Payers retracted earlier financial forecasts, which could signal trouble ahead for revenue cycle leaders.
Payers continue to signal a rocky road ahead with the potential for significant implications on hospital revenue cycles. Both Molina Healthcare and Centene have recently walked back earlier financial forecasts for 2025, citing unexpected medical cost pressures.
For providers already facing cuts to Medicaid and Affordable Care Act subsidies, these announcements indicate an increasingly difficult-to-navigate reimbursement landscape on the horizon.
Payers Sound the Alarm on Rising Costs
Molina announced in early July that it was lowering its annual profit forecast due to "medical cost pressures" that had been building throughout the first half of the year, and that the company expects this to continue through the second half.
“The short-term earnings pressure we are experiencing results from what we believe to be a temporary dislocation between premium rates and medical cost trend which has recently accelerated,” Molina President and Chief Executive Officer Joseph Zubretsky said in a statement, indicating that member premiums could be on the rise in the near future.
This news came just one week after Centene withdrew its 2025 earnings forecast, citing a reduction in earlier predictions around the amount it would collect from the federal government in net risk adjustment revenue transfers.
These announcements follow broader industry trends. Earlier this year, United Healthcare and Cigna both announced disappointing financial performance in the fourth quarter of 2024 due to rising medical costs.
The Downstream Effect on Provider Revenue
It likely won’t be long before payers’ financial woes affect health systems’ revenue cycles. Patients, who are already taking on greater financial responsibility for their healthcare costs, will likely see their premiums rise. While that does not seem to have had a significant impact on key performance indicators like bad debt and point-of-service collections yet, it could be a matter of time before cash-strapped patients are pushed to their limits.
Additionally, as payers move to protect their bottom lines, they could take a more aggressive approach to utilization management.
These developments come as health systems already juggle rising labor costs and workforce shortages with increases in claim denials and payer requests for information. These obstacles could grow and make reimbursement even more difficult if payers amp up the pressure in an attempt to drive down their own costs.
For revenue cycle leaders, now is the time to double down on denial prevention and management strategies, consider technologies to ensure claims are clean and accurate on the first submission, and prepare managed care contracting teams for tough negotiations. In a turbulent healthcare economy, the ability to anticipate and respond to these shifts in the payer landscape will be critical for maintaining financial stability.
Luke Gale is the revenue cycle editor for HealthLeaders.
KEY TAKEAWAYS
Centene and Molina Healthcare have both walked back earlier 2025 financial forecasts, citing rising medical costs and uncertainty around risk adjustment revenues.
Payers’ financial challenges will likely translate into higher premiums for patients and could potentially lead to more aggressive utilization management strategies.
External payer pressures would compound internal challenges that health systems already face, including rising labor costs and workforce shortages.