Bright Health is shutting down MA operations in Florida in the latest business downsizing

This audio is automatically generated. Please let us know if you have any feedback.

Brief description of the dive:

  • Less than a month after pulling out of the Affordable Care Act exchanges entirely and shrinking its Medicare Advantage footprint to just Florida and California, Bright Health Group announced it is also winding down MA operations in Florida.
  • As a result, Insurtech will only manage MA plans in California starting in 2023, CFO Kathy Smith told investors during a third-quarter earnings call on Wednesday.
  • The implementation of restructuring plans toward a more focused business model should result in Bright’s MA and NeueHealth businesses being well positioned for 2023, management said on the call. Bright expects adjusted EBITDA to be profitable next year as a result, although previously disclosed revenue is expected to halve due to the cuts.

Dive Insight:

Bright contracts its business for third time to focus on care delivery and provider services business NeueHealth and Medicare Advantage in better performing markets. In April, the Minneapolis, Minnesota-based payer said it plans to exit six states starting next year. Then, in October, Bright further expanded its footprint as it chased profitability after recent losses.

“We have a pretty significant change in our cost structure when we exit the ACA insurance business and MA business in states other than California. We are well ahead in plans to change this year-over-year business cost structure, which will help bring those costs down fairly quickly,” Smith said.

The payer remains in “some of the largest markets in health care,” with 26 percent of the nation’s aging population, CEO Mike Mikan said on the call. Mikan also noted that the MA open enrollment period in California, which is still ongoing, has been better than Bright expected so far.

Bright focused more and more on him NeueHealth care delivery business, which provides care through 180 owned and affiliated clinics and is expected to make up a larger share of Bright’s revenue going forward.

NeueHealth ended the quarter with 520,000 patients in value-based arrangements, compared with 170,000 at the same time last year. NeueHealth’s revenue doubled year-over-year to $502 million, as customer shifts to fully aligned models and direct contracting fueled growth.

Overall, Bright brought in $1.6 billion in revenue in the quarter, up 51% year-over-year. It reported a medical loss ratio of 90.6%, compared to 103% at the same time last year when it was hit by the headwinds of COVID-19.

After a string of disappointing financials through the end of 2021, Bright’s stock tumbled earlier this year amid the departure of two top executives, layoffs of about 5 percent of its workforce and a $1 million fine in April by Colorado for operational problems at the insurer.

Bright has been using reserve funds to cover its losses and has told Florida regulators it has “substantial doubt” it can remain financially viable without outside investment, according to a Star Tribune report.

Bright has taken a number of steps to shore up its finances, management said Wednesday. For example, the insurtech is working with state regulators to wind down its ACA and MA businesses and expects to recover $250 million after paying outstanding claims over the next six to 18 months.

Mikan said Bright will be “90% complete with claims” by the end of the first quarter.

“We will engage with the regulators on the release of this capital. It will be staged over time. We believe some states will be more proactive early on and others will slow down over a period of time,” Mikan said.

Bright reported a net loss of $259.3 million in the third quarter, compared with a loss of $296.7 million in the same period last year. The payer came in below Wall Street’s expectations on both earnings and revenue.

Leave a Comment

Your email address will not be published. Required fields are marked *