By Brazil Stock Guide — Brazil’s National Supplementary Health Agency (ANS) said on Friday it had lifted a precautionary measure imposed on Hapvida (HAPV3) just one day earlier, which had halted potential contract reviews involving 947,000 health-plan members.
The company provided further details on the contract review announced to the market last week. According to the ANS, the measures are limited to large employer-sponsored group health plans.
The decision allows Hapvida to continue negotiating price increases under those contracts. The regulator said it will monitor the process and any potential impact on consumers.
The ANS had imposed the precautionary measure after Hapvida disclosed the initiative alongside its second-quarter results on Aug. 12. The regulator raised concerns that the process could lead to contract terminations and double-digit price increases affecting those members.
At a meeting on Friday at the ANS headquarters in Rio de Janeiro, Hapvida executives told the regulator that the measures apply exclusively to group contracts signed with large corporate clients.
According to the ANS, the health operator also said the review does not cover individual plans, association-based group plans, or contracts with small and medium-sized companies.
Hapvida Group CEO Luccas Adib and Institutional Relations Vice President Gustavo Ribeiro attended the meeting. The company is still expected to formally submit the data presented at the meeting to the regulator.
Following the explanations, the ANS board decided to suspend the precautionary measure for now and replace it with regulatory monitoring of any steps taken by Hapvida.
“There is no regulatory restriction imposed by the ANS that would prevent negotiations over price adjustments for the group contracts referred to by Hapvida,” the agency said.
ANS President Wadih Damous said the initial measure had been precautionary, given the potential impact on a large number of consumers.
“In a situation like this, the regulator cannot simply wait for problems to occur before acting,” Damous said. “Regulatory oversight is non-negotiable.”
In a market notice released Friday morning, Hapvida said the review involves contracts with inadequate profitability or a history of late payments.
The company said the process will be conducted contract by contract, on each plan’s renewal anniversary, over the next 12 months.
Hapvida added that it will propose terms it considers necessary to restore the economic balance of each contract, but that the corporate client will ultimately decide whether to accept the new conditions.
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