The volume-coding-payments tussle between hospital operators and insurance companies shows no signs of abating in 2025. And based on the fourth-quarter results and 2025 outlook of UnitedHealth Group Inc., it appears providers have the upper hand for now.
The leaders of Minnesota-based UnitedHealth Group, parent of UnitedHealthcare, said on Jan. 16 that the company’s medical care ratio, the share of premiums used to pay for medical expenses, finished 2024 at 85.5 percent, 40 basis points higher than analysts had expected. The company’s fourth-quarter MCR came in at more than 87 percent and CEO Andrew Witty and his team are forecasting it will be around 86.5 percent in 2025.
Speaking to analysts after reporting Q4 results—UnitedHealthcare’s headline numbers were $5.8 billion in net income on revenues of nearly $101 billion compared to $5.7 billion and $94.4 billion, respectively, in the same period of 2023—Witty and his lieutenants said a handful of factors contributed to the higher-than-expected medical costs. Among them were higher utilization, Medicare Advantage benefit changes and hundreds of millions in spending on the Change Healthcare cyberattack from nearly a year ago.
CFO John Rex also pointed to “an aggressive upshift in hospital coding intensity” as a headache United has had to handle for several quarters. Rex said that the “hospital coding intensity” accounted for about one-seventh of the 1.5 percentage point increase in United’s MCR from 2023. That dynamic, he added, stabilized in the fourth quarter and his team expects providers will continue to submit claims at a similar rate.
“We had noted back in the third quarter that was something that just moved faster in ’24 than we expected,” Rex said. “But in terms of the levels we’re seeing and how we anticipated that in our ’25 [forecasts], we feel very good about that.”
United hasn’t been alone in facing higher-than-expected medical costs as consumers have returned in force to the healthcare system since the COVID-19 pandemic’s peak. Last fall, CVS Health Corp. directors showed President and CEO Karen Lynch the door after poor results at the company’s Aetna insurance division and Elevance Health leaders cut their earnings forecast due to rising Medicaid cost trends.
On the other side of the coin, hospital operators have been bullish about utilization trends. Executives of HCA Healthcare Inc. and Tenet Health Corp. last year said they expect patients to continue to use their facilities at the pace at which they have been since roughly 2023. They and their peers also have been vocal about insurers’ attempts to limit or deny coverage—and at least one doesn’t see that changing soon.
Speaking at the 43rd JPMorgan Healthcare Conference Jan. 14, Ardent Health Partners Inc. CFO Alfred Lumsdaine also used the word “aggressive” to describe insurer practices, which he said took a big step up in 2024 as they sought to arrest rising cost trends. Lumsdaine said the Ardent team—which runs 30 hospitals and more than 200 other sites of care in six states—is counting on more of the same.
