Geisinger recorded $61.2 million in operating income for the first half of fiscal year 2018, up 17.9 percent from $51.9 million in the same six-month period a year prior, according to recent financial documents. At the same time, the system’s operating margin fell from 3 percent to 1.8 percent when comparing the three-month period ended Sept. 30, 2017, to the six-month period ended Dec. 31, 2017.
Geisinger Health Plan, the system’s health insurance arm that sells policies on the ACA exchange, was to blame. GHP missed out on $11 million in cost-sharing reduction payments from the federal government in the second quarter of 2018, according to Geisinger. President Donald Trump’s administration ended the cost-sharing reduction payments — which helped offset the cost of providing health insurance to low-income Americans purchasing plans on the ACA exchanges — in early October 2017.
GHP expected the change to begin correcting on Jan. 1, when an average 31 percent premium rate increase kicked in for plan members.
Geisinger added its second quarter operating margin was negatively affected by volatility in the individual exchange. “The individual exchange product volatility is believed to have occurred as a result of members, fearful of a possible [Affordable] Care Act repeal, seeking unusually high levels of medical services before the expiration of their calendar year policies,” the system said.
Year over year, Geisinger reported an 8.1 percent increase in revenue for the six-month period to $3.3 billion. Geisinger attributed the incline to an uptick in net patient revenue, aided by increased market share and capture of high-acuity volumes. The system’s health plan also generated 11.4 percent more revenue in the six-month period compared to the same period in fiscal year 2017, primarily from rate increases.
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