UNH Stock Slides on Lower Guidance and Higher Medical Costs

An example, according to UnitedHealthcare, is when hospitals label a patient visit as an inpatient stay, but the insurer assumes medical centers offer less intensive outpatient observation services that justify less revenue.

“Some companies have been remarkably and persistently aggressive, increasing their coding intensity factors by more than 20%,” Rex said. “We are actively addressing this unnecessary additional cost burden on the healthcare system.”

The company also has problems with the federal Medicaid health insurance program for lower-income Americans and people with disabilities, Rex said.

States have been redetermining the eligibility of beneficiaries over the past year, a process that has resulted in many healthier beneficiaries losing their coverage. UnitedHealthcare says this means the remaining population will use more services, but payment rates will still be based on lower historical average usage.

A final factor, Rex said, is the federal Inflation Reduction Act, which next year will eliminate coinsurance payments from Medicare patients during the so-called “catastrophic period” of Part D drug benefits. Rex said UnitedHealthcare expected this change to increase drug use next year, but the company started seeing an impact in the third quarter.

There has been a “fairly rapid acceleration in the prescription of certain expensive specialty drugs,” Rex said, “particularly those used to treat cardiovascular disease, autoimmune diseases and cancer.”