Humana posts higher first-quarter revenue as Medicare Advantage membership hits 3.5 million
Humana's revenue rose in the first quarter of 2018 as it added more seniors to its Medicare Advantage rolls and increased premium rates across its health plans.
The Louisville, Ky.-based company's individual and group Advantage membership reached 3.5 million as of March 31, an increase of 7.3% over the same time a year ago. Its Medicare membership is second only to UnitedHealth Group, which had 4.8 million enrolled in Advantage plans at the end of the first quarter.
Humana is preparing for additional growth in its Medicare Advantage business, but also is grappling with new competitors that hope to snag some of the lucrative business for themselves. Aetna, Anthem, UnitedHealth and WellCare all grew membership in Advantage plans in the first quarter, helping boost each of the companies' profit and revenue.
Humana on Wednesday said the CMS' final Medicare Advantage rate notice allowing health plans to tailor benefits to address the social determinants of health would give the company more flexibility to improve patient outcomes. It also said the CMS' final notice would lead to a 3% rate increase for its individual Advantage business.
The insurer has also been investing in outpatient care providers to shift its senior members' care away from costly hospitals and reduce healthcare spending. Humana, along with two private equity firms last week said they would acquire Mooresville, N.C.-based hospice provider Curo Health Services for about $1.4 billion. The same trio in December announced plans to buy home health provider Kindred Healthcare for $4.1 billion.
Humana's Medicare Advantage membership gains helped drive first-quarter revenue to $14.3 billion, up 3.8% year over year. At the same time, its net income fell by 56% to $491 million, reflecting the breakup fee Humana received in 2017 after its failed attempt to merge with Aetna. That fee inflated its 2017 first-quarter profit.
Humana's individual Medicare Advantage membership grew 6.3% to 3.0 million, and its group Advantage membership grew 14.3% to 492,700. Humana also grew membership in its military services segment thanks to a Tricare contract that went into effect Jan. 1. The contract added 2.8 million members to Humana's rolls and nearly doubled its military services membership to 5.9 million.
Those gains were offset by lower membership in its Medicare stand-alone prescription drug plans, which fell by 3% to 5 million. Humana's Medicaid membership also dropped to 336,000, down 11.7% largely because Humana stopped serving Medicaid recipients in Illinois. The insurer also no longer serves individual commercial members after exiting the marketplace in 2018. It covered 201,000 people in individual plans at the same time last year.
In total, Humana's customers totaled 16.6 million as of March 31, up 19% from the same time in 2017.
Humana also reported total premiums of $13.8 billion in the quarter, up 3.1%. The bulk of premiums came from the Medicare plans, which saw premiums grow 7.1% to $11.4 billion. The insurer said it increased premium rates in certain Medicare and commercial insurance plans.
Its medical loss ratio—the amount of premiums spent on medical care and quality improvement—was flat year over year at 84.5%.
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