UnitedHealth, CVS Among Major Insurers To Fast-Track Prior Authorizations: Will It Cut Profits Even More?

Group 1 - Major U.S. health insurers, including CVS Health, UnitedHealth Group, and Elevance Health, have agreed to measures to expedite patient care and reduce paperwork for providers [1][2] - The changes will affect commercial insurance and some Medicare and Medicaid plans, potentially benefiting 257 million Americans [2] - Insurers recognize that these changes may increase patient care usage, impacting profits, but are deemed necessary for healthcare system improvement [2] Group 2 - Healthcare stocks are underperforming the broader market, with the Healthcare Select Sector SPDR Fund trading at its lowest relative value to the S&P 500 in over a decade, reflecting a 40% drop from 2015 levels [3] - Historical trends indicate that significant undervaluation in healthcare often leads to strong rebounds, as seen after downturns in 2001 and 2008 [4] - Analysts remain optimistic, with 59 out of 60 healthcare companies in the XLV having 12-month price targets above current prices, indicating an average expected upside of 17% [4] Group 3 - A common standard for electronic prior authorization requests is set to be established by 2027, aiming for at least 80% of requests to receive real-time responses [5] - The number of services requiring prior authorization is expected to be reduced by 2026, streamlining processes to alleviate the administrative burden on healthcare providers [5]