Aetna faces legal setbacks over its Medicare Advantage contract for New York City retirees, while CVS Health implements layoffs due to revenue decline. Updates include a court injunction against NYC’s transition to Aetna’s plan, patients from Phoenix Children’s deemed out-of-network, CVS Health’s 5,000 job cuts, Medicare Advantage cost pressures, financial fluctuations, Aetna’s success in reducing NICU births, and expansion in Covered California’s ACA exchange.
Aetna, the healthcare provider, is encountering its most recent legal setback about its Medicare Advantage contract that offers coverage to retired personnel from New York City. Meanwhile, CVS Health, Aetna’s parent company, is initiating a process of layoffs and organizational restructuring due to a decline in revenues. Here are seven updates concerning Aetna and CVS Health that have been reported by Becker since July 25.
1. Legal Ruling on Medicare Advantage: A judge from the New York State Supreme Court has issued a permanent injunction that prevents the execution of New York City’s plan to transition 250,000 retired city employees from traditional Medicare to an Aetna Medicare Advantage plan.
2. Out-of-Network Status with Phoenix Children’s: A disagreement between Aetna and Phoenix Children’s has led to patients from the latter being considered out-of-network with Aetna. Despite efforts, an agreement couldn’t be reached before the August 6 deadline.
3. Workforce Reduction: CVS Health has announced its decision to eliminate 5,000 positions that are not customer-facing across its operations. Specific details about the areas affected, including Aetna, remain undisclosed. The workforce reduction is a national measure, primarily impacting corporate roles, according to a statement from a CVS Health spokesperson shared with Becker’s.
4. Medicare Advantage Cost Pressure: CVS Health executives have conveyed that heightened utilization is exerting pressure on the medical cost ratios of Medicare Advantage. This trend is expected to persist until the conclusion of 2023. CFO Shawn Guertin stated that the company anticipates elevated utilization rates within the Medicare Advantage program throughout this period.
5. Second-Quarter Financials: CVS Health has reported a 10.3 percent increase in revenues during the second quarter, surpassing investor expectations. However, the company’s net income has declined by 37 percent year over year. This drop can be attributed largely to company-wide restructuring, expenses related to acquisitions, greater medical utilization among the elderly, and ongoing challenges with pharmacy reimbursements.
6. Success in Aetna’s Florida Medicaid Program: Aetna’s Medicaid initiative in Florida has exceeded the national average for Neonatal Intensive Care Unit (NICU) births in less than two years. This achievement is attributed to a partnership with ProgenyHealth, a case management platform serving mothers and newborns. Jennifer Sweet, CEO of Aetna Better Health Florida, shared insights with Becker on how the program successfully reduced NICU birth rates for beneficiaries.
7. Expansion in Covered California: Aetna is set to extend its services to two new counties within Covered California, the state’s Affordable Care Act (ACA) exchange, in 2023. This expansion marks a strategic move to increase the company’s presence and accessibility within the state.
These updates shed light on the ongoing developments surrounding Aetna and CVS Health, illustrating their responses to legal challenges, organizational adjustments, financial performance, and initiatives to enhance healthcare services.