UnitedHealth continues to make headlines months after the cyberattack.
UnitedHealth has remained in the news since the Change Healthcare cyberattack earlier this year.
CEO Andrew Witty recently testified in front of the Senate and provided some updates surrounding the attack—including how it happened—the details of UnitedHealth Group’s (UHG) security controls. Witty also stated it was his decision to pay the large ransom.
From the initial cyberattack, to lawsuits, to divestitures; here are five updates on UnitedHealth Group.
Left without cost data, a study shows employers are still struggling to create better health plans.
A new report published by RAND found that during 2022 private insurers paid hospitals on average 254% of what Medicare would have paid for both inpatient and outpatient services.
Looking at the information from over 4000 hospitals in 49 states, the report showed that private health plans were paying more for the same services; despite wide price variation according to state.
While the number of hospitals and insurance claims has grown, the state-level average price remains 200% greater than Medicare prices.
In 2022, prices for inpatient hospital services averaged 255% higher than Medicare prices, outpatient services averaged 289% higher, and other professional services averaged 188% higher. Even prices for common outpatient services swelled, averaging 170% higher than Medicare payments.
The report estimates that about 160 million Americans have private health insurance, and these hospital increases are key growth drivers in per capita spending.
Drug Costs
When the study weighted each state’s prices equally, researchers found that commercial insurance prices for “select administered drugs received in a hospital setting averaged 278% of average sales price, compared with 106% of average sales price paid by Medicare.”
Payers, Prices and Data
This issue of price transparency isn’t new to the health insurance landscape. Employers have often struggled with creating well-structured plans.
Although federal policies require hospitals to post some prices for “shoppable” services and for insurers to post full sets of negotiable rates, many have not complied. Another issue here is that insurer data often contains duplicate information that inflates the file size, making it difficult to use.
“The widely varying prices among hospitals suggests that employers have opportunities to redesign their health plans to better align hospital prices with the value of care provided,” said Brian Briscombe, who currently leads the RAND hospital price transparency project.
“However, price transparency alone will not lead to changes if employers do not or cannot act upon price information.”
Krishna Ramachandran, senior vice president of health transformation and provider adoption at Blue Shield of California, spoke of the efforts that his organization has made to combat these cost pressures. This includes a collaboration amongst the Office of Health Care Affordability, Pharmacy Care Reimagined efforts, and Pay for Value and Data Exchange solutions.
“We also acknowledge that the healthcare system is getting increasingly complicated, and many parts of this fragmented system are left scrambling to manage a variety of care for all age groups, which this RAND study helps highlight,” Ramachandran said.
Insurers should work with employers to distribute accurate data to combat this issue. We saw a back and forth over this issue in February. Often, employers and plan sponsors said that insurers were refusing to hand over their claims data, which even led to some federal investigations.
The report presented a significant win for hospitals, yet illustrates where more funding is needed.
The Medicare Trustees Report shows that the Hospital Insurance Trust Fund is in better shape than we previously thought. According to the report the program will be able to pay all scheduled benefits until 2036 - seven years later than what was reported in 2023.
All parts of Medicare are expected to grow over the next couple of decades, and reforms will be needed to ensure a slowing of that growth and build revenue for the trust fund.
Although the report did cite some greater financial issues, the Biden Administration seems pleased with the results, seeing it as a correlation of the administration’s focus on economic and healthcare policies such as the Inflation Reduction Act.
The upswing of the Hospital Insurance Trust Fund is attributed to a policy change of how medical education costs are calculated for Medicare Advantage rates in 2024. The result is greater payroll tax income from an economy that performed better than economists had expected, as well as lower 2023 costs for inpatient hospital and home health agency services.
“The Biden-Harris Administration has left no stone unturned in our efforts to strengthen and preserve Medicare, not just for our parents and grandparents but for our children and generations to come,” said Department of Health and Human Services Secretary Xavier Becerra in a statement. “We will continue this work by negotiating the cost of prescription drugs, ensuring no one with Medicare goes bankrupt paying for lifesaving prescription drugs.”
Physician Payments
One major problem that is still lurking is physicians payments, the report citing that trustees expect “access to Medicare-participating physicians to become a significant issue in the long term.”
Many groups agreed, including lawmakers from the Medicare Payment Advisory Commission (MedPAC) and Jesse Ehrenfeld, M.D., president of the American Medical Association.
“This report continues the drumbeat of recommendations that all point out that the payment system is failing patients and physicians," Ehrenfeld said in a statement. "It would be political malpractice for Congress to sit on its hands and not respond to this report."
Physician payments have decreased roughly 30% since 2001, a major problem for underserved providers.
While MedPac agreed that physician payments should be higher, its report that was released in March capped its inflationary update at 50% of the Medicare Economic Index for physician services in 2025. Many groups such as AMA and AHIP slammed the organization for not doing enough to address the issue.
The added years to the Hospital Insurance Trust Fund are a significant improvement, but there is still much work to be done in terms of long-term stability in the healthcare industry. The report suggests two potential solutions: raising the payroll tax from 2.9% to 3.25% or reducing expenses by 8%.
We will have to check back on this issue to see which, if any, solutions will play out.
Implementing innovation and new ideas in health systems can be a tricky endeavor. With tight margins and increasing competition, new innovation strategies must be creative and flexible.
Atlantic Health System has implemented an innovative venture capital strategy, complete with a venture studio. Doug Hayes, the studio’s executive director, says health systems need to focus on the pursuit of their own innovations, instead of looking elsewhere for ideas or guidance. The New Jersey based health system has created a four pronged approach when it comes to innovation.
Payers are shifting their priorities in the MA space.
Medicare Advantage often takes the spotlight and next year will bring about some big changes that are sure to keep it there. Payers were up in arms over Medicare Advantage base rate cuts that will drop to 0.16% in 2025. Payers fought for higher payments, but CMS finalized this rule in April.
With this lower reimbursement rate and high medical costs, some payers are adjusting their strategies and looking at profitability and margins over membership growth.
Atena is looking to implement this strategy as it pulls out of less profitable counties. With disappointing first quarter results, Aetna CEO Brain Kane said the company will prioritize profitability over membership growth.
“It's hard to say right now that we won't have a meaningful decrease in membership," Mr. Kane said. "It's certainly possible."
Humana is also looking to exit some markets next year after examining its first quarter results. According to The Wall Street Journal, Susan Diamond, Humana's CFO, said the company is expecting a net decline in its MA membership next year.
Some insurers have also said they will cut back on supplemental benefits due to the rate cuts, which was an adjustment we all saw coming as payers scrambled for new ways to cut costs after disappointing MA numbers.
CVS Is another payer looking to readjust. CVS Health CEO Karen Lynch said it will adjust plan-level benefits in 2025. Supplemental benefits like fitness reimbursement could be on the line.
The strategic move could pay off for CVS Health's Medicare Advantage members.
In its latest business move, CVS Health has tacitly acquired Hella Health, a tech-enabled Medicare Advantage (MA) broker based in New York City. Hella Health operates as a wholly owned insurance agency with a national platform in all states.
While CVS has not put out a press release about the deal, Hella Health CEO and founder Rafal Walkiewicz announced the news in a LinkedIn post. The financial terms of the deal were not disclosed, but Walkiewicz did express his belief that it will further enhance CVS Health’s digital capabilities, particularly for their senior members.
“Through this combination, CVS Health will expand its multi-payor technology platform to include a wide range of insurance offerings, supported by trusted advisors and agents, to provide a simple, direct-to-consumer Medicare shopping and enrollment experience,” Walkiewicz said.
This is a savvy move by CVS. Payers have been recently struggling with their digital platforms, specifically regarding MA, as these platforms typically have seen a much lower rate of engagement. Members are increasingly unsatisfied with the digital health insurance experience, and this can have a somewhat substantial effect on member loyalty.
Care management has always been a pain point for payers in terms of expense and navigation. As a result, many payers have not seen a return on investment from their care management efforts. Some payers appear to let care management fall by the wayside in favor of more big picture opportunities, but care management can affect a great deal of a payer’s business and will continue to do so.
Care management is becoming an increasingly important aspect of whole health for plan members, especially as the sector focuses on the concept of value-based care models.
Other payers will likely follow suit and explore options for better tools to boost their ROI in this space. These tools must be functional and enable engagement with providers in their networks, as well as craft a user-friendly digital experience for members. When payers are able to do this and increase all-around participation in their care-management programs, member engagement improves, as can star ratings, and better, informed health outcomes.
"The fact that you're so big and so dominant, presents a special vulnerability."
On Wednesday, UnitedHealth Group (UHG) CEO Andrew Witty sat before Congress to give his testimony during a hearing regarding the Change Healthcare ransomware attack. Witty was met with intense questioning about everything from UnitedHealth’s billing practices to its “leviathan” presence in healthcare.
Here are the key takeaways from the hearing:
Security Updates
UHG was in the process of updating its outdated security systems to meet “UnitedHealth standards.” The security systems UHG had in place at the time of the attack did not call for multi factor authentication, which seems to be how the hackers were able to get into the system, UHG believes the hackers broke into the system nine days prior to deploying ransomware.
Payments
Witty confirmed that UHG has paid more than $6 billion to providers since the attack, in the form of interest-free loans that they do not have to repay until 45 days after confirmation that they are fully operational.
In his written testimony, Witty confirmed that UHG paid the $22 million ransom and that it was his decision to do so.
Too Big To Fail
The size of UHG was scrutinized due to its substantial presence in healthcare, with one senator comparing the company to a leviathan. Oregon Senator Ron Wyden opened the hearing by “putting things in perspective” he said: “Last year UnitedHealth Group generated $324 billion in revenue, making it the fifth largest company in the country. Overall the company touches 152 million individuals across all lines of business, insurance, physician practice, home health, and pharmacy.”
UHG has been called the largest physician employer in the country, but Witty argued against this statement saying that UHG employs less than 10,000 physicians and it contracts and affiliates with another 80,000 who voluntarily chose to work with its Optum colleagues.
United may not directly employ the other 80,000 physicians, but it owns Optum, which, albeit indirectly, expands its physician groups and market power.
Witty was also questioned by Senator Elizabeth Warren about the federal investigation into UHG’s billing practices, calling UHG “a monopoly on steroids.” Witty did not provide a comment on this.
Accountability
Witty confirmed that the data breach resulting from the ransomware attack affected about 111 million people. Congress noted that is a massive amount of people and data to be handled by a single enterprise.
“The bigger the company, the bigger its responsibility to protect its system from hackers,” said Louisiana Senator Bill Cassidy, MD during the hearing. “The fact that you’re so big and so dominant, presents a special vulnerability.”
Cassidy may be right. Millions of consumers having their data exposed and the American healthcare system being brought to an almost absolute standstill begs the question: how big is too big when it comes to payers?
Studies show that these mega-payers are not serving the best interests of patients, but instead creating less options with steeper prices.
As CEO, Witty has a lot of responsibility on his shoulders, arguably too much for one person. Ultimately policymakers will have to decide if the weight is too much to bear.
If we pause to think about it, there’s a large possibility this type of attack could happen again…and it could be worse. When asked if he was certain if UHG was prepared to deal with another cyberattack, he said that UHG is doing everything in its power to do so. But would everything in its power be enough? We better hope so when just about the entire country’s private health data is on the line.
How can payers utilize tools to help with care-management ROI?
Payers have been fighting the woes of care management for a long time. Taking the extra step to educate and equip plan members with health tools that they will actually use can be a big challenge.
According to a study by Mckinsey and Company, most payers dedicate about 10% of their administrative spend on care management but are not seeing a ROI.
There’s a lot of talk around the shift to value-based care, but implementation is a different story.
In order to come out on the profitable side of care-management, payers will need to shift their perspective to whole-person health. This shift will likely be more taxing compared to dwelling in traditional health concepts, (at least in the commencement phase) and it will take innovation, dedication, and consistency for payers to create a sustainably profitable care model that keeps their members engaged.
Why Help Is Needed
Payers haven’t been faring too well when it’s come to member engagement, particularly on their digital platforms. With Medicare Advantage plans usually seeing lower rates of engagement, combined with new, stricter rules for calculating MA star ratings, payers need to start looking to new platforms to improve their MA plans.
Regardless of how payers implement new tools, improved care management and member engagement are two critical factors for health plans to retain satisfied members. Since the COVID-19 pandemic and all the consumer-tailored health solutions, ーsuch as telehealth optionsー that came with it, members are increasingly seeking an easy, well-rounded experience when they interact with their health plans. With better tech, and a little thoughtful innovation, payers can offer this while simultaneously improving the ROI of their care-management solutions.
Payers need functional tools that allow them to engage with the providers in their networks. When payers are able to do this and increase all-around participation in their care-management programs, member engagement improves, as can star ratings, and better, informed health outcomes.
But What’s Out there?
There are endless technology options available for payers with new options frequently popping up.
For example, on April 25 WebMD Ignite announced HealthHub Interactive for health plans.
The new HealthHub Interactive will allow health plan clinical teams to engage with members in a more personalized, effective way. The new platform combines Webmd’s HealthHub and HealthAdvisor platforms and each platform in the bundle speaks to a specific healthcare function.
The newest bundled platform will also allow payers to pinpoint the populations that are less engaged with their health and make targeted outreach to them.
Kyruus Connect for Payers is another option that offers the streamlining of data and optimal transparency, something members rate highly in a health plan. Kyruus Connect allows members to make informed care decisions, search providers, and know their costs, all while staying engaged on a platform that offers a consistent experience from every angle.
HealthInteractive and Kyruus Connect are just a couple tools that payers can utilize to offer a comprehensive solution to care management. As more innovative health tech solutions emerge, payers can choose from a variety of options to get a handle on care management and conquer member engagement.
The healthcare industry is a prime target for ransomware attacks.
Healthcare is no stranger to cyber-attacks, and ransomware attacks accounted for 249 of them last year, costing the industry millions. The recent Change Healthcare attack shook the country and sent health systems into chaos. It’s also likely the biggest ransomware attack on healthcare, affecting 1 in 3 Americans.
Cyber-attacks can lead not only to massive data breaches, financial loss, and hardship, but also lawsuits and public distrust in health systems in how they manage and protect consumer health data.
With healthcare being a prime target for cyber-attacks, usually through phishing emails, health systems must prepare actionable response plans for cyberattacks and educate their systems on the facts surrounding cyber-attacks, particularly ransomware attacks.
Check out this infographic for 5 quick facts about ransomware attacks on the healthcare industry.
Four trends are shaping the payer landscape in 2024.
Governmental payers outweigh commercial payers: With the immense growth of government-funded programs like Medicare and Medicaid, hospitals and health systems have become too reliant on these systems. Medicaid fee-for-service physician payments are about 30% lower than Medicare payments, and commercial payments are even lower than that. Medicaid expansion has been booming lately and the program now has even more enrollees than Medicare programs.
Size & Negotiation Power: Often, a payer business is about ten times the size of its health system. Providers are fed up with the lack of negotiation power when they’re contracting with these insurance giants. When payers hold the majority of negotiation power in contracts providers' reimbursement rates also tend to suffer. For example, a 2023 analysis showed that the top insurer in the least competitive insurance markets pays about 15% less to health systems than the top insurer in the most competitive markets. Payers may be profiting, but it’s through unsustainable strategies. The trajectory of payer/provider relations will have to change for hospitals and health systems to stabilize and provide better health outcomes.
Medicare Advantage Is Ballooning: MA now covers more than half of the Medicare population. Payers have seen a lot of profit from MA but also a lot of regulatory headaches and rate cuts. Despite any speed bumps, payers are still basking in the cash flow of the MA market; the CMS overpaid an estimated $75 billion to MA organizations in 2023.
To Cover or Not To Cover? GLP-1 Drugs for Weight-Loss: Diabetes/obesity drugs have become the popular kid and have seen more coverage last year and leading into this year, which is set to keep increasing. One KFF study showed that about 80% of adults think insurance companies should cover these drugs for obesity, and 53% think they should be covered for general weight loss.
