By Shelby Livingston | March 19,
2018
Highmark
Health, a Pittsburgh-based Blues plan that owns Allegheny Health Network,
recorded higher operating gains and profit in 2017, driven by the continued
turnaround of its Affordable Care Act insurance business, growth in its
Medicare Advantage segment, and the sale of a portion of its vision insurance
business in December.
The health insurer in 2017 managed to turn a profit in its ACA exchange business for the first time after losing approximately $1 billion in that market between 2014 and 2016, company officials said Monday.
"We've done a lot to really try to manage the ACA population," Highmark Health Plan President Deborah Rice-Johnson said on a conference call Monday. "No.1: Getting the premiums right to cover the care costs and expenses was important. But we're doing a lot around building upon our complex care management model that's allowing us to really take care of our members more effectively, and also partnering with like-minded providers in the marketplace."
Highmark also narrowed its networks and ACA product offerings, reduced or got rid of broker commissions for ACA plans, and lowered certain provider reimbursement rates for services delivered to ACA members. The plan covers 91,600 members in on- and off-exchange individual plans, down 48% from 177,400 in 2016.
Highmark Health CEO David Holmberg said he's "cautiously optimistic" that the federal government will come up with a package to stabilize the exchanges, saying the continued uncertainty in the marketplace remains difficult for both patients and insurers.
"We're seeing encouraging signs that we could maybe stabilize this marketplace if we have certainty over the next three to four years that the rules aren't going to change and that the revenues and expenses are going to be consistent," he said.
A recent proposal out of the Trump administration to extend short-term health plans to up to a year, and potentially allow them to be renewed, could throw a wrench in stabilizing the market, however, Rice-Johnson said.
While short-term plans lasting three or six months make sense for people transitioning to new forms of coverage, plans that last up to a year aren't short-term and "would create issues in the marketplace, disrupting more stable populations or risk pools and would be a problem long term," Rice said, adding that no short-term plans should be renewable. Highmark already sells some short-term plans.
Beyond the improvements in the ACA business, Highmark's government business, led by Medicare Advantage, reported strong financial results and higher enrollment. Total Medicare Advantage membership is 264,349.
In total, Highmark served 4.6 million commercial health plan customers in 2017 in core markets of Pennsylvania, West Virginia and Delaware.
The Highmark health plan recorded an operating gain of $750 million, up 47.6% from $508 million in 2016. The commercial insurance plan posted an operating gain of $317 million, up 44.1% from $220 million in 2016, while the government businesses recorded operating gains of $433 million, compared with just $22 million the year before.
Highmark's eight-hospital Allegheny Health Network also generated a higher operating gain, helped by improvements in its clinical processes. Inpatient and outpatient volumes were flat during the year but marked by high-acuity patients, company officials explained. The entire network of physicians and facilities is moving to the Epic electronic health record platform, which has led to better care coordination, the company said.
Officials also noted that physician office visits increased by more than 4% during the year, and ambulatory surgery center volume increased by 10%, illustrating the system's strategy to promote care in lower cost settings.
Allegheny Health Network recorded an operating gain of $31 million in 2017, compared with a loss of $33 million in 2016.
Highmark Health's results were also driven by a one-time net gain of $300 million from the sale of a portion of its vision business, Davis Vision, to a private equity firm last year.
The company's other businesses, which include its vision and stop loss insurance segments, reported an operating gain of $103 million, down from $163 million in 2016, thanks to poor results in the stop loss business.
In total, Highmark Health reported operating revenue of $18.3 billion for fiscal 2017, up slightly from $18.2 billion in 2016. Operating revenue grew slowly because of anticipated declines in health plan revenue associated with offering more sustainable products, the company said.
Its operating gain was $616 million for the year, compared with $62 million in 2016. Its net income totaled $1.1 billion, compared to $60 million in 2016.
The health insurer in 2017 managed to turn a profit in its ACA exchange business for the first time after losing approximately $1 billion in that market between 2014 and 2016, company officials said Monday.
"We've done a lot to really try to manage the ACA population," Highmark Health Plan President Deborah Rice-Johnson said on a conference call Monday. "No.1: Getting the premiums right to cover the care costs and expenses was important. But we're doing a lot around building upon our complex care management model that's allowing us to really take care of our members more effectively, and also partnering with like-minded providers in the marketplace."
Highmark also narrowed its networks and ACA product offerings, reduced or got rid of broker commissions for ACA plans, and lowered certain provider reimbursement rates for services delivered to ACA members. The plan covers 91,600 members in on- and off-exchange individual plans, down 48% from 177,400 in 2016.
Highmark Health CEO David Holmberg said he's "cautiously optimistic" that the federal government will come up with a package to stabilize the exchanges, saying the continued uncertainty in the marketplace remains difficult for both patients and insurers.
"We're seeing encouraging signs that we could maybe stabilize this marketplace if we have certainty over the next three to four years that the rules aren't going to change and that the revenues and expenses are going to be consistent," he said.
A recent proposal out of the Trump administration to extend short-term health plans to up to a year, and potentially allow them to be renewed, could throw a wrench in stabilizing the market, however, Rice-Johnson said.
While short-term plans lasting three or six months make sense for people transitioning to new forms of coverage, plans that last up to a year aren't short-term and "would create issues in the marketplace, disrupting more stable populations or risk pools and would be a problem long term," Rice said, adding that no short-term plans should be renewable. Highmark already sells some short-term plans.
Beyond the improvements in the ACA business, Highmark's government business, led by Medicare Advantage, reported strong financial results and higher enrollment. Total Medicare Advantage membership is 264,349.
In total, Highmark served 4.6 million commercial health plan customers in 2017 in core markets of Pennsylvania, West Virginia and Delaware.
The Highmark health plan recorded an operating gain of $750 million, up 47.6% from $508 million in 2016. The commercial insurance plan posted an operating gain of $317 million, up 44.1% from $220 million in 2016, while the government businesses recorded operating gains of $433 million, compared with just $22 million the year before.
Highmark's eight-hospital Allegheny Health Network also generated a higher operating gain, helped by improvements in its clinical processes. Inpatient and outpatient volumes were flat during the year but marked by high-acuity patients, company officials explained. The entire network of physicians and facilities is moving to the Epic electronic health record platform, which has led to better care coordination, the company said.
Officials also noted that physician office visits increased by more than 4% during the year, and ambulatory surgery center volume increased by 10%, illustrating the system's strategy to promote care in lower cost settings.
Allegheny Health Network recorded an operating gain of $31 million in 2017, compared with a loss of $33 million in 2016.
Highmark Health's results were also driven by a one-time net gain of $300 million from the sale of a portion of its vision business, Davis Vision, to a private equity firm last year.
The company's other businesses, which include its vision and stop loss insurance segments, reported an operating gain of $103 million, down from $163 million in 2016, thanks to poor results in the stop loss business.
In total, Highmark Health reported operating revenue of $18.3 billion for fiscal 2017, up slightly from $18.2 billion in 2016. Operating revenue grew slowly because of anticipated declines in health plan revenue associated with offering more sustainable products, the company said.
Its operating gain was $616 million for the year, compared with $62 million in 2016. Its net income totaled $1.1 billion, compared to $60 million in 2016.
Shelby Livingston is an insurance reporter.
Before joining Modern Healthcare in 2016, she covered employee benefits at
Business Insurance magazine. She has a master’s degree in journalism from
Northwestern University’s Medill School of Journalism and a bachelor’s in
English from Clemson University.
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