassHealth members who incurred higher medical costs than state actuaries had projected, Partners said in its earnings release. That resulted in Neighborhood paying 111% of the money it received from premiums for medical claims, an increase from 93% in calendar year 2013.
The losses required Partners to set aside $26 million in a deficiency reserve for the second half of the year.
In addition, the state Medicaid program still hasn’t decided whether it would reimburse Medicaid managed-care plans for the cost of Sovaldi, an expensive hepatitis C drug approved in December. Neighborhood incurred $10 million in costs associated with the drug.
Partners also said it lost $4 million in the quarter from the state’s delay in establishing an adequate health insurance exchange.
The challenges offset its 27% growth in health plan revenue, stemming from 27% growth in new health plan members compared with the same quarter last year. Its expenses increased 57% year-over-year.
In its hospital division—which includes flagships Massachusetts General Hospital and Brigham and Women's Hospital—Partners stayed in the black with operating income of $55 million on $2.4 billion in revenue. However, its operating margin declined to 2.3% from 3.9% during the same period last year.
While the 12-hospital system saw a 3% increase in discharges as well as higher acuity patients, it also witnessed a shift toward public payers, which held net patient revenue growth to just 1%. Research revenue declined 1% and expenses rose 2%.
Follow Beth Kutscher on Twitter: @MHbkutscher
