Clover Health narrowed its net losses 42.3% last year, the insurance company reported Tuesday.
The insurer's net loss was down to $338.8 million in 2022 after it reduced spending by its in-house broker, Seek Medicare, the company announced during a call with investors. Revenue grew 136.1% to $3.4 billion driven by higher Medicare Advantage and Accountable Care Organization enrollment.. Clover Health had almost 89,000 Medicare Advantage members and 164,000 ACO REACH participants last year.
Clover Health agreed to a provisional $60 million settlement with federal regulators for failing to control ACO REACH members' expenses, CEO Andrew Toy said. The company will reduce its participation in the program by two-thirds this year, but expects cost-cutting measures will enable revenue to exceed $1 billion, he said.
Overall, Clover Health revenue will decline by 44% this year, but the company has enough cash to sustain operations, Chief Financial Officer Scott Leffler said. The company has $331.7 million in unregulated cash on hand, down $84 million from the third quarter, he said.
Clover Health is under legal scrutiny on more than one front. The Justice Department is investigating its Medicare Advantage coding practices, and the Securities and Exchange Commission is looking into whether the company failed to disclose the Justice Department inquiry prior to its initial public offering in 2021. Likewise, a group of shareholders allege the company committed securities fraud by not informing them of the investigation.
The company also is subject to a Centers for Medicare and Medicaid Services regulation toughening oversight of Medicare Advantage carriers. CMS published a final rule this month to tighten its audits, and expects to collect more than $5 billion from insurers it concludes were overpaid in past years.
Despite these regulatory and legal challenges, Toy downplayed Clover Health's exposure to the new CMS policy.
“We’ve always focused on diagnoses where there is care management involved, which is the spirit of what CMS is doing, and so we feel pretty good about that,” Toy said. “If you look at some of the impacts coming out from other plans and risk-bearing providers, we think they are significantly more impacted than what is in the CMS projections. That’s because of the prevalence of coding for diagnoses that may not impact the cost of care.”