Medicare Advantage insurtech company Clover Health announced it delivered notice to the Centers for Medicare and Medicaid Services that it will be exiting the ACO REACH Program at the end of the 2023 performance year.
The Accountable Care Organization Realizing Equity, Access, and Community Health (ACO REACH) program provides tools and resources to healthcare providers to improve the quality of care for individuals with traditional Medicare.
In a statement, the company’s CEO, Andrew Toy, said that in 2021 Clover entered the program as it felt it would garner benefits, like expanding the number of physicians it worked with or lives it touched via its Clover Assistant management platform, a tool that combines health data with machine learning to provide physicians with patient insights at the point of care.
“While we were successful in those goals, we have not seen a clear line to profitability in this business, and it has also become quite clear that, over the same period of time, we have made far greater and swifter strides on our path to profitability in our Medicare Advantage insurance business,” Toy said.
The company will send written notice to participating physicians, as required by CMS. It will also fulfill its obligations under the program for the remainder of the 2023 performance year.
“We remain extremely excited about the success of our Medicare Advantage insurance business in 2023 and intend to focus our resources on building that business and continuing to invest in Clover Assistant as part of our path to profitability. We remain focused on our goal to deliver a sustainable, profitable Clover Heath to our members and investors,” Toy said.
THE LARGER TREND
Last year, Toy told MobiHealthNews sister publication Healthcare Finance News that it was scaling back its participation in the ACO REACH program to improve its medical cost ratio, and because of the model’s unpredictability.
Clover Health has had a tumultuous year financially. After going public in 2021 through a SPAC with Social Capital Hedosophia Holdings Corp. III, the Tennessee-based company’s valuation climbed to around $3.7 billion.
A month after finalizing its merger, Clover came under fire from Hindenburg Research, a short seller that describes itself as a specialist in forensic financial research.
Hindenburg published a report alleging Clover failed to disclose active investigations by the Department of Justice during its SPAC. It argued many of the company’s claims were misleading or outright false.
In April of this year, Clover announced it settled a securities class action in which the class would receive $22 million, $19.5 million of which the company’s insurance would pay, and the remaining $2.5 million out-of-pocket.
In June, Clover Health relayed it reached an agreement to settle seven lawsuits in Delaware, New York and Tennessee pertaining to allegations the company did not disclose it was under active investigation by the Department of Justice when it went public.
The defendants in the lawsuits were to receive “customary releases,” and Clover Health would implement “a suite of corporate governance enhancements,” according to a press release. Clover did not admit wrongdoing.
No monetary payments were included in the recent settlement other than an award of fees and expenses to the plaintiff’s counsel, and the final settlement was pursuant to court approval.
The company released its third-quarter earnings in November, and reported its insurance medical cost ratio (MCR) improved to 78.5% from 86.4%, with insurance revenue of $301.2 million, a 12% growth compared to the same period last year. Total revenue in the third quarter was $482.1 million, with a net loss of $41.5 million.
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