- UnitedHealth Group’s first-quarter earnings report could offer a window into the financial impact of the February cyberattack on its Change Healthcare subsidiary.
- The outage of the billing and payments processing unit has pushed physician groups to take out loans to meet the costs of managing their practices.
- The disruption of real-time data on medical cost trends among seniors will cause greater uncertainty for Medicare Advantage health insurers, as they prepare bids for 2025 plans due in June.
UnitedHealth Group’s first-quarter earnings report Tuesday will mark the health-care giant’s first major public comments since a cyberattack on its Change Healthcare billing and payments subsidiary in February, which has led to the largest disruption in U.S. health care since the Covid pandemic.
“Everybody looks to United as the bellwether of all of health-care services. This will be different,” said Lisa Gill, managing director and health care analyst at JPMorgan.
The data breach at the Change Healthcare unit forced the firm to take down its massive billing and payment processing service. While the company has restored services for pharmacies, the outage has continued to disrupt operations for health-care providers across the country.
Change Healthcare is a subsidiary of UnitedHealth’s sprawling Optum division, which includes 90,000 doctors under the Optum Care unit and one of the nation’s largest pharmacy benefits managers, OptumRx.
Analysts will be looking for how the company accounts for the costs associated with the cyberattack as well as the impact of the outage on other operations within Optum’s businesses.
“We will be very interested in the charge that they’re going to be incurring … in terms of how they’re estimating either lost revenue or additional expenses,” said Scott Fidel, managing director and health-care analyst at Stephens.
UnitedHealth said it has provided $4.7 billion in no-interest loans to providers, though the American Medical Association said more than half of physician groups surveyed in early April said they’d had to use personal loans to maintain operations.
One such physician, Nashville dermatologist James Allred, said he’s had to take out loans to keep his practice, Wellskin Dermatology & Aesthetics, afloat because he’s been unable to get claims processed and paid by private health insurers. The last six weeks have forced him to give up on plans to expand his practice this year.
“For one single hack to disrupt the entire American health-care industry… brings a lot of questions about how healthy is it, from a system standpoint, to have this massive consolidation?” Allred said.
Larger providers, such as home infusion services firm Option Care Health, have also warned that the outage could impact their quarterly results.
Medicare Advantage uncertainty
On the health insurance side, the timing of the Change hack has increased uncertainty for UnitedHealthcare and rivals such as Humana, CVS Health’s Aetna and Elevance, which reports its quarterly results Thursday.
All of the Medicare Advantage insurers reported higher-than-expected medical utilization rates among seniors during the fourth quarter.
With the Change outage taking place midway through the first quarter, it has likely made it more difficult for insurers to track medical utilization costs in real time. JPMorgan’s Gill expects most will report adjusted or estimated numbers.
“We’re going to have to wait for the second quarter to really get a better idea as to what’s happening with medical cost trend for United and most likely for the industry,” said Gill.
The delayed outlook on medical costs will also raise the stakes for the health insurers as they prepare 2025 Medicare Plan bids, which are due in early June. It comes after disappointing government payment rate increases for 2025, announced earlier this month, which are expected to pose a profit headwind.
“We’ve got elevated cost trends. We’ve got still … a pretty competitive market,” said Gill. “So, they have to work through that.”
Source: Business - cnbc.com
