Insurer-owned medical practices received CARES Act provider grants
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May 04, 2020 04:16 PM

Insurer-owned medical practices received CARES Act provider grants

Rachel Cohrs
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    Modern Healthcare Illustration / Getty Images

    Medical practices owned by at least one insurer got some of the $175 billion grant fund Congress set up to help providers offset coronavirus-related expenses and losses.

    UnitedHealth Group, which has been a leader in acquiring physician practices in recent years, received $49 million from the Coronavirus Aid, Relief, and Economic Security Act's provider relief fund, but returned the money to HHS.

    "UnitedHealth Group will not seek nor accept any federal aid money. We have returned all aid funds our provider organizations received under the CARES Act," Kristin Anderson, a spokesperson for UnitedHealth's Optum, said in a statement.

    HHS sent out the first $30 billion tranche of grant funds automatically in early April based on 2019 Medicare fee-for-service revenue. Insurers have recently told investors that COVID-19 may not hurt their bottom lines this year, while hospitals are complaining they didn't get a large enough share of the provider grants.

    UnitedHealth said in its first-quarter earnings release that the company "will not request, nor do we intend to retain, any government assistance."

    HHS chose UnitedHealth to distribute the grant funds to all providers.

    The structure of physician payment for UnitedHealth means its OptumHealth business is insulated from the disastrous effects postponing nonessential procedures is having on primary-care practices across the country.

    UnitedHealth CEO David Wichmann said on the company's first-quarter earnings call that two-thirds of OptumHealth's revenue is risk-based, while one-third come from a fee-for-service structure. One example of a risk-based payment structure is capitated per-member, per-month payment, under which a decrease in utilization could increase profit margins. A Barclays investor note called the revenue mix "favorable."

    "On a net basis, this mitigates total COVID-19-related exposure to a level that was not previously appreciated by investors," Barclays analysts wrote.

    Humana and Centene Corp. have also acquired physician practices in recent years. Neither company responded to a request for comment on whether they received CARES Act provider grants, and if so, whether they returned any money.

    The American Hospital Association wrote to HHS Secretary Alex Azar on April 27 lamenting that hospitals and health systems got an estimated 44% of the first $50 billion in general grant funds the department distributed.

    "Hospitals and health systems that are supporting the nurses and physicians to care for patients, building new sites of care to minimize the spread of the virus, and purchasing the ventilators, drugs, and supplies to care for the critically ill, received less than a fair share given their role," AHA CEO Rick Pollack wrote.

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