Thursday, August 29, 2024
Michigan Health Market Review 2024 Finds:
Medicaid Managed Care Membership and Revenues Drop Sharply
Medicare Advantage Membership Grows, But Michigan Plans Lost $194 Million in 2023
It sounds very contradictory: In Michigan, Medicaid HMOs have lost 15% of their members, but were still strongly profitable in 2023. Medicare Advantage plans have increased enrollment but have lost $392 million in the last two years.
These findings and others are presented in Part One of Allan Baumgarten’s Michigan Health Market Review 2024, released today. This is the 28th annual edition of the report, which he first published in 1997. Allan Baumgarten is a Minneapolis-based analyst who examines financial measures, enrollment trends and competitive strategies for health insurers and hospital systems in Michigan and five other states. The forthcoming Part Two report will analyze 2023 data on the financial performance, inpatient utilization and competitive strategies of the hospital systems in the state.
Key findings in the new report:
- After growing by 275,000 lives between the end of 2020 and June 2023, enrollment in Medicaid HMOs has now fallen by 336,000 lives, or 16.4% through the first quarter of 2024. As in other states, Michigan’s Medicaid agency began a process of reviewing current eligibility for the 3 million beneficiaries in the state, about 90% of whom are in managed care plans. For example, enrollment in Meridian’s Medicaid plans dropped by more than 121,000 or 21.7% since the end of 2022.
- Based on an average premium of $346 per member per month, Medicaid HMOs could see their revenues reduced by $1.4 billion in 2024. That likely also means less revenue for hospitals and clinics, especially safety net providers that see a high number of patients covered by Medicaid or uninsured.
- While Medicaid enrollment has decreased, health plans have seen enrollment in individual plans and Medicare Advantage plans grow sharply in the past 15 months. In the first quarter of 2024, enrollment in individual health plans increased by 21.7%, with Meridian Health adding 32,000 new enrollees and Priority Health gaining almost 17,000.
- Medicare Advantage plans have enjoyed steady growth in recent years and added almost 108,000 members in 2023. Three Humana companies added 35,000 members in Michigan, and three UnitedHealthcare companies added almost 24,000 lives. However, Medicare Advantage plans, both for seniors and persons dually eligible for Medicaid and Medicare, reported combined losses of $190 million. Blue Cross Blue Shield Mutual alone lost $142 million in 2023, while four HMOs – Aetna, Blue Care Network, Physicians Health Plan and Priority Health – reported large losses.
- The growth of Medicare Advantage enrollment has implications for hospital systems and physicians. Those plans are notorious for limiting provider payments and using prior authorization to limit care.
- Combined net income for Michigan HMOs dropped from $542 million in 2022 to $456.9 million in 2023., which was 1.8% of underwriting revenues of $25.817 The HMOs that were most profitable were Medicaid managed care plans UnitedHealthcare Community Plan and Molina Healthcare.
- By far, Medicaid was the most profitable line of business, with underwriting income of $253.7 million and combined underwriting income in the last four years of $945 million. Only one Medicaid HMO, HAP-CareSource, was not profitable in 2023.
Excerpts from the report, including the "Michigan HMOs at a Glance" page can be viewed at https://allanbaumgarten.com/. A subscription to Michigan Health Market Review 2024, including Parts One and Two, can be ordered online at https://allanbaumgarten.com/product-category/michigan/ Or call 952/212-8589; E-mail address: [email protected]
May 14, 2024
Michigan Health Market Review 2023, Part Two:
Key Findings
Our analysis of financial performance and inpatient utilization for Michigan hospitals is based on Medicare cost report data for 2022 fiscal years. A full set of reports for the hospitals for 2023 will not be available until October 2024.
Most of the 15 large hospital systems in Michigan lost money on their patient care operations in 2022. For half of them, their other revenues from sources like government grants (including CARES Act Provider Relief Funds), investment profits and philanthropy were large enough to offset those losses and giving them positive net income for the year.
Revenues for both hospitals and many HMOs in Michigan were boosted during the COVID-19 pandemic by the growth of Medicaid enrollment. There were just under 3 million Medicaid beneficiaries in Michigan in June 2023, about 80% of them in HMOs, but that number is declining as states begin to reverify eligibility of recipients. According to KFF, 687,000 Michigan Medicaid beneficiaries were disenrolled after those reviews as of April 2024. That will have a significant negative impact on the revenues of both Medicaid HMOs and the hospitals, especially those serving a high number of low-income households.
Detroit-Area: 31 General Acute Care Hospitals
- Combined net income for these hospitals dropped from $478.8 million in 2020 to $282.7 million in 2021 to a combined loss of $379.7 million in 2022. Their profit margins fell from 4.0% to 2.1% and to a negative 2.7% in 2022. Patient care revenues increased slower than expenses in 2022, and these hospitals saw their patient care losses increase from $387 million in 2021 to $860.2 million in 2022. Further, their other revenues, including investments, philanthropy and government grants, such as the Provider Relief Funds, dropped from $755.6 million in 2021 to $513.9 million in 2022. Hospitals in the area received $132 million in Provider Relief in 2022 and a total of $1.227 billion in 2020 through 2022.
- Corewell Health (formerly Beaumont), had net income of only $11.8 million, down from $194.5 million in 2021. The Henry Fordhospitals reported a loss of $277.6 million in 2022, compared to a loss of $218.5 million in 2021, while the Ascension hospitals here saw their losses grow from $16.3 million in 2021 to $86.9 million in 2022. The McLaren hospitals here lost $23.5 million in 2022, and the Tenet Detroit Medical Center hospitals lost $12 million.
- While the number of staffed hospital beds decreased in 2022, the number of inpatient hospital days increased by 1.6% and the average inpatient occupancy rate increased from 68% in 2021 to 70.8% in 2022. However, the number of inpatient days in 2022 was still less than in 2019, before the COVID-19 pandemic. Occupancy was highest at the Henry Ford hospitals and was above 80% at six hospitals. Reflecting the aging population of the area, Medicare, both traditional and Medicare Advantage, covered more than 56% of inpatient days. Medicaid paid for 25.6% of inpatient days, but that was fewer than in 2021. Three hospitals provided 50,000 or more Medicaid-covered days in 2022: Corewell Royal Oak, Henry Ford and John.
Other Michigan Hospitals: 68 General Acute Care Hospitals
We analyzed financial and utilization data from 67 hospitals in counties outside of the Detroit area. All but three are members of hospital systems.
- After reporting record combined net income of $2.952 billion in 2021, or 13.7% of their net patient revenues, their profits dropped to $307 million in 2022, or only 1.4% of their net patient revenues. They lost $591.5 million on their patient care operations, but had $876.9 million in other revenues, including $258.5 million in Provider Relief Funds. Between 2020 and 2022, these hospitals received Provider Relief Funds totaling $1.357 billion.
- The two University of Michigan hospitals had combined net income of $336.8 million in 2022, down from $783.3 million in 2021. The Corewell (former Spectrum Health) hospitals had net income of $144.5 million in 2022, much less than their net income of $417.7 million in 2021.The Ascensionhospitals in this group boosted their net income of $90.6 million in 2021 to $407.6 million in 2022, while the McLaren Health hospitals reported that their net income of $244 million in 2021 turned into a loss of $147.7 million in 2021.
- Inpatient days at these hospitals increased by about 134,000 or 3.4% in 2022. On average, inpatient occupancy increased from 63% in 2021 to 66% in 2022. Occupancy rates were above 85% at University of Michigan, Trinity Ann Arbor and MyMichigan Midland. Medicare covered 51.7% of inpatient days at these hospitals in 2022. The number of days paid for by Medicaid increased from 630,600 days in 2021 to 670,200 in 2022. Five hospitals provided more than 40,000 days for Medicaid recipients, with Corewell Grand Rapids and University of Michigan Ann Arbor providing more than 100,000 days.
Excerpts from the report and subscription information are available at www.AllanBaumgarten.com Michigan Health Market Review 2024 will be released later this year. The 2024 report will be the 28th annual edition of our Michigan market analysis, first published in 1997.
Ascension St. John Providence Health System
Blue Cross Blue Shield of Michigan
Henry Ford Health System (Health Alliance Plan)
Michigan Association of Health Plans
Michigan Center for Rural Health
Michigan Department of Health and Human Services
Michigan Health and Hospital Association
Michigan Department of Financial and Insurance Services
Michigan State Medical Society
Michigan State University College of Human Medicine
Spectrum Health System, Grand Rapids
University of Michigan Medical Center
For links to the web sites of several dozen Michigan hospitals, go to:
http://www.mha.org/about/hospitals.htm
Part One
| Introduction | | 3 |
| Market Structure | | 4 |
| Health Plans | | 4 |
| Provider Systems | | 8 |
| Trend Review | | 8 |
| Health Plan Enrollment | | 8 |
| Individual Plans and the Marketplace | | 10 |
| Medicaid Managed Care | | 10 |
| Medicare Plans | | 12 |
| Health Plan Revenues and Income | | 13 |
| Financial Results by Line of Business | | 15 |
| Provider Payments | | 21 |
| Administrative Expenses | | 22 |
| Health Plan Capital | | 23 |
| A Look Ahead | | 25 |
Part Two
| Introduction | | 5 |
| Michigan Hospitals and Health Systems | | 6 |
| Detroit Area Hospitals | | 9 |
| Revenues and Net Income | | 11 |
| Inpatient Occupancy and Payer Mix | | 13 |
| Performance Bonuses and Penalties | | 15 |
| Other Major Michigan Hospitals and Systems | | 16 |
| Revenues and Net Income | | 17 |
| Inpatient Occupancy and Payer Mix | | 19 |
| Performance Bonuses and Penalties | | 21 |
| Health Plan Trends | | 24 |
| Hospital Discharges by HMO and System | | 24 |
| Health Plan Enrollment and Finances in 2021 | | 24 |
| A Look Ahead | | 27 |
MICHIGAN HEALTH MARKET REVIEW 2020, PART ONE, RELEASED JULY 16, 2020: “SUPERSIZE INVESTMENT REVENUES BOOST MICHIGAN HEALTH PLANS TO RECORD PROFITS IN 2019; ENROLLMENT IN MEDICARE PLANS GROWS BY 15%”
MICHIGAN HEALTH MARKET REVIEW 2019, PART TWO, RELEASED MAY 7, 2020: “NET INCOME AND INPATIENT VOLUME DROPPED SHARPLY FOR MICHIGAN HOSPITALS IN 2018; HEALTH INSURERS ENJOYED STRONGER PROFITS IN 2019”
- Jay Greene wrote in Crain’s Detroit Business: “Report: Health plan profits drop first quarter, but experts project rose year ahead with more rebates.” Click here to read
Michigan Health Market Review 2018, Part One to be released April 25. Get pre-publication special pricing and read Jay Greene's pre-publication reporting:
- Jay Greene wrote in Crain's Detroit Business: "Health plan enrollment, profits hit record highs." Click here to view
Michigan Health Market Review 2017, Part Two, released February 27, 2018: "Detroit hospitals increase operating income by more than $100 million; Michigan health systems continue growth, consolidation and partnership strategies; Increased HMO enrollment boosts 2017 profits"
- Jay Greene wrote in Crain's Detroit Business: "Hospitals, health plans posted strong margins for 2016-17, but future could be rougher" Click here to view
Michigan Health Market Review 2017, Part One released July 19: "Medicaid plans add members but profits drop sharply; HMOs and insurers post large losses on individual plans"
- Jay Greene wrote: "Michigan health plan profits drop in 2016 by 8% but enrollment up 5%." Click here to view
Michigan Health Market Review 2016, Part Two, released May 8, 2017: "Medicaid expansion helps Michigan health systems to best net income; HMO enrollment grows in Medicaid, Individual and Medicare plans"
- Karen Bouffard wrote in the Detroit News: "Beaumont, DMC posted strongest profits ever in 2015." Click here to view
- Jay Greene wrote in Crain's Detroit Business: "Report: Michigan hospitals, health plans post slightly lower, but still strong, profit margins in 2015" Click here to view
Michigan Health Market Review 2016, Part One released July 27: "Medicaid Expansions Adds 183,000 HMO Members in 2015 and 2016, Increases HMO Profits
- Jay Greene wrote in Crain's Detroit Business: "Michigan health insurers post near-record profits in 2015." Click here to view
- Karen Bouffard wrote in the Detroit News: "Michigan Medicaid HMOs earn highest profits in decade." Click here to view
- Mark Sanchez wrote in MiBiz: "In first full year of under state Medicaid expansion, HMO underwriting income spikes 83 percent." Click here to read
- JC Reindl wrote in the Detroit Free Press: "Affordabe Care Act rates may jump 17.3% in Michigan." Click here to read
- Sarah Hulett reported for Michigan Radio: "Insurers asking for average 17% rate increase for individual plans." Click here for her report
Michigan Health Market Review 2015, Part Two, released March 7, 2016: "Consolidated Michigan hospitals report higher profits even as inpatient days are flat; Enrollment in health plan surges but profits drop"
- Jay Greene wrote in Crain's Detroit Business: "Michigan hospitals post impressive profit margins" Click here to view
Michigan Health Market Review 2015, Part One, released August 12: "HMO Enrollment Grows Sharply; Medicaid HMOs Add Members and Improve Profits."
- Karen Bouffard wrote in the Detroit News: "Enrollment up in Michigan Medicaid HMOs, individual plans
- Jay Greene wrote in Crain's Detroit Business: "Operating income of Michigan Medicaid HMOs rises 295% in 2014"