Most major health insurers are so far experiencing positive results in the face of unknowns.

The largest payers continued to see profits in the second quarter, despite concerns of increased utilization.

Familiar names were at the top of the charts, with UnitedHealth Group paving the way at $5.5 billion in profit, followed by CVS Health at $1.9 billion.

Not unlike their counterparts on the provider side, health insurers this year have had to maneuver through their own set of issues, although as their second quarter earnings reports showed, it hasn't hurt the bottom line much.

Here are three takeaways from the second quarter:

Utilization is up, but not alarmingly so

Insurers were already bracing for utilization to go up from deferred services as a result of the COVID-19 pandemic.

Those fears, the second quarter indicated, were not unfounded, but they weren't fully borne out either.

Some of the medical loss ratios experienced by payers were 83.2% for UnitedHealth, 86.2% for CVS, 86.3% for Humana, and 81.2% for Cigna. While the figures were on the higher end compared to recent quarters, they were mostly manageable.

Where utilization has especially increased is in outpatient settings as patients begin to seek out care they delayed during the pandemic.

"Bottom line, I don't really think the benefits are driving this," UnitedHealth Group CEO Andrew Witty told investors. "When you look at the concentration of what we're seeing in terms of the outpatients, the orthopedics, in particular, those sorts of areas, it looks very much more like a kind of deferment of care."

CVS also reported utilization increase in outpatient settings, particularly on the Medicare Advantage (MA) side.

Fallen star ratings

Speaking of MA, payers projected realistic outlooks for their star ratings, which have taken a hit across the board in 2023.

Cetene CEO Sarah London told investors that the insurer anticipates losing its only four-star MA contract—plans with at least four out of five star qualify for bonus payments that can be used to offer supplemental benefits.

"While this is disappointing, we do expect to see meaningful movement in our three- and 3.5-star plans in October, and roughly two-thirds of our members are in plans showing year-over-year improvement," London said.

Humana, meanwhile, expressed confidence in their position and reported significant improvement in star ratings for CenterWell Home Health, with the percent of its branches with 4.5 stars or above increasing from 18% in January to 50% in the second quarter.

Bonus payments have been a boon for MA insurers, with KFF estimating qualifying plans will collect at least $12.8 billion in bonus payments this year—an increase of 30% from 2022.

MA payers are working to account for CMS' adjusted methodology for star ratings to continue bringing in the payments.

Medicaid not redetermining expectations

The ongoing Medicaid redetermination process is creating a potential drain in membership, but insurers have so far conveyed cautious optimism that it won't be too detrimental.

Elevance Health president and CEO Gail Boudreaux said she was encouraged that Medicaid members losing coverage are transitioning into Affordable Care Act exchange plans. The insurer reported a loss of 135,000 Medicaid members in the quarter, but managed a net income increase of 13.2% year-over-year.

"It's still early in the process, and our expectations for coverage transitions remain unchanged," Boudreaux said on an earnings call.

For Centene, Marketplace membership grew to 3,295,200, up from 2,033,300 over the same period in 2022, while the Medicaid business increased to 16,059,600, compared to 15,446,000 year-over-year.

London said the performances of both sectors are "running slightly ahead of expectation."

Members want more from their health insurer, but different generations require different approaches.

If you're a health plan and want to not only retain your members, but attract new ones, the status quo may not be enough.

A one-size-fits-all approach may not be either, with older beneficiaries preferring one type of experience, and younger members wanting another. That's why health plans have to deliver highly personalized care—something they're seemingly not doing enough of.

Recent surveys, studies, and analysis have shown member satisfaction to be relatively low right now. The newest piece of evidence comes from a survey of more than 2,800 beneficiaries by digital healthcare company HealthEdge, which found that only 45% of respondents are fully satisfied with their health plan, while 55% want more from their insurance.

The survey also reveals differences among generations. Respondents aged 18 to 24 were four times more likely than other age groups to prefer digital communication with their health plan, such as texting and mobile app messaging. Respondents aged 65 and up, on the other hand, preferred traditional forms of communicating, such as phone calls and emails.

However, commercial health plans are struggling to meet patients' engagement needs. A separate study by J.D. Power, based on response from 32,656 commercial health plan members, uncovered that overall member satisfaction dropped by 13 points this year (on a 1,000-point scale), mostly due to a 33-point decline in customer service and a 16-point decrease in information and communication.

Another report by Accenture, released near the end of 2022, revealed the top reasons why beneficiaries leave their insurers. Nearly half of almost 11,000 respondents (49%) cited ease of navigation as the number one factor for switching, which includes: inconsistent or inaccurate information, unanswered questions, poor experiences using digital tools, poor customer service, and discomfort with how payers used their personal data.

Switching up coverage and benefits, or increasing provider choice, is likely a bigger ask for health plans than improving the engagement experience. Focusing on digital tool offerings, customer service, and convenience can be low-hanging fruit for payers to appeal to beneficiaries, particularly of the younger generation who are more prone to switching plans.

Gabriella Gold, director of Network Strategy and Innovation at CareFirst BlueCross BlueShield, recently shared at the HealthLeaders' Payer NOW Summit some unique solutions to improving the member experience in behavioral health that her health plan is seeing results from.

"An example of a technology we've rolled out to all our commercial members is an asynchronous chat function that mimics a coffee conversation with a close friend or family member," Gold said.

"We've also partnered with an organization to bring all of our solo practitioners together and incentivize technology use for charting and appointment scheduling. We're now seeing streamlined appointment bookings in under four days whereas previously, members were calling five to 10 providers and not getting a call back for 30 days. We've seen great strides there."

For health plans, building and maintaining loyalty with beneficiaries isn't just about trust and consistency, but also about demonstrating a willingness to evolve to meet members' needs and expectations.

While digital engagement may not always be the priority for members, it's the area where insurers can potentially make strides fairly quickly to improve satisfaction.

The publicly operated health plan has seen an increase in requests for resolving claims and requests for potential advances coming out of the pandemic.

Months into taking over the reins as CFO of L.A. Care Health Plan, Afzal Shah understands the financial challenges facing not only his organization, but also his counterparts at hospitals.

"They want their claims paid faster," Shah says.

During a time in healthcare when payers and providers have little choice but to work together to ensure mutual success, it's critical both sides recognize what the other needs.

Shah knows that better than most, having previously served as deputy CFO at L.A. Care, senior vice president at Alignment Healthcare, and vice president for Actuarial Services at Health Net and Centene.

In an exclusive interview with HealthLeaders, Shah shared how he's collaborating with hospital CFOs, addressing claims disputes, scaling back expenses while eying growth, and more.

This transcript has been lightly edited for clarity and brevity.

HealthLeaders: What has the experience been like in the first few months as a CFO in the current financial climate?

Shah: After the pandemic, there have been quite a lot of changes, impacts to our providers and our partners, including our IPAs [Independent Physician Associations] and especially the hospital community and the nursing facility community. We've definitely seen an increase in requests for paying claims faster, requests for potential advances, and loans. We officially don't give out loans, but we can give an advance related to directed payment that usually the state gives us to pass on to hospitals and we have offered millions and millions of dollars in those advances to hospitals to provide financial relief to them.

And then separately for L.A. Care, we are certainly looking at our team, our resources, our admin, our vendor spend, contracting spend. Our goal and my goal for the company is I want to see a sustainable company for many, many years to come, long after I'm gone. So we are reviewing all of our departments and our spend internally to see how we can manage to live within the revenue. We are heavily, heavily dependent on the revenue we get from the state of California, so how we can live within the revenue that the state gives us for both our admin costs, as well as our healthcare costs spent.

HL: Healthcare organizations everywhere are trying to cut costs, but how do you grow while keeping expenses low?

Shah: We are doing both, looking at our healthcare dollars and where we want to spend the right amount of dollars for the right price, in terms of purchasing services. We are looking at our network. Where do we need to add providers in the market? We are also looking at, in the individual market, people who may fall off of Medi-Cal due to redetermination. We have a home for them in Covered California and we continue to be the lowest price plan for that. We are also reviewing all of our admin spend and looking at each and every department. There are areas where we are looking to add staff where it's needed and then at the same time there are areas where we are looking to make changes.

Afzal Shah, CFO, L.A. Care Health Plan.

HL: What are the areas of focus for investment right now?

Shah: Security is a big one for us. Our IT team is very focused on security. That's very, very important to us. We have made some investments in the health services team. We heard from many of our hospital partners, they wanted more focus, they wanted more regular meetings, updates. And as we know, there are multiple changes on the state side in terms of the Medi-Cal program with CalAIM, Enhanced Care Management, community support. So we are also making investments to ensure that we can comply with all of the requirements of the state and the new benefits and programs that are impacting the Medi-Cal population, which of course is the majority of our population.

HL: How do you view the current payer-provider relationship and what can you do to improve it? Putting yourself in the shoes of a hospital CFO, how do you see it from their side?

Shah: I talk to hospital CFOs on a weekly basis. The leadership team is very committed to making sure we are listening to the issues that hospitals are facing and we are responding. We've had some very positive meetings with the CFOs. We are figuring out ways to address the issues. I think a lot of what we certainly hear is they want their claims paid faster than even before the pandemic, at times. That's what I hear a lot. If there are claims disputes, how do we address them in a timely manner. I've been working all summer with many of the CFOs to address some of those issues and there's still a long way to go, but we have been working with them collaboratively and listening to them.

There's definitely, in terms of medical inflation and changes in the healthcare industry, we've heard of certain hospital closures. So I do want to recognize that the economic environment is a fairly challenging one for hospitals and we are doing everything we can to help, such as with advances that we've made to hospitals for the ones that need it, for example.

HL: How can you tailor payment and care models to gain a win-win with providers, whether it's with fee-for-service, fee-for-value, or capitation?

Shah: We currently have a very diverse model of care, in the sense that we have three plan partners: Anthem Blue Cross, Promise, and Kaiser. We delegate membership to those plan partners, which we believe is a good thing because certainly that way our members have a choice of not just L.A. Care, but also the plan partners. But we also delegate risk to hospitals and IPAs, and because of that, sometimes there are timing issues. If a provider sees an L.A. Care member, oftentimes they may send us the claim, but the claim may not belong to us. It may belong to a delegated party. It may belong to a plan partner that we have delegated risk to, for example. While this very complicated payment methodology structure we believe is providing good service to our members, it can create some delays and we are working collaboratively with our hospitals, as well as our plan partners and delegated payers to really see how we can address the root causes of those delays.

There are also delays sometimes with Medicare, Medi-Cal claims where there's coordination of benefits—a provider has sent us a claim but we don't have the amount that Medicare would pay. So we also are working on addressing how we can, on a more timely basis, address those types of claims where there's a different party that's the primary payer versus the secondary payer.

Over 48,000 clinicians polled say payers are manipulating the surprise billing law.

Health insurers are acting in bad faith in a multitude of ways when it comes to the No Surprises Act, a survey by Americans for Fair Health Care (AFHC) reveals.

The coalition of clinical and advocacy organizations polled 48,005 physicians in 45 states to investigate concerns over insurer abuse in the surprise billing law. The survey results suggest that providers are often on the wrong end of power dynamics, which includes payers withholding payments, limiting patients access to in-network care, and ignoring mechanisms of the independent dispute resolution (IDR) process.

The No Surprises Act is meant to protect patients from unexpected bills when they receive services from out-of-network providers at in-network facilities. When there is a dispute between providers and payers over price, the two sides can enter an IDR arbitration.

However, according to the surveyed clinicians, 52% of payments determined by independent dispute resolution entities were not made at all, while 49% were not made in the required 30-day timeframe, and 33% were made in an incorrect amount.

Since going into effect on January 1, 2022, the No Surprises Act has run into a litany of problems. Providers have challenged the law several times in court, with the latest resulting in a federal court suspending the IDR process once again by striking down an increase in administrative fees for arbitration and restrictions on batching related claims.

The IDR process has also been inundated with a massive influx of disputes. A recent status update by CMS revealed a total of 334,828 billing disputes had been filed, nearly 14 times more than initially expected.

Litigation challenges and surveys such as the one conducted by AFHC have illustrated how providers feel about the balance of power within the law. Without the necessary cooperation from insurers, the No Surprises Act will continue to impose financial challenges that will fall on the shoulders of providers.