Humana plans to leave some Medicare Advantage markets in 2025

Humana expects to exit Medicare Advantage markets in 2025, company executives told investors. 

The company reported its first quarter earnings April 24. Humana posted a $741 million in net income in the first quarter of 2024, beating investor expectations, but pulled its 2025 earnings guidance. 

Executives told investors the company would update its 2025 expected earnings later in the year when it has more visibility into its 2025 Medicare Advantage bids. 

On an April 24 call with investors, Humana executives said it will look to pull back benefits and exit some markets, as CMS continues phasing in risk adjustment changes. 

"We expect benefit levels, plan stability and choice for seniors to be negatively impacted by the final MA rate notice, which is not sufficient to address the current medical cost trend environment and regulatory changes," CEO Bruce Broussard said. 

CMS published its final MA rate notice for 2025 earlier this month. The agency slightly cut benchmark payments and continued phasing in coding changes. Humana previously said the agency's rates were lower than its expectations. Other payers have signaled they will likely cut benefits to accommodate the rate notice. 

CFO Susan Diamond said the company will expect to see membership decline as it exits markets. 

"We are anticipating net membership declines in 2025, largely because we do plan to exit certain plans and counties," Ms. Diamond said. "Whether that is incrementally larger or smaller based on the other plans will be very dependent on what we see across the competitive landscape." 

Humana will share more information on the size and scope of plan exits after bids are submitted in early June, Ms. Diamond said. 

Though the company is anticipating a decline in 2025 membership, the company upped its 2024 membership guidance. Humana expects to add 150,000 Medicare Advantage members in 2024. 

Inpatient medical costs in the first quarter were in line with expectations, Ms. Diamond said. In the fourth quarter of 2023, Humana reported an "unprecedented increase" in Medicare Advantage costs, leading to a steep loss in earnings. 

Delayed claims from disruptions in the Change Healthcare hack limited some visibility into non-inpatient cost trends, Ms. Diamond said. 

"Inpatient utilization overall is in line with expectations. That's positive. We'll have to see how non-inpatient costs and inpatient units develop as we get more visibility into claim maturation," Ms. Diamond said. 

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