Insurtech company Clover Health will exit the ACO REACH program

Clover Health, a Medicare Advantage insurtech company, has officially notified the Centers for Medicare and Medicaid Services of its decision to exit the ACO REACH Program by the conclusion of the 2023 performance year. 

The ACO REACH program, aimed at enhancing care quality for traditional Medicare beneficiaries, provides tools and resources to healthcare providers. CEO Andrew Toy explained that although the company achieved its goals of expanding physician partnerships and leveraging its Clover Assistant management platform, which utilises health data and machine learning for patient insights, it failed to see a clear path to profitability in the ACO REACH business. 

Clover Health will fulfil its obligations under the program for the remainder of the 2023 performance year. The company will then focus its resources on its Medicare Advantage insurance business and advancing Clover Assistant.

Clover Health's decision to exit the ACO REACH program follows a strategic reassessment, with Toy previously expressing concerns about the program's unpredictability and its impact on the company's medical cost ratio. Financially, Clover Health faced challenges, including controversies following its 2021 SPAC merger and allegations of failing to disclose Department of Justice investigations. 

The company settled a securities class action for $22 million in April, addressing claims of misleading information. Despite these challenges, Clover Health reported improved third-quarter earnings in November, showcasing a 78.5% insurance medical cost ratio and a 12% growth in insurance revenue to $301.2 million compared to the same period last year. With a net loss of $41.5 million on total revenue of $482.1 million, the company remains focused on building a sustainable and profitable future for its Medicare Advantage insurance business.

In light of these developments, CEO Andrew Toy affirmed the company's commitment to delivering a sustainable and profitable Clover Health to its members and investors.