John Rex
President and Chief Financial Officer at UnitedHealth Group
Thank you, Andrew.
This morning, I'll first provide color on some of the unique items in the quarter directly related to the Change Healthcare cyberattack, followed by care activity trends, business updates and finally, thoughts on the remainder of '24. But first, let me start at the most fundamental level. The UnitedHealth Group businesses continued to grow and perform well during the quarter, and we are encouraged by the momentum and the many opportunities to serve we're seeing across the enterprise.
On the Change Healthcare cyberattack, as Andrew noted, our guiding focus throughout has been to make sure patient care is delivered and care providers access to funding is secured as we work to bring back services fully. The cyber impacts in the quarter totaled about $870 million, or $0.74 per share. At this distance, we estimate the full-year impact will be $1.15 to $1.35 per share.
Let me break that down into its key components. Of the $870 million, about $595 million were direct costs due to the clearinghouse platform restoration and other response efforts, including medical expenses, directly relating to the temporary suspension of some care management activities. For the full year, we estimate these direct costs at $1 billion to $1.15 billion, or $0.85 to $0.95 per share. It's important to note these direct costs are included in net earnings, but are excluded from adjusted earnings per share.
The other component affecting our results relates to the disruption of ongoing Change Healthcare business. This is driven by the loss of revenues associated with the affected services, all while incurring the support and costs to keep these capabilities fully ready to return to service. Notably, these effects are not excluded from adjusted earnings. In the first quarter, this impact was about $280 million, or $0.25 per share.
At this distance, we currently estimate the business disruption at $350 million to $450 million, or $0.30 to $0.40 per share for the year. This, of course, will depend on the ultimate timing of service and transaction volume restoration. These elements are broken out for you in the supplemental tables provided with our press release this morning. Of course, we will provide regular updates on our progress and outlook throughout the course of the year. While much of Change Healthcare's functionality and services have been restored, we are working hard to restore more and the objective we all share is for an even stronger Change Healthcare to be fully returned to expected performance levels next year. I'll come back to some of these elements in more detail in just a moment.
Turning to underlying care patterns. The headline is that these continue within our expectations. Outpatient care activity among seniors remains consistent with the elevated levels we began seeing in the first half of '23 and for which we planned. So, we continue to be comfortable with the outlook we established last June when we filed our 2024 Medicare Advantage benefit offerings. The winter seasonal activity we discussed with you in January, particularly related to strong vaccine uptake, higher respiratory illness incidents and related physician office visits, has subsided. Overall, inpatient care activity also remains within our expectations.
The first quarter medical care ratio at 84.3% included roughly 40 basis points, or about $340 million, related to the temporary suspension of some care management activities. These have been recently reinstated. The majority of the remaining $325 million of full-year medical expense impact included in our outlook will land in the second quarter. Notably, we did not reflect any favorable earnings impacting medical reserve development in the quarter. Out of prudence, due to the potential for the cyberattack to affect claims receipt timing, we reflected an additional $800 million of claims reserves. We'll continue with a judicious view as we progress over the next several quarters.
Turning to the performance of our businesses. The most important takeaway is they are growing and performing at a level, which allows us to maintain the adjusted earnings per share objectives we established last November. Even while taking on the business disruption impacts of the Change Healthcare attack, at UnitedHealthcare, revenues of $75.4 billion grew nearly $5 billion. Within our domestic commercial membership, we're off to a strong start, powered by disciplined growth, serving 2.1 million new consumers in the first quarter. We are encouraged by the momentum and positive customer response to our differentiated offerings and look forward to building further upon that momentum heading into '25.
For Medicare Advantage, as you would anticipate, we are deeply into our '25 planning activities. As we finalize our '25 benefit designs over the next several weeks, we will build competitive offerings that once again appropriately reflect the funding and cost environment. We approached this last year with a deliberate three-year plan, which continues firmly on track and positions us well going into '25. Our Medicaid business ended the first quarter with 7.7 million members. As Andrew noted, key wins in Texas, Virginia and Michigan demonstrate the value state customers see in our offerings. In Virginia, UHC was the highest scoring plan, with particular strength in member centric care, benefits and service delivery, quality and value-based payments.
In Texas, UHC was awarded the maximum number of possible service areas, expanding the number of people we will have the opportunity to serve. And in Michigan, UHC achieved perfect scores in such critical consumer-centric areas as social determinants of health and health equity, further solidifying our value proposition. Optum Health's revenues grew by 16% to $26.7 billion, as we increased the number of patients served and are on track to approach 5 million patients in value-based care by year end.
For the most complex patients that Optum Health serves, we have engaged 75% through the first quarter this year, a significant increase in the number of patients engaged over last year. This reflects progressively earlier connectivity with patients and the ability to improve their health outcomes and experiences more rapidly. Optum Rx revenues grew 12% to $30.8 billion, driven by new client starts, continued expansion within existing partnerships and growth within pharmacy services. Optum Insight, as you know, is where the Change Healthcare business resides.
In the quarter, about $500 million of the $870 million total impact is within Optum Insight. Just under half of this are direct response costs. Think [25:13] clearinghouse restoration activities, which we have excluded from adjusted earnings and slightly over half are the business disruption effects, which are not excluded from adjusted earnings. For many of the impacted Change Healthcare services, transaction volume drives revenues. So the effect of the attack in the period is one of keeping all the lights brightly burning at full readiness to resume services, while revenue production was essentially suspended. To be clear, the Optum Insight team did the critical and right thing, promptly shutting off services and finding any method possible to keep the care system working, including helping clients find alternative solutions.
Coming out of this incident, the team will be working tirelessly with customers to recover transaction volumes and demonstrate that Change Healthcare is ready to serve and is more valuable than ever. Beyond Change Healthcare, the Optum Insight revenue backlog increased to nearly $33 billion, growth of over $2 billion from a year ago, driven by health system partnerships to provide business process and information technology services.
A couple of other items of note that were affected by the cyberattack. Days claims payable in the first quarter were 47.1 compared to the 47.9 in the fourth quarter '23 and 47.8 a year ago. The accelerated payments to care providers and the Brazil sale reduced what would have been our reported measure for the quarter by about three days. The medical costs payable balance increased $1.6 billion from year-end '23 to $34 billion. The change reflects a $3 billion increase in the incurred but not yet reported component, or IBNR. This is the result of the prudent ongoing claims receipt assessment, offset by a $1.6 billion reduction in the fully processed claims component due to care provider payments acceleration. Cash flows from operations in the quarter were $1.1 billion, impacted by about $3 billion due to the funding acceleration to care providers and collection extensions to affected customers, and were additionally impacted by the timing of some public sector receipts.
To summarize, a continued focus on better serving patients and the health system underpins our mission and growth drivers, which remain strong. And as we move further into this year, the broadly strong performance across our enterprise allows us to continue to expect full-year adjusted earnings per share in the range of $27.50 to $28, even as we incorporate a $0.30 to $0.40 per share of business disruption impacts.
Now, I'll turn it back to Andrew.
