UnitedHealth Group leaders reflect on slain colleague, how the industry can improve

In their first investor call since the targeted killing of their colleague spawned intense debate about aspects of the U.S. healthcare system, UnitedHealth Group leaders said a systemwide focus on improvement is needed.

CEO Andrew Witty began this week’s Q4 earnings call by paying tribute to Brian Thompson, UnitedHealthcare’s chief executive, who was fatally shot Dec. 4 on a Midtown Manhattan street.

“He would dive in with passion and caring to find solutions to improve experiences, whether for an individual consumer, an employer or a public health agency,” Witty said.

Apparently in response to the sometimes-heated online criticism that was directed at UnitedHealth and health insurers in general after the shooting, Witty continued his opening remarks by saying all healthcare industry stakeholders must help spur change.

“There are so many areas that can be enhanced, reworked, reengineered or even scrapped to make the health system better, as we know it needs to [be],” he said.

The cost conundrum

While putting the impetus on stakeholders collectively, Witty seemed to be referring to hospitals when he said, “Ultimately, improving healthcare means addressing the root cause of healthcare costs. Fundamentally, healthcare costs more in the U.S. because the price of a single procedure, visit or prescription is higher here than it is in other countries.”

Referring to the debate over site-neutral payment policies, Witty added, “There are participants in the system who benefit from these high prices. Lower-cost, equivalent quality sites of service, for example, can be good for consumers and patients but threaten revenue streams for organizations that depend on charging more for care.”

Provider contracting for the current year yielded reasonable rates from UnitedHealth’s perspective, John Rex, president and CFO, noted later in the call.

“In commercial [insurance], pricing for ’25 is appropriately capturing the care activity we are seeing,” Rex said.

Drug costs were another area where Witty looked to shift the focus of the ongoing conversation.

“Pharmacy benefit managers [PBMs] play a vital role in holding these prices down, which is why drug companies and their allies have spent the past several years attacking them,” he said.

UnitedHealth Group’s OptumRx subsidiary is a leader in the PBM sector, which collectively was the subject of an unfavorable report released this week by the Federal Trade Commission and has come under bipartisan scrutiny in Congress.

Witty pledged that OptumRx would take steps to ensure 100% of negotiated rebates go to patients at the point of sale, with that change in effect by 2028 at the latest. He hopes that approach will bring a greater level of transparency as to the drivers of high drug prices.

Fixing administrative holdups

Claims-related processes represent an ongoing concern for many providers and some patients, Witty acknowledged.

“Some of the areas like, obviously, claims, where people get frustrated about how long it takes for a claim to process or maybe some confusion [about what] goes on in that, those are key areas for us to continue to work hard at to improve,” Witty said.

He said less than 0.5% of claims processed with UnitedHealthcare turn into clinical denials.

“But we all know there are other claims that get held up in the process before you get to that stage,” Witty said. “The overwhelming majority of those claims are held up because they were either sent to the wrong company, they didn’t have the right information on them, the patient didn’t have the right benefits — all of those things.”

Technological resources and industry standardization can help with those issues, he said, and he sees “a heightened energy across the organization to solve this across the whole sector for everybody.”

Among claims that need to be resubmitted after being sent to the wrong health plan, for example, Witty said 85% of those instances can be avoided via real-time processing and standardized intake mechanisms.

“I just want to emphasize the criticality of collaboration here to try and design something, not just for one company, but for all companies, not just for one patient, but for all patients,” Witty said.

Sandeep Dadlani, UnitedHealth Group’s chief digital and technology officer, said initiatives for 2025 include more comprehensively digitizing documentation and summaries for provider organizations and clinicians, along with other paperwork, “helping drive much more automated, seamless, frictionless claims processing as well.”

Reflecting on high costs

UnitedHealthcare’s medical loss ratio (MLR) for 2024 was 150 basis points above the original outlook, Rex said.

Developments that affected the metric included “the mix of people served,” he said. “We ended up with a different profile of consumer than expected,” stemming from Medicare Advantage benefit design factors and from Medicaid case-mix changes amid the post-pandemic eligibility redeterminations. There was a lag between the case-mix shifts and managed-care rate updates, but the company foresees that gap narrowing in 2025.

There also was nearly $1 billion in business disruption from the February cyberattack on Change Healthcare, Rex noted.

Two lesser factors, contributing roughly a combined 30% to the higher-than-expected MLR, were an acceleration in the prescribing of high-cost medications “as drug companies took early advantage of the Inflation Reduction Act,” Rex said, and “an aggressive upshift in hospital coding intensity.”

UnitedHealth leaders also noted those two factors in October during their Q3 earnings call, indicating they were taking a close look at provider coding practices.

For Q4, “We weren’t seeing acceleration in that,” Rex said. “We’re seeing stabilization in those trends at the levels we saw before.”

He added, “In terms of the levels we’re seeing and how we anticipated that in our ’25 [outlook], we feel very good about those coding intensity levels staying at the levels that we had seen.”