Industry giant (and ex-employer) UnitedHealthGroup is taking fire from an analyst who questions the company’s ability to hold down health care costs, reserving practices, and the results of UHG’s Pacificare division. The analyst, Matthew Borsch of Goldman Sachs, is perhaps the only one on the street recommending against UHG – that said, his points are worth considering and may portend troubles for the industry as a whole.
Borsch notes:
– the Arizona Dept of Insurance recently levied its largest-ever fine ($340,000) against UHG for allegedly not responding to consumer complaints; failing to follow grievance and appeals processes; and not handling disputed payments appropriately. While those problems are not atypical of the industry, UHG was hit hard because it had been cited for similar issues earlier and failed to correct the problems.
– UHG faces another possible hit from a pending class-action suit similar to one that has been settled by Aetna and Cigna, who each paid $160 million to settle their cases. The case is in court this week.
– more troubling is UHG’s apparent problems with health care costs, which have been accelerating of late. That rise, coupled with the company’s payment of medical claims appears to have slowed recently, adds to concerns about future profitability.
While analysts’ opinions should always be viewed with caution, Borsch’s prognostications about UHG have been quite accurate in the past; his forecasts for UHG were the most accurate in the industry in 2004. And, his experience working at industry giant HealthNet probably gives him a leg up on the other erstwhile “experts”.
What does this mean to you?
If UHG stumbles due to higher medical costs, that will be a strong signal that health cost inflation remains unmanageable – and that will be very bad news indeed.
Thanks to Matt Holt’s FierceHealthcare for the lead.
Mar
15
This article kind of supports the title of a recent article: https://www.joepaduda.com/archives/000453.html#comments
In that article Joe, you address the overpayment of ~600 doctor’s claims by Horizon of NJ.
In this current article you bring up a pending suit that Aetna and Cigna and others have settled on. If it’s the suit I think it is – Not only were some of the settlements finacial in nature – some of those settlements involved agreements by some insurers to adjust certain claims processing software – that reduces payments to providers: “…According to the agreement, the company would not be permitted to use computer programs that “systematically downgrade treatments doctors perform or to routinely deny payments for multiple procedures performed on the same day,” the Los Angeles Times reports. The agreement also would require WellPoint to update its claims-processing software each year to recognize new and reclassified treatment codes…”
http://www.californiahealthline.org/index.cfm?Action=dspItem&itemID=112638
-In other words – how they do business…
So, not only is United getting caught with it’s pants down so to say – other industry giants are also “settling” their suits and are paying back the money that should have been coughed up to begin with.
“Those awful insurance companies” apparently are having a tough time saving money…
Above link quit working – here is another:
http://www.medicalnewstoday.com/medicalnews.php?newsid=27347
Adding this:
“…Aetna and Cigna, have agreed to settle the In Re Managed Care litigation. In May 2003, Aetna reached a settlement valued at a total of $470 million, which is comprised of approximately $170 million in monetary payments (including up to $50 million in attorney
And now we can add this to the pile of issues (from the Minneapolis Star-Tribune of 3/20):
“The Securities and Exchange Commission is reviewing the award of stock options to top executives at U.S. companies, including the types of options granted by Minnetonka-based UnitedHealth Group Inc. to its chairman and CEO, Dr. William McGuire, according a published report.”
http://www.startribune.com/535/story/319798.html
Writing from a Provider’s Office- Been denied legitimate charges that have been appealed(although should not have been) for $$$ however, much to the surprise of the bad guys I HAVE 900+ sheets of doucumentation, edits, quotes, contracts etc. that will certainly tell a good story.I am ready to park myself in front of 9900 Bren Road. Anyone with a reporter please join me.