Good afternoon. My name is Mike, and I will be your conference operator today. At this time, I would like to welcome everyone to Oscar Health's first quarter 2021 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there'll be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press the pound key. Thank you. I will now like to turn it over to Cornelia Miller, Vice President of Corp Dev and Investor Relations, to begin the conference.
Thank you, Mike, and good afternoon, everyone. Thank you for joining us for our inaugural earnings call, which will focus on our first quarter 2021 earnings results, recent developments in our business, and our outlook for the full year 2021. Mario Schlosser, Oscar’s Co-founder and Chief Executive Officer, and Scott Blackley, Oscar’s Chief Financial Officer, will host this afternoon’s call, which can also be accessed through our investor relations website at ir.hioscar.com.
Full details of our results and additional management commentary are available in our earnings release, which can be found on our investor relations website at ir.hioscar.com. Any remarks that Oscar makes about the future constitute forward-looking statements within the meaning of safe harbor provisions under the Private Securities Litigation Reform Act of 1995.
Actual results may differ materially from those indicated by those forward-looking statements as a result of various important factors, including those discussed in our prospectus dated March 2nd, 2021, filed pursuant to Rule 424 and our other filings with the SEC. Such forward-looking statements are based on current expectations as of today. Oscar anticipates that subsequent events and developments may cause estimates to change.
While the company may elect to update these forward-looking statements at some point in the future, we specifically disclaim any obligation to do so. The call will also refer to certain non-GAAP measures. A reconciliation of these measures to the most directly comparable GAAP measures can be found in our first quarter 2021 press release, which is available on the company's investor website at ir.hioscar.com. With that, I would like to turn the call over to our CEO, Mario Schlosser.
Thank you, Cornelia. I'd like to welcome all of you to our first earnings call. We are thrilled to share with you our strategic position, our first quarter results, and our guidance for the full year 2021. I want to start by grounding everyone in our distinctive positioning in the healthcare industry. Since day one, we've set out to be a different kind of health insurer using data and a modern technology stack to make healthcare more affordable and easier to understand for the consumer.
We build our own technology to provide a superior experience to our members, but also to create a platform that would allow us to power more of the healthcare ecosystem around us. We set out to create a unique brand that people value because it is simple, transparent, and relatable.
We think of the business as, one, an insurance business that includes our risk-based individual, small employer, and Medicare Advantage product lines. Two, our +Oscar platform business, where we generate revenue by making our technology stack available to providers and third-party payers and enable others to grow risk revenues. For the past nine years, we have built an impressive business.
We have delivered 73% year-over-year direct policy premium growth in 2020 and 44% year-over-year direct policy premium growth in the first quarter of 2021, while simultaneously achieving meaningful improvements in our medical loss ratio, or MLR, and our administrative expense ratio. We can tie those improvements directly to our technology investments and to our growing scale. This insurance business is strengthened by the growth in the individual markets, and it's strengthened by our diversification across insurance product lines.
Our superior consumer experience and our performance is powered by +Oscar, the technology platform that enables the full suite of interactions that members and our providers have with us. The strength of our brands and the power of the technology drive industry-leading member engagements, and as of 2020, 89% of our members have engaged digitally with Oscar, 47% are monthly active users, and 75% of subscribed members with a medical visit use Oscar tools to search for a new provider.
We saw a 7% reduction in total cost of care for those members that accept our care recommendations when they look for a new provider. Let me spend some time on our key business metrics in the first quarter and the positive momentum we are seeing in our business today.
We started this year, 2021, with a strong quarter marked by both solid top-line growth and bottom-line growth, with direct policy premiums up 44% year-over-year and a 10-point improvement in our combined ratio, the metric that measures the profitability of our insurance companies.
Now, one click below that, I'd like to share some more detail about the growth and the performance of our three different product lines in the insurance business. Our individual business performed well in the first quarter with above-market growth during open enrollments, and Florida, Texas, and California are the states with now the largest number of Oscar members.
Of note, we attracted strong membership growth in markets in these states even when we were not the lowest priced plan, reflecting the value of our products and the strength of our brands. Additionally, we feel confidence about our growth driven by the Biden administration's special enrollment periods, which as you know, began on February 15th and will run through August 15th.
We certainly applaud the supportive steps that the administration has taken to expand access to affordable healthcare in the country. Between January and through the end of the first quarter, through the end of March, we have signed up an additional 50,000 new individual members for Oscar Insurance. That is growth that is in line with what the overall market is seeing.
We anticipate further growth through the year driven by the enhanced Advance Premium Tax Credits that took effect on April 1st, in our focused efforts to grow and retain membership. As you know, we believe that our platform, +Oscar, which we also use to drive our own insurance business, enables us to consistently build the best products. That has been a key driver of our growth in our insurance business as well.
An example here that I'd like to actually point to is Oscar Virtual Primary Care, which is now available in 82 counties. Our approach to virtual primary care aligns incentives across Oscar as the insurance company, the providers on our virtual care platform, and our members by offering downstream cost savings for those members using virtual care and attributing themselves to an Oscar Virtual Primary Care physician, an Oscar Medical Group Virtual Primary Care physician.
Those members who used Oscar Virtual Primary Care in 2020 were actually about 10% more likely to stay with Oscar Insurance Company year-over-year than those who were not using Oscar Virtual Primary Care. Some other early results in Oscar Virtual Primary Care, and it might be really show that these kinds of innovations will continue to help us grow while improving our combined ratio.
A couple of additional stats on Oscar Virtual Primary Care. The Oscar Medical Group, that's the medical group that delivers the Oscar Virtual Primary Care, is now one of the top three largest primary care provider groups by volume of Oscar patients seen in those states where that group is practicing. Members with chronic conditions have actually had higher adoption rates than healthy members had in using Oscar Virtual Primary Care.
Finally, 45% of members using Oscar Virtual Primary Care tell us they did not have a PCP prior to using the virtual offering, and an additional 21% were explicitly looking for a new PCP. We're getting the volume, we're attracting the right more chronically ill members into the virtual primary care service, and members who have chronic conditions and otherwise didn't have a PCP also have a good chance of attributing themselves to the Oscar Medical Group physicians here.
Moving on to Medicare Advantage, our other insurance product line. We had approximately 3,600 members in eight counties at the end of the first quarter of 2021, more than doubling year-over-year. In our MA plans, at the core, we enable providers to take risk, enabled by the great member experience and the efficient tech stack that +Oscar, our platform, provides.
We're pleased with our performance in MA, Medicare Advantage, heading into the year. In this past annual enrollment periods, we were the fastest growing HMO plan in the Bronx. We expect to see continued organic growth from our existing markets. We are also seeing strong engagement rates with our digital tools among our MA members. For example, more than 50% have utilized our care routing to help them find in-network care.
Finally, we have significantly also improved our quality measures this year through the implementation of new quality programs. For example, as a result of one of these programs, 88% of our New York Medicare Advantage members are adhering to the critical medications prescribed by their physician, which puts us among the top performing MA health plans. We are importantly thrilled to take on an additional 37,000 Medicare Advantage lives through our Health First partnership starting 01/01/2022.
The Health First agreement provides validation of our Plus Oscar platform strategy, particularly in the context of Medicare Advantage. These additional 37,000 members provide us with scale Medicare Advantage, bringing the total number of MA members using Plus Oscar to more than 41,000, even before the results of this year's coming AEP in MA.
Looking ahead, we expect growth for the MA business to be driven organically through the Oscar Insurance business and additional Plus Oscar platform deals in Medicare Advantage. Now finally, in Small Group, our third insurance product line, we are in the early phase for our Cigna + Oscar products, and there is a lot of runway in front of us. In Q1, we successfully launched three new states for the products, California, Connecticut, and Arizona, building on the two states we had launched in late 2020.
In the 7 months since we launched the first states in Cigna + Oscar, we have launched 5 states overall, reflecting our platform's ability to launch rapidly in these kinds of platform relationships. It is early, and growth will be driven through existing market cultivation and expansion into new geographies. Going back to the comprehensive power of our model and our platform.
I think the numbers I just went through show that our platform is enabling a better product offering that's powering our growth. Just as importantly, that platform is also enabling us to continue to improve our unit economics. While we're growing the top line in our insurance business, we also saw these improved unit economics come through. One of the things that we are most proud of is that we grew our direct policy premiums from $1.3 billion in 2019 - $2.3 billion in 2020.
At the same time, we have seen our MLR, our medical loss ratio, decrease from 87.6% in 2019 - 84.7% in 2020. This wasn't just a COVID improvement, as the same powerful medical loss ratio trend continues into the first quarter of this year, even without the same COVID tailwinds we saw in 2020. In fact, we view our improving MLR performance as a validation that our technology-powered model is working.
To just give you a few examples from the last few months, we estimate our virtual visits, urgent care visits saved 22 basis points of MLR by reducing unnecessary ER visits during year 2020. Another example of the technology to support our risk adjustments workflows resulted in about 70 basis points in savings in 2020 in our medical loss ratio.
We've seen the same impacts that's helping us on the medical loss ratio sides, also driving improved admin ratio, which we also believe will compound in the years to come. There, tech enhancements have delivered savings directly to our bottom line. For example, building our own claims system has saved us roughly 90 basis points when compared to the cost we incur when using a common industry vendor.
Of note, our auto adjudication rates of claims, the automatic processing of claims, in the first quarter is now up to 95% in Q1 of this year. In summary, on the insurance business, our priority is to deliver continued revenue growth with tightly managed business costs and a lower medical loss ratio. That's a simple formula, and we're very focused on that to ensure that this business becomes profitable.
Now, I'd like to spend time talking about +Oscar, a key element of our growth strategy. +Oscar is our technology and our services platform. We designed that to help healthcare clients grow risk-based revenues with a great member experience. We branded this platform as +Oscar a few weeks ago, building off the organic interests we have historically seen from the markets.
Of course, our successful provider-sponsored health plans that we built with the likes of the Cleveland Clinic, ACHN in South Florida, and Montefiore. With the market, the overall U.S. healthcare market shifting towards value-based care, towards delegation of risk, towards virtual care, we really believe we have been, and are, well-positioned to serve these growing segments. Part of what the +Oscar provider clients are looking for is enablement. We are delivering on that need.
For example, just to give you a couple of examples here, we can send data from the virtual consultations with attributed members directly to health system EHRs via FHIR integrations, or in the Health First case, our utilization management and our care routing teams will be using these +Oscar tools to help serve Health First members in an innovative way.
The next phase of our growth for this business, for the platform business, the +Oscar business, will come through arrangements with providers looking to bear risk, either through provider-sponsored health plans or delegated from payers, particularly Medicare Advantage, individual, and small employer. This represents a near-term addressable market of more than $230 billion of premium revenue, and we expect +Oscar to be a meaningful growth driver for Oscar in the years to come, with long-term target EBITDA margins reaching 20% plus.
As you all know, the +Oscar arrangement with Health First Health Plans was announced in January, and here we are in proactive transition of approximately 37,000 Medicare Advantage lives and 20,000 individual market lives onto the +Oscar platform for plan year 2022. With this transition, we estimate that starting in 2022, beyond our own at-risk lives, we will have 72,000 individuals accessing +Oscar through platform arrangements, again, even before the results of the coming OE and AEP periods.
Pulling out, we continue to believe that our past investments in our technology stack will be critical to our plans to mature and expand +Oscar. Going forward, we expect our investments will be targeted towards the most high-impact areas that will help +Oscar scale. With that, I would like to turn it over to Scott Blackley, our CFO, to take us through the numbers.
Thank you, Mario, and good afternoon, everyone. I'll begin by walking you through our Q1 financial results, and then I'll provide some guidance for 2021 full-year financial metrics.
Turning to slide three of the earnings presentation, I'll start with a discussion of our membership. Ending first quarter membership of 542,000 increased 29% year-over-year, driven by growth in our individual, Medicare Advantage, and Cigna + Oscar books of business. Membership growth exceeded our initial expectations as new consumers selected Oscar's innovative plans through the end of open enrollment and into the special enrollment period.
Moving to slide four, first quarter direct and assumed policy premiums increased 44% year-over-year to $823 million, driven by higher memberships as well as business mix shifts towards higher premium plans and modest rate increases. On mix specifically, we saw a move from bronze to silver plans in our individual book, and we also saw a modest mix benefit from higher MA membership.
You can see the walk from direct policy premiums to premiums earned on the right side of slide five, which reflects the impact of risk adjustment and reinsurance on our revenues. Premiums earned of $369 million increased 332% year-over-year in the first quarter as we reduced our utilization of quota share reinsurance. I want to provide a brief update on quota share reinsurance.
Under our quota share agreements, we cede a percent of our premiums to our reinsurance partners, which reduces our premiums earned, and therefore our risk-based capital requirements. As you can see on slide six, historically, we've used a higher level of reinsurance for risk management and for optimizing capital. Given our recent IPO and improving profitability, we chose to decrease our utilization of quota share reinsurance for this year.
Moving to slide seven, our overall combined ratio, the sum of our medical loss ratio and insurance company administrative expense ratio, was 94.2% in the quarter, reflecting a consolidated profit across our insurance companies. This metric improved by roughly 1,000 basis points year-over-year, demonstrating progress across both our medical loss ratio and our insurance company administrative ratio, while proving our innovative model is working.
Turning to slide eight, our medical loss ratio of 74.4% was down 670 basis points year-over-year from the first quarter of 2020, primarily driven by six basis points of net reserve strengthening in first quarter 2020 ahead of COVID. Prior period development, largely related to the second half of 2020, also had an 80 basis point favorable impact on the MLR this quarter.
Compared to the adjusted MLR in Q1 2020, and absent the favorable prior period development in the quarter, the MLR would be roughly flat year-over-year. We believe this is a strong result given our membership growth and COVID variability. Let me spend a minute on COVID and overall utilization environment. Non-COVID utilization was slightly below baseline levels, but was offset by higher than expected COVID treatment and testing costs in the first quarter.
COVID costs peaked in January and then declined throughout the quarter. On slide nine, you can see our first quarter insurance company administrative ratio of 19.8% improved 380 basis points year-over-year. This metric reflects the administrative expenses that are necessary to run our collective insurance companies, which are included in the other insurance cost line item in our GAAP P&L.
In contrast, general administrative, that line item in our P&L, largely consists of expenses at the holding company or Holdco, and includes tech development and overhead costs. The meaningful year-over-year improvement in the InsuranceCo administrative ratio was driven primarily by operating leverage and operating efficiencies, as well as the removal of the health insurer fee.
Moving to slide 10, our adjusted EBITDA loss of $26 million decreased by $60 million year-over-year, as you can see on slide 10. This improvement is largely attributed to higher underwriting, the repeal of the HIF fee, lower quota share impact. These benefits were partially offset by increased administrative costs across the InsuranceCo and Holdco due to higher membership and greater development in our +Oscar platform, respectively.
Turning to the balance sheet, we ended the quarter with $1.3 billion of cash and investments at the parent, and another $1.7 billion of cash investments at our insurance subsidiaries. To summarize, our first quarter results demonstrate our continued top-line growth and improving profitability across our businesses. Let me now turn to our 2021 guidance, which you can find on slide 11. We expect direct and assumed policy premiums for 2021 will be approximately $3.075 billion-$3.175 billion, largely driven by membership increases.
We expect our MLR will be in the range of 84%-86% for the full year, which is roughly flat with 2020, despite headwinds from continuing COVID costs and a return to baseline utilization levels. We expect the MLR will be lowest in the first quarter and highest in the fourth quarter as individuals meet their deductibles throughout the year. We project our insurance company administrative expense ratio will be between 22.5% and 23.5%, an improvement of 300 basis points year-over-year at the midpoint. Like the MLR, we expect the administrative ratio will be highest in the fourth quarter, driven by sales and marketing expenses for OE and AEP.
We are very focused on driving further improvement in this metric over time, and we believe that it will be possible by continuing to deliver operating leverage through disciplined fixed cost management and scale efficiencies from our technology, both of which were drivers that we saw in our Q1 performance. We also expect that our full year 2021 InsuranceCo combined ratio will be between 107%-109%, an improvement of approximately 280 basis points year-over-year at the midpoint.
Finally, we expect a meaningful improvement in our 2021 full year adjusted EBITDA loss as compared to 2020, with a loss in the range of $380 million-$350 million. With that, let me turn the call back over to Mario for some final remarks.
Thank you, Scott. I would like to close with a reiteration of our strategic priorities. One, we are dedicated to growing our insurance business while at the same time managing costs. Over the years, we have created a platform that will continue to let us push the most innovative and the most engaging products into the markets and continue to penetrate Medicare Advantage and small employer markets and keep growing in individual.
Growth in all three of these product lines will be driven by increasing market share in our current counties and by future market expansion. Two, we are focused on expanding the reach of +Oscar, our platform, by adding new arrangements with providers looking to bear risk, particularly in Medicare Advantage, individual, and small group. Three, we are fully committed to becoming profitable as our businesses are reaching scale.
This will be driven by our growth, capital reductions in medical costs, and meaningful improvements to our admin ratios. Given our progress to date and plans for further improvements, we expect our insurance company to be profitable in 2023, posting a combined ratio of less than 100%. Finally, I would like to give a heartfelt thank you to the entire Oscar team. They work tirelessly.
They work with unparalleled compassion, as we like to say, with genius and with grit at the same time to ensure members have access to the care they need as we all work towards our vision of making a healthier life affordable and accessible for all. With that, I will ask the operator to open up the line for questions.
We'll pause for a moment to compile the Q&A roster. Your first question comes from Stephen Baxter from Wells Fargo.
Hi. Thanks. Good afternoon. Just when we look at your MLR guidance, just wanted to get a little bit of help about how you're thinking about COVID for the balance of the year. Appreciate the comments about Q1 and where you were relative to baseline. As we see COVID costs likely moving lower through the balance of the year, how should we think about what you're modeling inside that MLR for core utilization against the baseline level?
Yep. Hey, thanks for your question. We really appreciate you joining us tonight, Stephen. As I talked about in our prepared remarks, the MLR this quarter was in line with our expectations with lower utilization this quarter offsetting higher COVID costs. As I also talked about, COVID costs actually were highest in January and then trended down through the quarter.
When I look at our full year MLR, what we're anticipating is that we will continue to see a heightened level of COVID expenses that will work its way through the year, probably going to be in the range of 3%-4% of MLR. On the other side of that, we expect to see that some of the deferred care from 2020 is going to start to come in as increased utilization in 2020.
We also anticipate that we may see some additional deferred care. Net-net, we would expect kind of utilization levels to be around what I would call baseline levels, kind of pre-COVID 2019 as a comparable. With all of those things kind of going on, we expect COVID to be roughly flat year-over-year, which, as I said, we think is a pretty good performance given that we do anticipate that we're going to have some headwinds from COVID. MLR flat.
Got it. Thanks. Makes sense. Just wanted to ask about the special enrollment period members. Obviously, it's early there, but I was hoping you can maybe talk a little bit about what you're seeing there in terms of utilization and how that compares to what you might see for your other new members this year or new members in a prior cycle. Thank you.
Yeah. I think that with respect to the members coming in with SEP, so far we've seen, and obviously these are early days, but we've not really seen any major differences in morbidity. What we're planning for the full year is that we're expecting in our guidance that we won't see a significant deep differential between the SEP members from our base population.
Of course, there's some risk there, I think that one of the reasons why our guiding range in MLR is a little bit broader than what we might want it to be is that we're trying to make sure that we've got some room for variation in the performance of those new members.
Stephen, this is Mario. Great talk, by the way. Thanks for joining here. One additional data point, just for observation, is that it appears that there is a little bit more of a shift towards sort of self-service among these new SEP members, like the tests on the websites, whether people would rather talk to brokers or our own call center or just kind of do research themselves.
We're now actually seeing this compared to open enrollments, kind of 30% more members who end up coming in choose to do their own research on the websites, kind of look at healthcare.gov and so on. Might be an indication of a bit of a different segment of members now buying.
Interesting. Okay. Thank you. I will get back in line with someone else if there are questions. Thanks a lot.
Thanks.
Your next question comes from Kevin Fischbeck from Bank of America.
All right, great. Thanks. I guess a couple of questions. How are you viewing I don't know if it's something you determine this, but how is your share of the enrollment coming in through the SEP versus your share of enrollment overall? I guess this is the first time we're seeing in people buying insurance with the higher subsidies. Just trying to get a sense of if your model is resonating as well now that price isn't as much of a factor, or whether it's resonating more or less.
Yeah. Kevin, I think what we do is we look at how much is the market up in APTC, in terms of overall enrollments as compared to the same period last year. How much are we up in terms of overall enrollments as compared to the same period last year. Those numbers are about the same. Essentially that market share gain we've achieved in open enrollment appears to be continuing throughout special enrollments.
I think what we are generally seeing in the marketplace is that there is, as we talked about, a bit more of a shift towards $0 plans. There is a shift towards higher premium plans, and I think that generally makes us think that it's important to have a model where you deliver a great member experience, where people will buy on more than price.
We showed that even pre the expanded tax credits, right? As I think we talked about in the roadshow a bit, we were only the lowest priced plans in about 10% of our markets, even in OE, and yet obviously delivered a 44% revenue growth in OE. I expect to continue to see the markets evolve toward a situation where delivering a great experience, more innovative features and so on, will end up winning the day. We're preparing for that.
Okay, that's helpful. I guess the commentary, I know that majority of this is still in the exchanges, but the commentary on how costs have trended through the quarter, is that largely the same in Medicare and in small group, or would you highlight any differences there?
No, I think that I wouldn't highlight any other differences.
Okay. You mentioned you guys changed your view on reinsurance. It wasn't exactly clear to me what exactly you were attributing that to. I guess, how should we think about your use of reinsurance kind of going forward in the out years? Is this a good percentage, or should we expect this percentage to kind of slowly rise until you get to profitability?
Sure. Kevin, thanks for the question. Look, with quota share, we obviously leaned into that, you saw that in our results in 2020 as a way to help capitalize the company's growth and to reduce our cost of capital. After we did the IPO, we now have the proceeds of that, and we have the capital from that.
From my perspective, deploying that cash into going ahead and using that as capital and reducing our quota share actually was the best decision in terms of creating the best financial outcome. The consequence of reducing the reinsurance is that we're actually able to keep the fee that we otherwise would've paid on that quota share. In our 2021 guidance, we do expect that quota share is part of the favorability that we're seeing through the year.
In terms of going forward, we're not saying that we won't go back and use quota share. I think in the near term, we're comfortable having a lower percentage. I'd expect that we would dynamically manage that going forward.
Okay. That's helpful. Beyond keeping more of the economics on your premium, is there a benefit as far as the percentage fee that you're paying at net at the end of the day for quota share, or is that relatively the same as a percentage of seated premiums?
I think that the structure of the arrangements that we are retaining is roughly similar before, so not a significant difference there. Just having a stronger view towards profitability, it just gives me more confidence that we don't need to have quite as much quota share.
All right, perfect. Thank you.
Your next question comes from Jailendra Singh from Credit Suisse.
Hey, good afternoon, guys. This is Carlos Ciccone jumping in for Jailendra. My question for you guys is, can you provide more color on your Cigna partnership on small group businesses, and how many lives are you assuming from that partnership in 2021, and any outlook you can share long-term for that? Thank you.
Hey, this is Scott. I think that the Cigna + Oscar partnership, as Mario talked about in his comments, we're off to a really good start. We've rolled that out in a number of new states and markets, five new states. I would say this for that, it is included in our premiums that the guidance that I gave you, our expectations about the growth in that business is part of the drivers there, we're not going to comment about the specific buckets of membership, only to say that we're excited to have the partnership with Cigna, we're looking forward to continue to roll that out.
Okay, thanks.
As a reminder, to ask a question, press star one. Your next question comes from Joshua Raskin from Nephron Research.
Hi, thanks. Appreciate you guys taking the question. I've got two. The first one is just on the recent rebranding of the +Oscar segment. Curious what the catalyst was for sort of that change in branding, and if we should read into there going to be more disclosures around revenue and segment profitability at some point?
Yeah, Josh. Great to have you on the call as well. Thanks for joining. +Oscar, we have two drivers. One is, essentially, we have built out five clients, I would say, over the past couple of years there. Those have often been relationships we have built in our insurance business, where providers saw what we bring to the table, how we enable them to grab market share with team members, and to help them shift more towards value-based care and risk-based revenues, really.
We, as we talked about on the roadshow as well, have been moving more and more towards really going on the offense there and saying we're building a pipeline, and we want to make sure that the healthcare market understands that, and has an easy way of talking about this, hence the +Oscar branding.
The second point is we have been organizing internally a little bit differently. Meghan Joyce, our COO and Executive Vice President of Platform, oversees that business, is continuing to build the pipeline there. We're excited about more to come. Obviously our heads down and implementing, continuing to grow the relationships and the arrangements we have already built. Many of these, Health First, Montefiore, ACHN, these are all MA plans, have just started growing, and that's exciting to us. Now, in terms of reporting, Scott, you can-
Yeah. Josh, thanks for joining us tonight. I'll just say that on the reporting side, I do think that at some point the company's going to look to, as those businesses grow and become more meaningful, we're going to start to want to do more to help you and others understand them. Certainly, as we've stood up +Oscar, we're going to start increasingly looking at the results of both of those businesses separately. As we do that'll start to trickle its way into our financial reporting as well.
Yeah, I think that'd be helpful. We see the $850,000 of other income, but I'm not sure that's really representative of what you're doing. I think that would be helpful.
Yeah.
Just my second question on the 3,600 lives. I understand you don't want to talk too specifically about Cigna, but maybe just help us relative to expectations, and as you think about the year. I know small group's a little less dependent on that one renewal date. Would it be reasonable to expect more meaningful growth as the year progresses?
Well, look, I think that, again, I'm not trying to be stubborn by not telling you the membership numbers, we're not trying to break the book apart at granular detail. With respect to Cigna + Oscar, we do expect that book to be growing. We do expect that it's going to continue to grow throughout the year, and accelerate in certainly the second half.
It's early days, so we don't want to get too far ahead of ourselves in terms of projecting where that book's going to be going. We do think that we've got all the right tools into the market to see some acceleration in terms of the numbers of memberships from where we are today.
Maybe I'll sneak in one last one. Just the PDR, the $9.5 million, what line did that relate to?
On the PDR, when you say what line does that relate to?
Was that an individual and small group? Was that MA? I guess it's early in the year to see a PDR, so I was just curious what that related to.
Yeah. I think it was really across all of the different product lines.
Okay.
Our next question comes from Ricky Goldwasser from Morgan Stanley.
Yeah. Hi, good evening, and congrats on the quarter. First question is on virtual primary care. Clearly, from the data points you provided on the call, it's having some meaningful impact on members' behavior. Can you maybe share with us what % of members are on the virtual care offering? Also, what type of incentives do you offer members to get them to join?
Yeah, Ricky. Let me start with the last part of the question. By the way, thanks for being on the call as well, and thank you for the congratulations. The incentives, I think this is one where we have been really at the cutting edge of incorporating virtual into plan design.
The way it works is that if you pick, as a member, a primary care physician in the Oscar Medical Group, among the virtual primary care physicians in the group, then the care that that doctor drives, whether it's lab tests or prescription drugs, some radiology tests and so on as well, they essentially get dynamically discounted, and become free. The Oscar Medical Group physician tells you, "Get this lab test," and then that lab test's cost share will get waived dynamically.
That was a real feat, I would say, of using our claim system that we built internally and the dynamic configuration benefits there, and connecting that with our electronic medical record system that these physicians operate on, that we also built internally. That's working well. It's growing.
In terms of who's using it's right now in a number of our states. In the states that it's in, as I mentioned before, the Oscar Medical Group is actually in the top three of all physician groups that are seeing Oscar patients, which is just a really nice statistic, we think. It's ramping throughout the year. It's ramping actually pretty linearly still. Let me keep you posted there. We'll get back to you in the next couple of quarters as to how people are using it.
We haven't published that yet and put that out there yet, but we'll consider doing that for the next earnings call.
Thank you. My next question is on the tech stack offering. I know you've previously said that you look to do a couple of deals a year. What does the pipeline look like, and how are these conversations with health plans going?
Let me ground you first on the offering again. +Oscar, that's what we call it now, right? It's our technology platform, our service platform. What we've designed it to do really is, and starting with ourselves, is help healthcare clients grow risk-based revenues and do that with a really great member experience.
I think I mentioned that near term, we think that is the growth there will be fueled by arrangements with providers looking to bear risk, either through provider-sponsored health plans or actually delegated from payers, and particularly in Medicare Advantage, individual and small group.
We think what this does in the kind of three areas we typically talk about there is we can drive an efficient plan infrastructure there. We've seen in some provider-sponsored health plans about a 10%-15% reduction on a PMPM basis for admin overhead. That's kind of number one.
The second thing we think we can do well is to provide more effective medical cost management because of high member engagements. That, for example, means that if we remind people of what are in-network, out-network labs and things like that, we can drive 15 point reduction in out-network lab utilization.
The third thing is growth and retention of membership and market share of a system or provider group in the given markets. The impact from virtual primary care or the impact from our digital tools on member retention, which we talked about in the past, here applies to then books of business built by providers. Those are the kind of the three big pitch points we have there. We have a pipeline. Clients are really at all stages in the pipeline.
We're going to call out throughout the year or throughout the time that passes when new arrangements happen there. We're building a macro pipeline, as I mentioned, and certainly Meghan Joyce is leading that business for us. I think it fits very well into the sort of sign of the times in U.S. healthcare. Post-pandemic, you've got the shifts, as we saw, towards virtual delivery of care, but you've also got the shifts towards more value-based care, more risk-taking. Often starting, obviously, in government business Medicare Advantage, but I think making its way more and more into the commercial business as well.
Finally, all that has to come with a great member experience, because too often I think this kind of focuses just on provider enablements, which we have also, we believe, good solutions for, but it comes not necessarily with a great, tight end-to-end member experience. I think that's the part we are adding to the stack there. That's where we are, and so we'll keep you posted.
Great. Thank you. Last question on this. Should we look to Health First as we think about a pipeline, as we incorporate in the model? Should we look at Health First as sort of kind of like a typical size deal?
I think that's a tough one to answer. I think we will see deals that, obviously, that would be a pretty typical deal for a system of that size. I think that we are open to really different types of deals and arrangements, so I don't want to say that that's going to be typical.
I think that that would be kind of a typical deal if you think about the way that we would like to position the arrangement, the economics, and what we're bringing to the table. I think that we'll just say that we're open for all kinds of different arrangements as long as we're able to bring our full capabilities to the table.
Thank you.
Thanks again.
That was our last question at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.
Thank you very much to everybody on the call, we're looking forward to continuing the conversation with you. Thank you.