3 Major Payer Q4 2021 Earnings Reports Show COVID-19 Impacts

February 04, 2022 - Major payers have released their earnings reports from the fourth quarter of 2021, which revealed the continued impacts of the coronavirus pandemic, highlighted mergers and acquisitions deals, and made projections for growth in 2022.

Anthem, Humana, and UnitedHealthcare were three of the first major payers to release their earnings reports for the 2021 fourth quarter. Their comments reveal some of the trends that payers are facing and how these trends impact them financially and in membership count.

The Omicron variant appeared to have a strong impact on healthcare spending in December 2021, which was balanced out by deferred care.

Medicaid eligibility redeterminations are expected to have an impact on enrollment if the public health emergency comes to an end, as expected, in April 2022.

Payers also noted the effects of workforce management challenges and newly introduced products.

Anthem

READ MORE: Payer Third Quarter Earnings Results Spotlight COVID-19 Impact

Anthem’s overall annual operating cash flow for 2021 was $8.4 billion.

The payer's total operating revenue for the fourth quarter reached $36 billion or 14 percent above the previous year’s fourth-quarter growth. 

Anthem also continued a 14-quarter streak of growth in medical enrollment. At the end of 2021, the payer had 45.4 million members total, including 303,000 members that joined during the fourth quarter alone. Three-quarters of the growth was organic.

The coronavirus pandemic continued to drive utilization down and impacted healthcare spending, although coronavirus costs in December 2021 surpassed projections, the payer noted.

Total Anthem membership is expected to hit 45.6 million to 46.2 million members in 2022. 

READ MORE: Anthem Earnings Call Projects COVID-19 Vaccine Impact, ACA Growth

Medicare Advantage saw double-digit membership growth in 2021. To explain this expansion, Anthem leaders pointed to products that members might find attractive, such as Everyday Extras which facilitates social determinants of health services for members.

Commercial and fee-based membership may add 530,000 to 730,000 lives by the end of 2022. In 2021, much of the commercial membership growth was due to honed selling strategies as well as targeted products such as balanced funding for mid-sized employers and plans for college students.

The payer expected that eligibility redetermination would push members from Medicaid into employer-sponsored health plans and individual health insurance market plans. In 2021, Anthem had a 100 percent request for proposals win-rate.

In 2022, the payer’s full-year operating cash flow is currently projected to surpass $6.9 billion, including a $500 million settlement.

Anthem also highlighted its mergers and acquisitions activity, bringing in new companies like myNEXUS, as well as its value-based care progress. Value-based contracts made up 60 percent of the payer’s medical spend in 2021.

READ MORE: UnitedHealthcare Q4 Earnings Report Shows Leveling Care Activity

Anthem considered itself well-positioned to comply with the at-home testing coverage requirement handed down by CMS in January 2022 because the payer was already allowing risk-based commercial members to access at-home coronavirus tests through the company’s app.

“We are pleased to have delivered another year of strong growth despite significant challenges related to the COVID-19 pandemic. While much of the backdrop remains uncertain, we are committed to managing the uncertainty thoughtfully and prudently,” concluded John Gallina, executive vice president and chief financial officer at Anthem.

Humana

Humana’s consolidated operating cash flow was $96 million and its adjusted consolidated revenue equaled $21.19 billion in the fourth quarter of 2021 and $83.40 billion in fiscal year 2021 as a whole, according to the press release.

In the earnings call, Humana echoed Anthem’s experience of a sharp rise in coronavirus utilization due to the Omicron variant coupled with a decline in healthcare utilization and spending not related to coronavirus care. 

The payer highlighted its major deal from 2021 with Kindred at Home. Home health admissions increased in the final quarter of 2021, following a year-long trend. Hospice nurse retention grew by double digits in 2021, a number which Humana heralded with a mixed reaction since the hospice workforce’s growth and retention continues to lag at a time when nurses are sorely needed.

For 2022, Humana emphasized that it plans to reduce operational costs, with the goal of increasing value by $1 billion via spending reductions. The payer outlined four ways in which it plans to achieve this: by reviewing strategic initiatives for value potential, optimizing the workforce, decreasing third-party spend, and streamlining processes through automation and digitization.

Humana leaders anticipated that consolidated revenues will grow ten percent in 2022. Medicare Advantage and payer-agnostic Health Services markets could push consolidated revenues to hit $92 billion at the midpoint.

Individual Medicare Advantage membership could grow by 150,000 to 200,000 members. In contrast, group Medicare Advantage membership growth is expected to remain static.

The payer also anticipated a shift in membership from Part D plans to Medicare Advantage plans. Around 80,000 members who are currently in Humana’s Part D plans may switch to Humana’s Medicare Advantage plans.

Medicaid membership is expected to drop. The decline could be anywhere from 50,000 to 100,000 enrollees, driven largely by redeterminations. Some growth due to a new contract in Ohio may offset this trend.

Commercial membership will also decrease for both fully-insured and administrative services only plans. Quoting activity and sales indicate that membership in this market could drop by 125,000 to 165,000 members.

“As we look ahead, our improved membership growth, combined with further penetration in our growing and maturing health care service businesses, position Humana favorably to deliver on long-term earnings target in 2023 and beyond,” said Bruce Broussard, president, chief executive officer, and director of Humana.

UnitedHealthcare

UnitedHealthcare witnessed an 11 percent growth in full year revenue, reaching $223 billion, according to the company’s fourth quarter earnings call.

The payer ended 2021 with $22.3 billion in cashflow from operations, which exceeded the projected cashflow by $2 billion. And in 2022, UnitedHealthcare expected this number to rise to $24 billion.

Looking toward 2022, the payer expected around 75 percent of the UnitedHealthcare Medicare Advantage population to be in Individual and Group Medicare Advantage. The remaining quarter of Medicare Advantage members will be in dual special needs plans.

For Medicaid in 2022, the payer anticipated a mild churn. Shifts in enrollment will largely occur in response to eligibility redeterminations, which will likely return to normal by the end of the year. UnitedHealthcare hinted that it may look to expand its Medicaid population in 2022.

UnitedHealthcare’s commercial membership saw a surge in 2021 that pushed its actual enrollment 200,000 members beyond earlier projections. The payer attributed this to its innovative products, particularly highlighting NavigateNow, a virtual-first health plan.

The payer also touched on its efforts to comply with the at-home coronavirus testing coverage mandate. UnitedHealthcare has partnered with Walmart and RiteAid to make tests available to their members.

“We see an even greater demand for integration, to bring together the fragmented pieces of the health system, to harness the tremendous innovation occurring in the marketplace, to help better align the incentives for providers, payers and consumers, and to organize the system around value,” said Andrew Witty, chief executive officer of UnitedHealth Group.