Cigna Corp. (NYSE:CI) has posted higher health insurance revenue and operating income, but the increase was due mainly to the acquisition of HealthSpring, a Medicare Advantage player.
Cigna, Bloomfield, Conn., is reporting $371 million in net income for the first quarter on $6.8 billion in revenue, compared with $413 million in net income on $5.4 billion in revenue for the first quarter of 2011.
At the health care unit, premium and fee revenue increased to $4.5 billion, from $3.3 billion.
The company ended the quarter providing or administering coverage for about 13 million people, up from 11 million people a year earlier.
Commercial plan enrollment increased to 12 million, from 11 million.
Other health insurers have avoided saying much about how they expect the new federal minimum medical loss ratio (MLR) rules to affect their operations, and Cigna has followed suit.
Cigna disability unit premiums and fees increased 8%, to $339 million. Disability unit earnings fell to $65 million, from $82 million. Earnings were off partly because the unit benefited from a favorable reserve adjustment that was made in the first quarter of 2011.
International segment revenue increased 24%, to $900 million.
Health Net Inc., Los Angeles (NYSE:HNT), is reporting a $27 million net loss for the latest quarter on $2.8 billion in revenue, compared with $60 million in net income on $2.7 billion in revenue for the first quarter of 2011.
The company says it peoples a shift to the Health Insurance Portability and Accountability Act (HIPAA) 5010 billing format affected results for the fourth quarter of 2011.
The 5010 shift led providers to submit claims more slowly, and the slowdown in claim submissions led the company to underestimate the need for “incurred but not reported (IBNR) commercial reserves” for the fourth quarter, the company says in a discussion of its latest earnings.
Because of the IBNR estimation glitch, Health Net recorded about $67 million in “adverse prior period development” for the fourth quarter, the company says.
The company ended providing or administering health coverage for about 3 million people with non-military coverage, up from 2.9 million people a year earlier.
Health Net also administers the TRICARE North Contract — a health plan for veterans, military dependents and military personnel who get care away from military and veterans’ facilities. Health Net TRICARE enrollment fell to 3 million, from 3.1 million.
Many health insurers have talked about health claims being somewhat lower than they’d expected.
Is it possible that health insurers other than Health Net will turn out to have IBNR problems of their own, because the providers in their networks are shifting to the 5010 billing standard, adopting electronic health record systems, or making other moves that are gunking up the the claim pipes?