Humana Meets Expectations in Q2 But With Some Mixed News
Medicare Advantage (MA)-dominant Humana released its Q2 2024 results. It had $679 million in profit for the second quarter, down from $959 million a year ago. It had $29.5 billion in revenue for the quarter, compared to $26.7 billion in the second quarter of 2023. It affirmed its already conservative guidance.
It revealed that MA rates have complicated its financial performance and that it would shutter some plans in geographies and has reduced benefits in others. It expects to lose about 5% of its projected 2024 enrollment next year, or about a few hundred thousand. It will increase its enrollment this year by about 225,000. Only Humana and CVS Aetna performed well on the enrollment front recently.
Its medical loss ratio (MLR) was 89.5% in the quarter, compared to 86.8% in the second quarter of 2023. Humana blames the increased utilization on the recent 2024 rule regarding prior authorization. MA plans must now follow traditional Medicare program rules, including honoring physicians’ certification for inpatient admission that someone needs a hospital stay and will remain in the hospital for at least two midnights.
Humana says that the changes will allow it to get back to a target 3% MA margin over time. It is basically flat right now.
Additional articles: https://www.modernhealthcare.com/insurance/humana-medicare-advantage-costs-jim-rechtin and https://www.healthcaredive.com/news/humana-membership-losses-medicare-advantage-plan-cuts/722619/ and https://www.beckerspayer.com/payer/humana-2-midnight-rule-driving-up-inpatient-costs.html and https://www.beckerspayer.com/payer/humana-expects-medicare-advantage-membership-to-decline-by-a-few-hundred-thousand.html and https://www.healthcarefinancenews.com/news/humana-logs-679-million-q2-profit
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#medicareadvantage #humana #rates #margins
Humana CEO Rechtin Believes Plans Need To Show Value And Allow CMS To Accrue Some Benefit
New Humana CEO Jim Rechtin is making some waves already. He used his Q2 Investor Call almost entirely for Q and A, dispensing with the regular hype plans usually engage in on the calls. More to the point, Rechtin also sought to turn the page on MA’s adversarial approach with the Centers for Medicare and Medicaid Services (CMS).
Rechtin made the case that greater collaboration with CMS is needed and that the industry must better show its value and have some of it accrue back to CMS, Medicare and Medicaid. He noted that the value – better benefits, outcomes, and lower costs – are well-documented.
In essence, he is taking the long view, acknowledging some reform is needed to clearly show the savings MA can bring to Medicare. He indicated that MA needs to create “a long-term value proposition for taxpayers that creates real stability” for Medicare and Medicaid.
Here are some key quotes from the new CEO at the investor call. The audio is at a link below too.
“CMS and the federal government, state government, and by extension even taxpayers, are also our customers. I think we need to constantly remind ourselves of that. What we do creates value for those customers as well. We need a regulatory environment that allows that value to be fully realized and that requires constant collaboration and adjustment. We need to be a proactive partner with CMS in that process, and we need to do this to make sure that we’ve got a long-term, stable Medicare, Medicaid program.”
“How do we actually collaborate with CMS to make sure that the regulatory environment allows that value to accrue back, or some of that value to accrue back? None of that should be harmful to the MA sector.”
“That’s good for everybody. It’s good for the MA sector, it’s good for the member, it’s good for taxpayers, and that’s what we’ve got to focus on getting back to.”
Humana investor call audio: https://humana.gcs-web.com/events/event-details/2q-2024-humana-inc-earnings-conference-call
#medicareadvantage #humana #rates #margins
How Have Insurers Fared So Far in 2024
With Q2 calls coming to a close, Modern Healthcare looks at how insurers are faring so far in 2024. In Medicare Advantage, there is a tough financial environment due to rate cuts and despite some positive news on the Star front. In 2025, many plans will reduce benefits and contract geographies, including Centene, CVS Aetna, and Humana. Centene will exit six states — Alabama, New Mexico, and four northeastern states. Humana expects to shed 5% of its lives, while CVS Aetna is projected to lose 10%. While United and Elevance Health say they are bullish on 2025, there is some word already that United is cutting benefits in some counties.
On the Medicaid front, insurers have seen enrollment losses, higher utilization with the losses, and rates that do not tie to expense. They obtained rate hikes during the redetermination process to sustain them, but dollars appear to be drying up.
In the Exchanges, enrollment is at record levels, which is an unlikely positive spot.
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#healthplans #healthcare
Cuban and Emanuel Spar On Potential To Reduce Brand Costs
Mark Cuban, founder of the Mark Cuban Cost Plus Drug Company, is pushing back on a claim by former Obama administration healthcare adviser Ezekiel Emanuel that Cuban’s approach to lowering costs will not have any success on the brand side.
While obscene prices of brand drug makers and the perverse rebate deals between them and pharmacy benefits managers create major challenges, Cuban is perhaps on to something with his volume-based and transparent models. While Emanuel says Cuban’s approach is only good for generics and where a generic has finally come on the market for a brand, there is nothing wrong with that. And don’t count Cuban’s argument out that brand-name companies could be enticed to making more per sale as volumes increase.
At any rate, Cuban’s model can be a component part of overall drug reform along with expanding Medicare drug price negotiations to the entire healthcare system.
In other news, Cuban warns that employers who receive brand rebates could face lawsuits as employees argue they are paying arbitrarily high prices because employers are not acting as a fiduciary for employees and bungling oversight of insurers and pharmacy benefits managers.
Additional article: https://www.beckerspayer.com/workforce/mark-cubans-big-warning-for-employers.html
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#erisa #employercoverage #generics #brands #drugpricing
MA Outperforms Medicare FFS on 9 of 10 HEDIS Measures
AHIP, the health plan lobby group, just published an analysis that showed that Medicare Advantage outperforms traditional Medicare fee-for-service (FFS) in 9 out of 10 Healthcare Effectiveness Data and Information Set (HEDIS) measures. The measures focused on preventive and chronic disease care in FFS Medicare and MA in 2021.
#quality #medicareadvantage #medicare
— Marc S. Ryan
