Humana remains optimistic about its Medicare advantage despite major regulatory changes, CEO Bruce Broussard told investors on Wednesday’s earnings call.
“We believe the industry will continue to grow strongly. Despite the adverse interest rate environment in the past, the industry has grown well,” Broussard said.
First-quarter net income rose 33.3% to $1.2 billion, driven by growth in Medicare Advantage, the health insurer said. Revenue rose 12% to $26.7 billion, but membership remained flat at 17.1 million as the insurer scaled back its hiring business. Broussard said the company’s CenterWell his provider arm continues to explore acquisition targets for primary care and home health care.
Humana does not expect new policies for Medicare and Medicaid services to impede growth in Medicare Advantage, despite lower benchmark rates next year and stricter rules for audits and other areas. Humana’s Medicare Advantage membership is expected to grow “in the high single digits” heading into its 2024 plan year, Broussard said.
Humana opposes CMS’s new Medicare Advantage audit policy, said Broussard. At his JP Morgan Healthcare conference in January, Diamond said it was likely that insurers would sue over the regulation. “It’s important to work with CMS on how they plan to implement their audit program going forward,” Broussard said Wednesday.
Humana billing days decreased nearly two days to 41.2 compared to the same period last year. Insurers are looking to increase payment days as the metric reflects how much reserves they hold to pay their outstanding debts. Additionally, Humana’s billing days plummeted from Q4 to almost five days. Insurers typically report more days due at the beginning of the year because patient numbers are low and policyholders have not yet met their annual deductibles.
Susan Diamond, Chief Financial Officer (CFO), said in a conference call with investors that increased pharmacy spending, reinsurance payments, value-based care contract provider payments, and changes to billing processes will drive billing growth. I mentioned that the number of payment days has decreased.
This trend is in line with the financial results of health insurers such as UnitedHealth Group, Elevance Health and Centene, which have previously announced a decline in claims days in the first three months of 2023. Although the 19 pandemic began in 2020, inpatient hospital utilization remains low, Diamond said.
This contrasts with large healthcare systems such as Dallas, Texas-based Tenet Healthcare, King of Prussia, Pennsylvania-based Universal Health Services, and Nashville, Tennessee-based HCA Healthcare. “We’re still seeing net income in the quarter, even with what hospitals are reporting,” Diamond said.
