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UnitedHealth Group’s Q2 Report Reveals Payer Progress, Priorities

The report starts providing answers to some of the questions payers faced at the end of the first quarter and outlines payer progress and priorities going forward through COVID-19.

Kelsey Waddill
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Published: 16 Jul 2020

UnitedHealth Group was the first major payer to release it second quarter earnings report, offering insight into how the coronavirus pandemic impacted the payer industry following the first quarter surge.

The payer’s first quarter earnings report highlighted the many unanswered questions facing the healthcare industry at the beginning of the pandemic. Specifically, the first quarter left payers wondering:

  • What would be the effects of unemployment on enrollment?
  • What would be the impact of delayed nonurgent care?
  • Would extended payment grace periods have any impact and, if so, what would that look like?

As the second quarter earnings reports come out, some answers are coming into focus and other factors that payers did not underscore are also emerging as key aspects.

Impact on enrollment

As unemployment soared, payers expected to see enrollment impacts. These expectations were largely confirmed.

The payer saw an increase in its public sector and senior lines of business. In the second quarter, the company's payer branch, UnitedHealthcare, added almost 600,000 new enrollees for these products year-to-date.

More individuals enrolled in UnitedHealthcare’s Medicaid business, driven by states loosening of redetermination requirements. April and May saw in-person sales for Medicare Advantage decline, but that activity rebounded to normal levels in the weeks preceding the mid-July earnings call.

On the other hand, enrollment in the payer’s commercial sector dropped during this quarter.

Most furloughed employees are remaining on employer-sponsored health plans, a recent Commonwealth Fund survey discovered.

However, this is not the case for all of the unemployed. Medicaid enrollment has also been on the rise, escalating above state projections from the beginning of the year. Many of the unemployed turn to Medicaid after losing their employer-sponsored health plan.

Impact on care delivery and expectations

“UnitedHealthcare and Optum have both experienced the effects of an unprecedented decline in health care services,” said David Wichmann, chief executive officer of UnitedHealth Group.

In addition to other actions intended to provide financial support to providers and patients, the company is expecting to pay $1 billion in rebates in future periods.

However, after sustaining the blow of coronavirus in the first quarter, care delivery is starting to equilibrate.

“We see the system operating just short of its normal baseline now, far above the lows experienced as the second quarter began,” Wichmann explained. “We currently expect care access patterns – while somewhat more volatile than in the past – to moderately exceed normal baselines in the second half, as people seek previously deferred care.”

The payer achieved a cash flow of $10 billion, shared John Rex, chief financial officer of UnitedHealth Group. That is 1.5 times the company’s net earnings.

Impact on telehealth and future implications

As for many payers, UnitedHealthcare experienced a significant jump in virtual care.

The payer disclosed that in April, UnitedHealthcare saw more than 4 million virtual care visits, which is 30 times the number of visits the payer arranged only four months prior in January.

“We expect digital and home care to persist and expand in coming years. We are rapidly assembling our next-generation, comprehensive platform,” Wichmann said.

He called out the payer’s intentions to continue using digital signaling and monitoring, engagement, artificial intelligence, electronic pharmacy platforms, community-based organization resources, and telemedicine.

Strategic focal points moving forward

UnitedHealth Group ended its prepared remarks by showing no intentions of backing down from its 13 to 16 percent growth objective for the coming years. This confidence stems largely from the company’s performance in several areas, underscoring UnitedHealth Group’s focus:

  • Public-sector business
  • Senior lines of business
  • Care delivery business
  • Virtual care initiatives
  • Home healthcare programs
  • Pharmacy services
  • Data and analytics
  • Payment and banking platforms

Another area that the executives indicated would be a focal point moving forward was resolving care disparities.

The payer is using data and analytics to address long-term disparities. In addition to these efforts, the payer will be leveraging its partnerships with community-based organizations to identify and solve disparities in coronavirus care.

Research will be another focal point. Wichmann singled out a coronavirus study with the Morehouse School of Medicine and a virtual clinical trial with the Yale School of Medicine, both of which observed coronavirus characteristics or treatments and the possible implications for Black communities.

Coronavirus testing and investments in social determinants of health will continue.

Payers will still have to face many uncertainties in the coming months, but the results of the second quarter may provide some clarity for the future.

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