Dive Brief:
- Hit by an influx of more than 60,000 patients with higher than expected medical claims in its health plan, Partners HealthCare has posted a $34-million operating loss for the three months ending June 30.
- That being said, Partners still managed to post third-quarter net income of $47 million (down from $69 million for the same period last year), thanks to gains from investments and other non-operating income.
- According to Partners execs, the biggest drain on their operations during the quarter was an $89-million operating loss at Neighborhood Health Plan, a Medicaid managed care subsidiary that Partners acquired two years ago.
Dive Insight:
Partners, whose 60,600 new patients came from the state's Medicaid program, seems to have lost out due to excessively low reimbursement rates set by state actuaries. Partners reports that the actual medical claims from the new members have been much higher than the state's actuaries predicted. What's more, Partners has been forced to pay out for new hepatitis C drug Sovaldi, and has also faced costs due to problems with the state's health insurance website.
Hoping to prevent such problems in the future, Partners is now negotiating with state officials over ways to ease the health plan's financial burdens generated by the new members. Specifically, Partners is asking the state to mitigate some of the losses incurred during 2014, as well as correct the situation going forward. Realistically, though, it will be surprising if the state bureaucracy moves fast enough to satisfy Partners. This could be a long negotiation.
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