At a time when states are both reforming Medicaid and expanding managed care, insurers have a lot of opportunities to grow business and increase value, but also many challenges.
After Medicaid managed care organizations saw a not insignificant deterioration in financial results in 2011 and 2012, performance in the aggregate was on the rebound in 2013, according to a new analysis by Milliman.
"While Medicaid enrollment continues to increase with the member months growing by over 5 percent from CY 2012 to CY 2013, the revenues increased by over 13 percent," write actuaries Jeremy Palmer and Christopher Petit. The growth in revenue, they found, is partly coming from the expansion of membership in higher-cost Medicaid populations.
Serving these growing, high-risk populations will be one of the major challenges for Medicaid plans going forward, as states try to expand primary care medical homes and community- and home-based care and task MCOs with care coordination and risk management. Another hazard is accounting for the ACA plan fee, which could impact some states and some insurers more than others.
Across the country, insurers are posting financial gains and losses, with some faring better in different states and regions.
In underwriting ratios, perhaps a better indicator of financial results than medical costs, average regional and state ratios varied a fair amount, with an average regional underwriting ratio of 0.74. Of the 35 states with Medicaid managed care, 12 states had negative underwriting ratios -- suggesting losses for more than one insurer.
Across CMS's 10 regions, two posted negative average underwriting ratio: a negative 3.3 percent in CMS region 7 (Iowa, Missouri, Nebraska and Kansas) and negative 2 percent in CMS region 1 (all of New England).
Three regions had ratios of under 1 percent and three broke 2 percent -- with region 8, the Rocky Mountains states plus the Dakotas, posting a healthy 3.6 percent.
For regional non-profit insurers, ending up in a challenging state with year-after-year losses can leave program discontinuation as the only viable option, while national insurers can try to make a portfolio work across states.
In 2013, UnitedHealthcare, saw gains in Washington D.C., Nebraska, New York, Ohio and Tennessee and Texas, but losses in Florida, Maryland, Michigan, Mississippi, Missouri and Pennsylvania, according to the Milliman study.
Of the 35 states, insurers in 23 on average posted a positive underwriting ratio -- albeit many of them by less than a full one percent -- and with the national average underwriting ratio hovering just above 0.5 percent, according to the Milliman study.
In Pennsylvania, where the average underwriting ratio was 0.1 percent, only three of the eight Medicaid plans came out in the black: University of Pittsburgh Medical Center, Health Partners Plan (sponsored by a group of seven Philadelphia area hospitals) and Aetna's Coventry subsidiary.
Among other large insurers, Aetna took gains in Kentucky, Maryland, Texas loss in Florida; in Pennsylvania's Aetna's Better Health plan took a loss, even while its subsidiary Coventry took a gain.
WellPoint's Amerigroup saw gains in 10 of its 11 states -- including Nevada, the state with the highest average underwriting ratio (11 percent), Texas and Virginia -- and only took loss in Kansas, which saw the second worst average underwriting ratio, negative 11.2 percent.
In the state with the lowest underwriting ratio, New Hampshire, the lone Medicaid plan in fiscal year 2013 was operated by Centene, which took a took a negative 12.7 percent underwriting ratio.
New Hampshire's managed care program challenging enough that Meridian Health Plan, a Detroit-based group of physician-owned and -operated health plans, is pulling out barely a year after securing a contract. Other provider-based Medicaid plans have seen some success, though: Boston Medical Center's plan posted a gain in 2013, along with Gundersen Health Plan, the insurance arm of the western Wisconsin health system.