With Claims Volumes Still Low, Payers Open Their Wallets to Meet Medical Loss Ratios

With COVID-19 cases surging throughout much of the US this summer, hospitals face a grim financial picture. As expenses increase and patients continue to stay away, hospitals have seen a 96% decrease in year-over-year operating margins since the start of 2020. Even with federal relief funding factored in, margins are still down by 28%.

But while providers struggle, payers are riding high, with major national insurers like Centene, UnitedHealthcare, and Anthem seeing profits increase by 100% or more over the same period, as they pay out fewer claims while their revenue from premiums remains constant. This puts many insurers at risk of failing to meet their medical loss ratio (MLR) requirement under the Affordable Care Act (ACA), which sets the percentage of premiums that must be spent on medical claims (80% for individual and small group plans and 85% for large group plans).

To meet that threshold and avoid paying rebates, insurers have offered premium relief to members, eliminated out-of-pocket costs for COVID-19 testing and treatment, and set up prepayment or accelerated payment transfers to providers.

In addition, we have seen some evidence that payers are more likely to overturn denied claims. While denials certainly haven’t gone away, as we reported back in June, payers have shown greater willingness to reconsider some of their previous denials as a gesture of goodwill. We have seen payers decide to make payment on claims that had already gone through multiple levels of reprocessing and escalation – sometimes for years!

For hospitals with a large backlog of aged, complex, high-dollar claims, now may be the right time to get them resolved. HLS is here to assist any provider that wants to seize the opportunity to finally get these claims paid. We can help you file an appeal or submit a complaint with your provider relations representative. To learn more, contact us here.