Unpaid Claims

12 Months Ended

Dec. 31, 2021

Liability for Unpaid Claims and Claims Adjustment Expense, Activity in Liability [Abstract]

Activity in the liability for unpaid claims, including claims adjustment expenses, for the years ended December 31, 2021 and 2020, is summarized as follows:


Years ended December 31,	2021		2020
	(in thousands)

Gross and net balance, beginning of period (1)	$	103,976	$	77,886
Incurred related to:
Current year	822,300		599,147
Prior years	15,834		(13,715)
Total incurred	838,134		585,432
Paid related to:
Current year	692,116		496,303
Prior years	113,677		63,039
Total paid	805,793		559,342

Gross and net balance, end of period (1)(2)	$	136,317	$	103,976

(1) Includes amounts due to related parties.

(2) Differs from the total unpaid claims amount reported on the Consolidated Balance Sheets due to the fact the figure here excludes unpaid claims for the Corporation’s DCE of $4.6 million as of December 31, 2021.

The Corporation uses a variety of standard actuarial techniques to establish unpaid claims reserves. Management estimates are supported by the Corporation's actuarial analysis. The Corporation utilizes an internal actuarial team to review the adequacy of unpaid claim and unpaid claim adjustment expense. The estimation of claim costs is inherently difficult and requires significant judgment. The estimation has considerable inherent variability and can vary significantly depending upon several factors, including medical cost trends and claim payment patterns, general economic conditions and regulatory changes. The time value of money is not taken into account for the purposes of calculating the liability for unpaid claims. Management believes that the current reserves are adequate based on currently available information.

The Corporation counts a claim when either a claim or claim adjustment expense amount has been paid, or at any period end, when the Corporation has recorded a medical unpaid claim reserve. The cumulative number of reported claims for each claim year has been developed using historical data captured by claim systems. As such, the cumulative number of reported claims may not be comparable to similar measures reported by other companies.

Unpaid Claims for MA Operations

Unpaid claims for MA operations as reported on the Consolidated Statements of Operations and Comprehensive Loss as of December 31, 2021, were $136.3 million. During the year ended December 31, 2021, $113.7 million was paid for incurred claims attributable to insured events of prior years. The unfavorable development of $15.8 million was recognized during the year ended December 31, 2021, resulting from the Corporation's claims experience, partially attributable to the direct cost of COVID-19 and the increased utilization from the deferral of healthcare services as a result of the stay-at-home orders and closure of certain provider facilities throughout 2020 due to COVID-19 restrictions. A favorable development of $13.7 million was recognized during the year ended December 31, 2020, resulting from the actualization of fee-for-service claims. Original estimates are increased or decreased, as additional information becomes known regarding individual claims. The ratio of current year medical claims paid as a percentage of current year net medical claims incurred was 84.2% for the year ended December 31, 2021, and 82.8% for the year ended December 31, 2020. This ratio serves as an indicator of claims processing speed, indicating that claims were processed at a faster rate during the year ended December 31, 2021, than during the year ended December 31, 2020.

The following tables provide information regarding incurred and paid claims development for medical claims, as well as cumulative claim frequency and the total of incurred but not reported liabilities as of December 31, 2021, respectively:


	Cumulative incurred claims for the years ended December 31,
Incurred year	2019*		2020*		2021		Total IBNR(1)		Number of reported claims
	(in thousands)								(in ones)
2019 and prior	$	962,373	$	948,658	$	947,323	$	843	2,926,156
2020			599,148		616,316		5,289		1,433,039
2021					822,300		130,184		2,384,691
Total	$	962,373	$	1,547,806	$	2,385,940	$	136,317	6,743,886

(1) Differs from the total unpaid claims amount reported on the Consolidated Balance Sheets due to the fact the figure here excludes unpaid claims for the Corporation’s DCE of $4.6 million as of December 31, 2021.


	Cumulative net paid claims through December 31,
Paid year	2019*		2020*		2021
	(in thousands)
Incurred year
2019 and prior	$	894,877	$	947,526	$	946,480
2020			496,304		611,027
2021					692,116
Total	$	894,877	$	1,443,830	$	2,249,623

*Unaudited supplemental information

The reconciliation of net incurred and paid claims development tables to unpaid claims and claims adjustment expenses for medical claims on the Consolidated Balance Sheets is as follows:


December 31, 2021	(in thousands)
Cumulative incurred claims, net	$	2,385,940
Less: cumulative paid claims, net	2,249,623
Net unpaid claims, including claims adjustment expenses(1)	$	136,317

(1) The following balance reflects the unpaid claims for Medicare Advantage only. The DCE and other medical unpaid claims should be included in order to reconcile to the total unpaid claims on the Consolidated Balance Sheets.