Fifteen of Florida's 34 HMOs, or 44 percent, listed in a Florida Office of Insurance Regulation report posted losses in 2014. The figures were published in the South Florida Business Journal on Monday. They included a range of losses from $14.6 million to $165.1 million. Some plans showed a profit, from $138,555 to $333 million. But the 34 HMOs' $66.5 million combined net income for 2014 represents a 90 percent decrease from the $648 million profit reported by 39 HMOs in 2013.
Click here to see which Florida HMOs profited and which lost.
The reason Florida HMOs experienced such an upheaval last year is partly due to Obamacare and the influx of new members, Minn.-based insurance analyst Allan Baumgarten told the Business Journal. “That can be tied to problems in adding new providers to the network when the HMO is under a time crunch to get hospitals and physicians under contract,” he said. “Sometimes the providers sense weakness and try to boost their prices.”
Health plan CEOs made the Florida Legislature aware of their problems in April, in the middle of the regular session, even as Florida Medicaid was touting its Managed Medical Assistance (MMA) program as a national model. MMA shifts virtually all Medicaid recipients into managed-care plans, but it underestimated how much their care would cost.
A spreadsheet the Agency for Health Care Administration prepared at that time showed that nearly all HMOs and provider-service networks involved in the program were losing money. The losses between May and December totaled more than $300 million.
"The plans are struggling," Kevin Kearns, CEO of Prestige Health Plans, a Miami-based provider-service network, said in April. "We're all hurting."
UnitedHealthcare of was hurting most as of December, accounting for more than one-third of the total losses. It was $109 million in the red, 24 percent above break-even. By the time industry figures for 2014 had been finalized, UnitedHealthcare was the industry's biggest loser at $165 million -- that’s $100 million more than all Florida HMOs' lost in 2013.
Humana Medical Plan reported the biggest profit in 2014, some $333 million. That figure is still down from the almost $349 million profit it reported in 2013.
Others that were deep in the hole in December, before figures had been finalized, include Sunshine Health Plan, $72 million; Staywell, the plan name for WellCare Health Plans in Florida, $44 million; and Prestige, $23 million.
Corey Miller, a spokesperson for Miami-based AvMed Health Plan, told the Business Journal, “Industry-wide changes affected many plans' 2014 financial performances, including AvMed's.” AvMed reported a decrease from a profit of $20.4 million in 2013 to a loss of almost $49 million in 2014. That loss was largely due to the rising cost of Medicare and the changing nature of the health care industry.
It's the changing landscape in health care that affects the entire industry, Miller explained. “All health plans engaged in Medicare have endured several years of reimbursement cuts, which, in our case, amounted to a $30 million setback last year alone. In addition, all plans are having to offset new taxes and fees mandated by the Affordable Care Act. As an industry, we are facing 'a new normal.'"
A report by Wakely Consulting for the Florida Association of Health Plans earlier this year said prescription drugs are one big reason plans are losing money. Patients are using more drugs than expected and the cost per prescription is higher than expected.
Carol Gentry of Health News Florida reported in April that the Wakely actuary who compiled the data, Brian Weible of Clearwater, said prescription-drug spending was above projections for both groups of low-income Medicaid recipients: the healthy group -- children and their mothers -- and the chronically ill elderly and disabled.
According to Weible's report, the actual expense for the younger group averaged more than $31 a month. The estimate that had gone into building the premiums was between $22 and $26.
Elderly and disabled Medicaid recipients were averaging about $247 a month between May and December, according to the report. The projection had been between $198 and $236.
The statewide decrease in profit may have been partly due to the increased cost of doing business during a year when plans saw a marked increase in enrollees. There were about 5.3 million enrollees in Florida HMOs in 2014, up from approximately 3.7 million in 2013.
More than 1.3 million Floridians enrolled in a plan during the 2015 open enrollment period for Obamacare, but we won't know how those numbers impact the bottom line until 2016.
