Humana eyeing opportunities to scale its newly launched Author model

Humana building
Humana released its fourth-quarter and year-end earnings Wednesday. (Humana)

Humana is intending to grow its newly launched Author model, which takes a tech-enabled approach to personalized care.

As the Medicare Advantage market booms, startups with a tech bent are breaking into the space. Leading the charge is Oscar Health, which has launched its first MA plans, and Walmart is joining forces with startup MA plan Clover Health to offer co-branded coverage.

Humana CEO Bruce Broussard told investors Wednesday that Author is built to meet seniors' changing expectations of what their Medicare Advantage plans offer.

"Author is designed to meet the emerging expectations of digital-savvy seniors aging into Medicare," Broussard.

Author launched initially for five South Carolina MA plans and boasts about 13,500 members so far, Broussard said. In the program, both members and providers will be offered direct access to a team of navigators who aim to address their needs.

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For providers, that includes resolving prior authorization requests and looking into claims status, Humana said. Members will be able to connect one-on-one with a care coordinator, who will assist with non-clinical advice and help members understand their benefits.

Broussard said the insurer is planning to scale Author by "delegating more MA lives over time."

Humana posted a $274 million profit loss in the fourth quarter of 2020, or $2.07 per share.

Despite reporting a loss, the insurer beat Wall Street's expectations, with analysts expecting a loss in the vicinity of $2.35 per share. The loss represents a 153% decline compared to the prior-year quarter, where Humana reported $512 million in profit.

Humana said in its earnings release that in the fourth quarter it saw a significant increase in admissions for COVID-19 in nearly all of its markets.

In tandem, utilization for non-COVID-19 care was about 15% below normal levels, Humana said. However, that was not enough to offset the uptick in treatment and testing costs related to the pandemic.

In addition, Humana said ongoing crisis relief efforts and strategic investments were heavily weighted toward the end of the year, also impacting the quarter. The insurer had warned investors during its third-quarter earnings that a loss was likely coming.

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“Despite the pandemic, Humana has continued to accelerate on all fronts, including our short-term operating and financial performance, our ability to advance our long-term strategic objectives and our customer-centricity efforts,” said Broussard in a statement.

Revenues for the quarter were up notably compared to the fourth quarter of 2019, according to the release. Humana brought in $19.1 billion in revenue for fourth-quarter 2020, compared to $16.3 billion in the fourth quarter of 2019, an increase of 17%.

And despite the fourth-quarter loss, the insurer was profitable for full-year 2020, bringing in $3.4 billion in earnings. Profits were up 24% compared to 2019, when Humana earned $2.7 billion in profit.

Full-year revenue also reached $77.2 billion in 2020, an increase of nearly 19% from $64.9 billion in 2019 revenue.

Humana said it expects earnings per share in 2021 to be between $21.25 and $21.75, though the insurer acknowledged that the pandemic represents continued financial uncertainty. It also expects to add between 425,000 and 475,000 Medicare Advantage members, growth of between 11% and 12%.