The dispute over volume coding payments between hospital operators and insurance companies shows no signs of abating in 2025. And based on UnitedHealth Group Inc.’s fourth-quarter results and 2025 outlook, it appears providers have the advantage for now.
Leaders at Minnesota-based UnitedHealth Group, parent of UnitedHealthcare, said Jan. 16 that the company’s health care ratio, the share of premiums used to pay for medical expenses, ended 2024 at 85.5 percent. , 40 basis points more than analysts expected. . The company’s fourth-quarter MCR was more than 87 percent and CEO Andrew Witty and his team forecast it will be around 86.5 percent in 2025.
Speaking to analysts after reporting fourth-quarter results: UnitedHealthcare’s topline numbers were $5.8 billion in net income on revenue of nearly $101 billion compared to $5.7 billion and $94.4 billion, respectively, in the same period in 2023, Witty and his lieutenants said a handful of factors contributed to the higher-than-expected medical costs. Among them were increased utilization, changes to Medicare Advantage benefits and hundreds of millions in spending in the Change Healthcare cyberattack nearly a year ago.
Chief Financial Officer John Rex also pointed to «an aggressive increase in the intensity of hospital coding» as a headache United has had to manage for several quarters. Rex said “hospital coding intensity” accounted for about one-seventh of the 1.5 percentage point increase in United’s MCR from 2023. That dynamic, he added, stabilized in the fourth quarter and his team expects the Providers continue to file claims at a similar rate.
«We had noticed in the third quarter that something was moving faster in ’24 than we expected,» Rex said. «But in terms of the levels we’re seeing and how we anticipate it in our ’25 [forecasts]“We feel very good about that.”
United hasn’t been alone in facing higher-than-expected medical costs, as consumers have flocked back to the healthcare system since the peak of the COVID-19 pandemic. Last fall, CVS Health Corp. directors showed Chairman and CEO Karen Lynch the door after poor results at the company’s Aetna insurance division and Elevance Health leaders lowered their profit forecasts. due to rising Medicaid cost trends.
On the other side of the coin, hospital operators have been optimistic about utilization trends. Executives at HCA Healthcare Inc. and Tenet Health Corp. said last year that they expect patients to continue using their facilities at the rate they have since about 2023. They and their peers have also weighed in on insurers’ attempts to limit or deny coverage, and at least one doesn’t see that changing anytime soon.
Speaking at the 43rd JPMorgan Healthcare Conference on Jan. 14, Ardent Health Partners Inc. CFO Alfred Lumsdaine also used the word «aggressive» to describe insurers’ practices, which he said gave a big step forward in 2024 as they looked to stem rising cost trends. Lumsdaine said the Ardent team, which runs 30 hospitals and more than 200 care centers in six states, has more of the same.
