Medicare Advantage utilization rates are beginning to trend closer to initial expectations after an elevated few months, Humana CEO Bruce Broussard told investors on a Wednesday morning earnings call.
"Humana's fundamentals are strong, and we are confident in our ability to navigate through the near-term impacts of our higher-than-expected MA utilization, while continuing to advance our strategy," Broussard said in prepared remarks.
Executives first noted higher-than-anticipated inpatient and outpatient Medicare Advantage utilization in May, Chief Financial Officer Susan Diamond said on Wednesday's call. The trend continued into early June, but updated paid claims data actually showed more stabilized outpatient utilization for April and May. Inpatient utilization, however, remains higher than expected, she said.
The company is offsetting higher utilization rates with investment income and reductions in administrative expenses, and Diamond said she remains confident Humana's 2024 pricing covers recent market changes and will deliver earnings growth.
Humana's Medicare Advantage and Medicaid enrollment numbers are rising, executives said. The company projects it will add 825,000 Medicare Advantage members in 2023, reflecting 18% year-over-year growth.
"The industry-leading individual MA growth we've achieved in 2023 creates significant momentum as we move into 2024," Broussard said.
The company added Medicaid members in Ohio and Louisiana earlier this year and plans to do the same in Indiana and Oklahoma, approaching 1.5 million members across nine states by the end of 2024, Broussard said.
Humana on Wednesday reported net income of $959 million, or $7.66 per diluted share, in the second quarter, compared with $696 million, or $5.48 per share, in the year-ago period. Revenue rose 13% to $26.75 billion, with results primarily driven by Medicare Advantage growth and higher individual premiums. Total membership remained relatively flat at 17.13 million.
Days claims payable—which insurers aim to increase, as it reflects how much they have in reserves to pay outstanding obligations—declined by more than three days, to 42.6, from the year-ago period.
The company changed its 2023 earnings-per-share guidance to at least $26.91, down from the previous projection of $27.88.
