Humana remains optimistic about Medicare Advantage despite major regulatory changes, CEO Bruce Broussard told investors during an earnings call Wednesday.
"I believe the industry will continue to see strong growth. We have seen the industry grow nicely despite an unfavorable rate environment in the past," Broussard said.
Net income rose 33.3% to $1.2 billion during the first quarter, driven by Medicare Advantage growth, the health insurance company reported. Revenue increased 12% to $26.7 billion, but membership remained flat at 17.1 million as the insurer winds down its employer business. The company's CenterWell provider division continues to seek primary care and home health acquisition targets, Broussard said.
Humana does not expect the new Centers for Medicare and Medicaid Services policies will impede Medicare Advantage growth despite a lower benchmark rate next year and stricter rules on audits and other areas. Humana's Medicare Advantage membership will grow in the “high single digits” for the 2024 plan year, Broussard said.
Humana opposes CMS' new Medicare Advantage audit policy, Broussard said. During the J.P. Morgan Healthcare Conference in January, Diamond said insurers would likely sue over the regulation. “It will be important to work with CMS about how they intend to implement the audit program going forward,” Broussard said Wednesday.
Humana's days claims payable declined by nearly two days to 41.2 from the year-ago period. Insurers aim for higher days claims payable because the measure reflects how much they hold in reserve to pay outstanding obligations. Additionally, Humana's days claims payable plummeted almost five days from the fourth quarter. Insurers normally report higher days claims payable at the start of a year because patient volumes are lower and policyholders haven't yet met their annual deductibles.
Higher pharmacy spending, reinsurance payments, payments due providers in value-based care agreements and modifications to claims processing caused the decline in days claims payable, Chief Financial Officer Susan Diamond said during a call with investors.
This trend aligns with financial results from health insurance companies such as UnitedHealth Group, Elevance Health and Centene, which previously announced that days claims payable fell during the first three months of 2023. Humana policyholders are visiting physicians at a rate similar to before the COVID-19 pandemic began in 2020, but inpatient hospital utilization remains low, Diamond said.
That contrasts with large health systems such as Dallas, Texas-based Tenet Healthcare, King of Prussia, Pennsylvania-based Universal Health Services and Nashville, Tennessee-based HCA Healthcare announcing upticks in utilization. “Even with what the hospitals are reporting, we are still seeing some net favorability in the quarter,” Diamond said.