Bright Health Group is reducing its workforce by about 5% — or roughly 150 jobs — in the wake of dismal financial results last year from its health insurance business.
Bloomington-based Bright Health has seen a meteoric rise in health plan subscribers over the past five years, but amassed large losses last year in the individual market for people under 65.
A regulatory filing this week illustrates problems in 2021 with the company's health insurance business in Florida, where losses mounted as the company saw individual market membership grow tenfold.
Bright Health is "taking steps to improve operational efficiency — including targeted workforce reductions in certain areas of our business," the company said in a statement to the Star Tribune. "While this decision was difficult, we strongly believe it is essential for the long-term health and success of our organization to realizing our vision of making health care right together."
Details weren't available on where workers are losing jobs. In addition to its headquarters in Minnesota, the company said in a regulatory filing last year that it operated corporate offices in 10 states, plus medical groups in Florida.
Bright Health Group struggled in 2021 to accurately calculate risk scores for its enrollees, particularly new subscribers that flooded into its health plans in states like Florida. The company disclosed the risk adjustment problem to investors in November, explaining that it resulted in a significant hit to premium revenue in the market where individuals buy coverage.
This week, Bright Health disclosed how its risk adjustment troubles were compounded by problems with claims processing, as the insurer struggled to accurately pay claims from medical providers. By managing a surge of new patients last year, the insurer had to load into its claims processing system contract details for more health care providers, Mike Mikan, the company's chief executive, said during a Wednesday call with investors.
"Loading our contracts, we made errors in loading, and so early in the year we had a challenge with processing claims," Mikan said.
As a result, the insurer had to process or re-process many claims later in the year — particularly during the fourth quarter — and had a limited understanding of subscriber health risks as well as emerging medical trends, he said.
The company has made changes to address the risk adjustment and claims processing troubles, but also moved to trim operating costs.
"We are addressing talent and cost structure," Mikan told investors. "We continue to evolve our team, adding expertise as needed, and have taken specific actions to reduce the cost structure, eliminate redundancies and drive efficiencies across the organization."
Back in 2017, Bright Health started with about 11,000 enrollees in just one state. This week, the company reported more than 1 million health plan members across 17 states.
In addition to individual-market coverage, Bright Health sells insurance to seniors who want to receive their government-funded benefits through Medicare Advantage health plans.
Between 2020 and 2021, the company saw annual revenue jump from $1.2 billion to $4 billion, according to financial results released Wednesday. During that time span, the net loss at Bright Health swelled from $248.4 million in 2020 to $1.178 billion last year.
In Florida, Bright Health's business selling individual coverage saw membership surge from 30,131 people at the end of 2020 to 326,012 this year, according to a regulatory filing this week.
The insurance business in Florida, which included a small number in Medicare health plans, saw its operating loss grow from about $60.5 million in 2020 to more than $356 million last year.
