The health insurers who have reported first quarter 2023 earnings – Elevance Health (Anthem), Humana, UnitedHealth Group, and Centene – have reported strong revenues and profits. These profits have been fueled, in part, by low medical costs, including lower payments to providers than anticipated. One of the ways that health insurers reduce their healthcare costs is to deny and downcode claims.
A health insurer’s medical cost ratio (“MCR”) represents the insurer’s spending on claims compared with its earnings from premiums. Different insurers use different terms to refer to the MCR, including the medical care ratio (UnitedHealthcare), the benefits expense ratio (Elevance and Humana), and the health benefits ratio (Centene). Regardless of the terminology, the lower an insurer’s MCR, the more profit it earns. In other words, when health insurers deny providers’ claims for reimbursements, they increase their profits.
In its first quarter 2023 earnings report, Elevance reported an MCR of 85.8%, 30 basis points lower than its 86.1% MCR from the prior year quarter. In its first quarter earnings report, Humana reported an MCR of 85.5%, a decrease from its prior year quarter MCR of 86.4%. Humana’s President and CEO Bruce D. Broussard attributed this decrease in part to “favorable inpatient utilization trends in our individual Medicare Advantage business.” Centene’s MCR was 87% in the first quarter, a decrease from 87.3% in the prior year quarter, which Centene attributed in part to lower Medicare utilization.
UnitedHealthcare’s first quarter MCR was 82.2%, essentially the same as its prior year quarter’s MCR of 82%. With the purchase of Change, United now owns InterQual, one of the leading commercial healthcare guidelines that health insurance companies use to second guess informed opinions of treating physicians when they deny and downcode healthcare provider claims.
Unfortunately, the attorneys of Whatley Kallas, LLP are seeing health insurance companies deny and underpay legitimate claims submitted by our provider clients for medically necessary services provided to the insurers’ members. As indicated by the reported MCR, this practice has no doubt increased the health insurers’ profits.