Oscar Health will not pursue additional full-service +Oscar agreements for the next 18 months after facing challenges implementing its deal with Health First Health Plans, CEO and co-founder Mario Schlosser said Thursday.
The insurtech had sought to secure up to two deals a year for its +Oscar information technology services, which aim to help other insurers and providers transition to risk-based payment models, manage medical spending and engage patients.
Oscar Health announced the Health First Health Plans partnership last year to provide the not-for-profit insurer’s Medicare Advantage and individual policyholders access to Oscar’s member engagement, provider and broker services. The technology deal was set to go live at the start of this year, but has run into “post-launch challenges due to the complexity of integrations at this scale,” Schlosser said during the second-quarter earnings call. He did not provide details.
“We’re in the middle of work supporting integration there, and seven months in we’re still refining implementation and recommitting additional resources," Schlosser said.
The decision to pause additional technology agreements does not change the company's financial expectations for this year, Schlosser said. The company will instead devote resources to achieving profitability in its insurance operations next year and overall profitability in 2025, he said.
Oscar Health generated $1 billion in revenue during the second quarter, up 92.2% from the same period last year. The insurtech’s net loss increased 52.9% to $112.1 million. Membership nearly doubled to 1 million, driven by individual and small group enrollment. Ninety-five percent of Oscar Health’s members have individual or small group coverage.
Growth in the company’s individual exchange business led to a $42 million risk-adjustment charge during the quarter, Chief Financial Officer Scott Blackley said during the call. The Affordable Care Act’s risk-adjustment policy requires health insurance companies that attract healthier members to transfer funds to insurers that enroll sicker, more costly members. “We think that is mainly attributed to market deterioration in the back half of last year with competitors a bit sicker versus our book and, really likely, some special enrollment period growth dynamics,” Blackley said.
Enrollment in the Cigna+Oscar small business product grew tenfold to 46,000. The co-branded plan is available in select markets in seven states and will expand to the Philadelphia area next year, Schlosser said.