Publicly held Medicare Advantage plan sponsors are making things interesting for securities analysts these days by putting a positive spin on the same kinds of comments they put a negative spin on three months ago. The most recent example was the July 18 second-quarter earnings conference call of UnitedHealth Group, which along with Humana Inc. had warned in first-quarter earnings calls that the various kinds of payment reductions in store for MA plans in 2014 and beyond would lead to service-area exits and benefit cutbacks.
United still is saying that — but in different ways that seemingly are designed to show the company won’t be hurt much by this. There is “continued underfunding” of MA, said CEO Stephen Hemsley in the second-quarter call, and it will result in “taking benefits down” and “narrowing networks” in virtually all of United’s MA markets, but the expected effect is just “to moderate” United’s MA growth next year. Jack Larsen, CEO of UnitedHealthcare Medicare and Retirement, added to the theme, responding to an analyst question by saying what is happening for 2014 is more “plan withdrawals” than market exits, so that while about 150,000 MA members will be affected by such pullouts, 80% of them would have access to another United MA product.
Analysts picked up on the differences in tone and verbiage from the first-quarter call, with one of them saying the new company discussion on MA was “more bullish” than expected based on the first-quarter comments. (Those earlier comments resulted in United stock taking a substantial hit, while the July 18 remarks contributed to a 6.5% jump in the stock price.) Hemsley responded to that analyst by saying the company’s view on MA has not changed, contending the program is “severely underfunded” in a way that will “impact” United’s profit margins in 2014. But analysts paid more attention to other remarks stressing that the company is emphasizing protection of its margins in MA decisions for 2014.
So what do you think is the takeaway here? Has anything substantively changed in the MA outlook since United’s first-quarter comments, which came shortly after CMS in the final 2014 MA pay rates notice April 1 reversed many of the financially damaging items in the preliminary notice? Has the outlook for United’s MA operations actually gotten brighter, or is the thought that it has improved just a midsummer day’s dream?
http://aishealth.com/blog/medicare-advantage-and-part-d/united-shows-its-not-what-you-say-about-ma-how-you-say-it
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