Aetna's fourth-quarter income plummeted 49 percent to $190.1 million, down from $372.6 million a year earlier--thanks to a multi-million dollar settlement and higher costs related to employer-based insurance coverage, according to its earnings report released Thursday.
Profits in the final quarter of 2012 were largely affected by a $120 million agreement Aetna reached in December to settle a 2007 lawsuit alleging it underpaid claims when members received services from out-of-network providers. Of that total, Aetna paid $78 million after-tax charges..
Costs for medical claims also increased, Aetna said, by more than 9 percent to $6.12 billion, largely because of employer-sponsored coverage is changing as more people enroll in high-deductible plans tend to seek medical care in the last months of the year when deductibles reset, the Associated Press reported.
"As that grows as a percentage of your book of business, the slope of utilization just gets steeper and steeper, and that's been happening every year for the past five," Chief Financial Officer Joseph Zubretsky said.
Aetna also announced some executive reorganization, naming Zubretsky as the head of its new national businesses segment, which includes its accountable care organizations, national network contracting and specialty products like behavioral health. Replacing Zubretsky as CFO is Shawn Guertin, who now heads up Aetna's finance business after working as the CFO for Coventry, Bloomberg reported.
To learn more:
- check out the earnings report
- read the Associated Press article
- check out the Bloomberg article