Humana reaffirmed its full-year guidance but is leaving 13 Medicare Advantage (MA) markets next year, Chief Financial Officer Susan Diamond said during the Wells Fargo Healthcare Conference on Wednesday.
Other members will have fewer plans to choose from in certain geographies.
Diamond explained around 560,000 members, or 10% of its individual MA membership base, would be impacted by the cutbacks, but Humana anticipates it will absorb about half of those members into other plans.
“Nearly all of those members have other options,” she said, adding that a couple hundred thousand members will be lost. “That is not atypical when we do plan exits.”
Unsurprisingly, Humana is exiting markets in which it did not expect to be profitable next year. It told investors in July enrollment would likely decrease, but it’s not yet clear the exact impact that will have on 2025’s financials.
“The exit itself is positive in the sense that those plans were not contributing,” said Diamond. “And so just exiting, even if we don't retain the members, is positive. If we do ultimately retain more of those members, that’s incrementally positive because the plan choices left behind are priced in a way that will be positively contributing.”
Humana slashed its guidance after the first quarter following the Centers for Medicare & Medicaid Services’ decision to cut the MA benchmark rate by 0.16%. Large payers have since blamed the cuts on reduced benefits and the rollback of coverage areas for next year.
Some plans, like Humana’s dual eligible special needs plans, are performing well and aren’t facing the same headwinds, she explained.
While inpatient utilization was higher than anticipated in May, it is once again trending normally, as are other utilization metrics.
Humana does expect to see higher signs of seasonality during the second half of this year. The insurer believes members will be using supplemental benefits such as OTC cards, fee benefit cards and dental services at a high level. This is common as the year winds down, but especially so this year.
“We are anticipating an even higher level of utilization in some of those services in the fourth quarter of 2024, just recognizing the benefit changes we’ve made for 2025,” said Diamond. “If people get visibility to that, knowing that those benefits will be reduced, we do anticipate an even further elevated use of some of those benefits.”