Molina sees bump in coronavirus inpatient costs as delta variant takes hold

 

• A rebound in healthcare utilization and increased COVID-19 inpatient costs weighed on Molina's bottom line for the second quarter of 2021 compared to the prior-year period, the insurer reported Thursday. Those trends led to a higher medical cost ratio of 88.4%.   
• Still, the California-based insurer posted a profit of $185 million for the quarter, down from $276 million when insurers were benefiting financially from the pandemic amid steep declines in patient care.
• The company again upped its guidance for the full year, now expecting to generate an additional $1 billion in revenue as it continues to benefit from a few tailwinds, including policy decisions that bar states from kicking Medicaid members off coverage during the duration of the COVID-19 public health emergency. 

As the healthcare sector keeps a close watch on utilization, Molina CEO Joseph Zubretsky has been cautious about predicting medical usage among members as the pandemic unfolds, though he provided some color on these trends for the second quarter. 

Molina experienced high COVID-19 inpatient-related costs early in the second quarter, which tapered off as the quarter went on. Overall, the direct costs spent on COVID-19 inpatient care for the quarter totaled $95 million. 

There were also increases in outpatient costs, which may signal a return to normal in pre-COVID utilization patterns, executives said. 

Zubretsky noted that although Molina is seeing the delta variant show up in infection rates, fewer of those cases are resulting in hospital stays. 

And for the cases that do lead to a hospital admission, the length of stay is shorter and fewer end up in the intensive care unit or on a ventilator, suggesting lower acuity, he said.  

"So while we're seeing a prevalence of delta variant COVID-related cases, the severity of those cases is a lot lower than the severity of the cases earlier the pandemic," Zubretsky said on an investor call Thursday. 

Centene, a Molina competitor, saw more members return for in-person care, which executives called pent up demand. That higher utilization, particularly among those insured with Affordable Care Act marketplace plans, spurred a second-quarter loss for Centene.  

Molina continues to see membership growth and added 1.1 million members compared with the prior-year period. That added onto the robust membership growth in the first quarter of the year thanks in part to its takeover of a Kentucky Medicaid plan. 

The large jump in members in the first quarter spurred the insurer to boost its outlook for the full year, expecting to bring in an additional $1 billion. Molina again boosted expectations Thursday, expecting to bring in another additional $1 billion in revenue. Full year revenue is now expected to exceed $26 billion.

Medicaid insurers have benefited from certain policy decisions that allow Medicaid members to keep their coverage throughout the duration of the public health emergency. As a result, insurers have reported large increases in Medicaid membership during this time. 

Plus, insurers like Molina and Centene have been able to pick up more marketplace members thanks to the special enrollment period enacted by President Joe Biden in response to fallout from the pandemic. The special enrollment period will end Aug. 15. 

Molina ended the quarter with 4.7 million members. 

https://www.healthcaredive.com/news/molina-sees-bump-in-coronavirus-inpatient-costs-as-delta-variant-takes-hold/604068/