UnitedHealth Group anticipates enrolling more Medicare Advantage members than expected this year despite regulatory changes to the program designed to curb health insurance companies' excessive profits, executives said Friday.
The Centers for Medicare and Medicaid Services’ decision last month to phase in risk-adjustment changes over a three-year period will give the company time to adjust its operations and minimize cuts to the benefits it offers members, UnitedHealth Group CEO Andrew Witty said during its first-quarter earnings call.
He said he expects to add more than 900,000 Medicare Advantage members this year, ahead of the company’s projections. Signing up members dually eligible for Medicare and Medicaid remains a company focus, in spite of CMS’ consolidation and removal of more than 2,200 risk codes used to catalog complex conditions.
“We feel good, we intend to grow in 2024 and we expect the marketplace to continue to grow in 2024,” Witty said.
Additionally, UnitedHealth does not expect regulatory changes to the Medicare Advantage program to lessen providers’ appetite for inking shared risk contracts.
Parent company UnitedHealth Group, the largest insurer and employer of physicians, increased net income 16% year-over-year to $8.1 billion on revenue growth of 15% to $91.9 billion.
The UnitedHealthcare insurer's net income rose 14% to $4.3 billion, driven by increased membership and slow recovery of non-urgent procedures. Revenue grew 13% to $70.5 billion. The insurer counted 52.8 million members this year, up 3.7% from 50.9 million.
During the call, executives addressed UnitedHealth’s plan for physician acquisitions, lawmakers' rising scrutiny of the pharmacy benefit manager industry, coverage of pricey new weight-loss drugs and more. Here’s what to know:
More doctors hired
Optum's net income increased 19% to $3.7 billion on revenue growth of 25% to $54.1 billion, primarily due to more patients visiting OptumHealth clinics and growth in OptumRx pharmacy scripts processed. Optum expects to add 10,000 physicians this year, Witty said. The healthcare provider reported employing more than 70,000 clinicians at the end of 2022. In February, Optum paid an undisclosed sum for Crystal Run Healthcare, a network for nearly 400 providers in New York.
Removal of prior authorization
UnitedHealthcare’s decision last month to remove prior authorizations from about 20% of its services will not pressure the company’s finances, UnitedHealthcare CEO Brian Thompson said during the call. The company also plans to remove all prior authorizations requirements for some physician practices, which will translate to another 10% reduction in prior authorizations, he said. The insurer expects to launch most of these changes during the third quarter.
Ozempic spending is low
While pharmacy spending represented 20% of the company’s total medical expenditures in the first quarter, less than 1% of those charges were for GLP-1 weight loss drugs, such as Novo Nordisk’s Ozempic or Wegovy. “The price has to be affordable, that’s going to be a key element of how this will evolve,” Witty said. “We’ll keep a close eye of prices in Europe.”
Regulatory scrutiny not slowing down OptumRx
Lawmakers’ scrutiny of the PBM industry has not slowed business at OptumRx, Witty said. OptumRx’s revenue grew 14.9% to $27.4 billion, with “record levels of retention” among employer customers, he said. OptumRx is the third-largest PBM, controlling 21% of the market in 2021, according to the latest data from Drug Channels, a research group. “There needs to be a counterbalance to drug company pricing and the only players really advocating hard for reducing costs are the PBMs,” Witty said. “We’re very happy when people cut list prices, and we’re very happy when we secure increased rebates, because that cuts costs.”
