Excellus posts 2023 net loss of $23M after rise in insurance usage

ROCHESTER — Excellus BlueCross BlueShield reported a net loss of more than $23 million for 2023, which it primarily attributed to a $271 million increase in medical benefits paid last year. Excellus, like other health insurers nationwide, continues to “experience increases in utilization and costs” for health-care services and prescription drugs. “We’re a company that budgets for thin financial margins and giving ourselves such a narrow window can sometimes result in a small net loss when facing the unexpected,” Jim Reed, president and CEO of Excellus, said in a news release. “As our communities emerge from the pandemic, we’re seeing significant increases in high-cost inpatient hospital utilization, outpatient surgeries on hips and knees, and new prescription medications.” Rochester–based Excellus, Central New York’s largest health insurer, reported the net-loss figure in its annual report filed March 1 with the New York State Department of Financial Services. The 2023 net loss compares to the reported net income of $58.9 million on premium revenue of $6.6 billion in 2022. The 2022 net-income figure had declined 50 percent from the $117.6 million the health insurer generated in 2021.

Medicare Advantage

A change in how the federal government sets hospital-reimbursement rates for Medicare Advantage plans has also impacted the health plan’s finances, Excellus said. An update to the Medicare wage index will bring an additional $1 billion of increased federal payments annually to upstate New York hospitals. “We’re glad to see this increased funding for hospitals in our region,” Reed said. “Our challenge, however, is that we’re now reimbursing hospitals more for providing care to Medicare Advantage members without a corresponding increase in health plan funding for Medicare Advantage premiums from the federal government.”

Premium dollar

As a mission-driven nonprofit, Excellus says it strives for a low operating margin. Overall, the health insurer in 2023 spent 93 cents out of every premium dollar collected on direct patient care including medical and pharmacy claims, and activities that improve the quality of care. Over the last 20 years, the health plan has averaged a net margin of 1.7 percent.

Reserves and taxes

Health-plan reserves totaled $1.68 billion at the end of 2023 or the equivalent of 91 days of claims and operating expenses. Excellus says its reserves are “like a savings account to be drawn upon for unforeseen higher expenses” such as during a pandemic. The health insurer also incurred $441.4 million in federal and state taxes and fees in 2023.

Administrative costs

Excellus also reported that with 93 cents of every premium dollar spent on patient care, the remainder of every dollar, coupled with investment income, is spent on taxes, fees and administrative expenses that include payroll, overhead expenses and broker commissions. “Excellus BCBS continues to demonstrate strong performance while navigating post-pandemic fluctuations in cost and utilization,” Faheem Masood, chair of the organization’s governing board, said in the release. “Reporting a net loss this year reinforces the health plan’s commitment to offering products that support its mission of ensuring everyone in our communities has access to high-quality, affordable health care.” Excellus and its parent organization employ more than 4,000 people across upstate New York.