Despite major regulatory overhauls of risk adjustments and slim rate increases, executives at UnitedHealth Group said the company is still expecting to hit its growth targets in Medicare Advantage.
CEO Andrew Witty told investors on the company's earnings call Friday morning that "we do appreciate" the Center for Medicare & Medicaid Services' decision in late March to phase in massive changes to risk adjustment in MA over the next three years. That gives UnitedHealthcare and other insurers time to adjust and respond, minimizing disruptions for beneficiaries as the changes roll out, he said.
UnitedHealthcare is the single largest player in the MA market, and in tandem with Humana accounts for the majority of Medicare Advantage membership. Multiple Wall Street analysts on the call pushed the leadership team about the growth potential in MA, but executives stayed firm on the outlook they see.
Brian Thompson, CEO of UnitedHealthcare. said the company still sees plenty of room to grow in 2024 as it prepares to submit MA bids, and that the market itself, which has been the hottest in health insurance for some time, will likely continue to grow as well. He said UHC is "encouraged and optimistic" by what it's seeing as it heads into bidding.
"It's not the first time we've had to navigate a rate environment like this," Thompson said.
Another major policy topic of interest to health plans is the reopening of Medicaid redeterminations, which were allowed to begin again after a pandemic hiatus on April 1. Witty said that UnitedHealth is working with its state partners to navigate the process, and that it could be a net positive for UHC as members shift to other types of coverage, including employer-sponsored plans or individual market insurance.
"We expect to be serving more people in our benefit progress when this process is completed," Witty said.
UnitedHealth Group's revenue grew 15% year over year in the first quarter, reaching $91.9 billion, according to the company's earnings report released Friday.
By comparison, the insurer reported $80.1 billion in revenue for the first quarter of 2022. The healthcare giant also reported $5.6 billion in profit for the quarter, up from $5 billion in the prior-year quarter.
Both figures surpassed Wall Street's expectations, according to analysts at Zacks Investment Research.
“Our strong, enterprise-wide growth this quarter is a direct result of our colleagues’ unwavering commitment to offering more health services to more people and connecting consumers with greater access to high-quality, affordable care,” said Witty, chief executive officer of UnitedHealth Group, in the earnings release (PDF).
The company said that the revenue increase came on the back of double-digit growth at both of its core business lines: UnitedHealthcare and Optum.
First-quarter revenues at Optum grew by a staggering 25%, reaching $54.1 billion. This includes growth across each of its key businesses, according to the report. Optum Health, its provider arm, saw its revenue per customer served grow 35% compared to the first quarter of 2022.
Optum Insight, the company's data analytics business, increased its revenue backlog by 35% to $30.7 billion, backed in large part by its recently completed acquisition of Change Healthcare. Optum Rx, its pharmacy benefit manager, saw revenues grow 15%, according to the earnings report.
Revenues at UnitedHealthcare grew by 17% in the first quarter, reaching $70.1 billion. The country's largest insurer has added 2 million more members compared to the first quarter of 2022, including 665,000 new commercial members added in the first quarter.
UnitedHealthcare secured Medicaid contracts in Indiana and Texas that will expand its geographic reach, and UHC is also "pacing strongly to its outlook" on Medicare Advantage for the year, according to the report.
Thanks to the performance in the quarter, UnitedHealth Group said it's boosting its earnings guidance for the year to between $24.50 and $25 per share.