Despite increased revenue, Wellesley, Mass.-based Harvard Pilgrim Health Care saw increasing medical use, pharmacy costs and ACA-established programs affect its 2016 financials.
The insurer recorded an operating loss of $91.3 million on a revenue of $3.1 billion for fiscal year 2016, which ended Dec. 31. This represents a year-over-year increase of nearly 16 percent compared to the payer's 2015 operating loss of $78.8 million.
The insurer's FY 2016 operating losses grew despite revenue rising about 15 percent, up from $2.7 billion in 2015. Harvard Pilgrim also saw its FY 2016 net losses decrease year-over-year by 11.5 percent to $48.5 million.
Harvard Pilgrim attributed the losses to rising healthcare costs associated with medical and prescription use and the effects of sick consumers signing up for coverage during special enrollment periods. The insurer also cited issues resulting from the ACA's risk corridors and risk adjustment programs as partial cause for the losses.
"Our year-end results reflect a number of external factors that the health insurance industry has been facing," Harvard Pilgrim CFO Charles Goheen said. "We have invested in medical and administrative cost improvement programs and completed [the] installation of our new core technology system. With significant expansion investments in Connecticut and the Medicare Advantage program and alignment of sustainable growth strategies in all of our markets, we are forecasting a significantly improved 2017."
Harvard Pilgrim did see a slight jump in its 2016 membership in the fourth quarter of last year, up 1.1 percent to 1.28 million. Financially, the insurer reported a decrease in net loss in Q4 2016 compared to the same period in 2015. Its Q4 loss was $1.6 million compared to $39.7 million in 2015. Harvard Pilgrim also grew revenues in Q4 2016 to $740 million, up from $698 million in the same period for 2015.
More articles on payer issues:
MDwise to lay off 79 employees in departure from Indiana Medicaid program
4 obstacles Anthem faces in pursuit of Cigna merger
CareSource sees 2017 ACA exchange enrollment increase 20%