Dive Brief:
- Non-COVID-19 medical use bounced back faster than expected during the second quarter, Humana executives told investors Wednesday. The insurer was able to post net income of $ 588 million as COVID-19 treatment costs for its members fell faster than anticipated, compared to $ 1.8 billion a year ago as patients deferred care amid the pandemic.
- Humana, which insures a large portion of seniors through Medicare, did disclose that is has noticed COVID-19 admissions increasing in recent weeks, a potentially troubling sign.
- The payer experienced robust membership growth in its Medicaid business while it reported declines in the fully-insured commercial segment. Overall, total medical membership was up slightly compared to the prior-year period.
Dive Insight:
How quickly patient utilization bounces back to normal is a key metric under close watch by insurers. As COVID-19 dented normal patient trends last year, insurers have always expected the pendulum to swing back the other way. It was just a matter of timing.
Humana said that pent up demand for deferred care was noticeable in the first half of the year and has worked it way through. Now, Humana expects utilization to normalize during the latter part of the year.
“Uncertainty remains for the bounds of the year due to the pandemic,” CFO Susan Diamond said Wednesday.
Still, Humana was able to report a medical loss ratio of 85.8%, higher, of course, compared to last year, which experienced severely depressed volumes. The medical loss ratio, which is an important measure on how much an insurer spends on care, beat analysts expectations.
The latest earnings season is producing somewhat mixed results for the nation’s largest payers.
Centene said utilization is trending higher among its marketplace members, reflecting “pent-up demand” that led to a net loss for the insurer.
Anthem upped its expectations for the year on strong membership growth and lower-than-expected medical costs.
The effects of last year’s depressed utilization continues to weigh on Humana. Medicare Advantage risk-adjusted revenue faces a “significant” hurdle in 2021, executives said. The revenue is based on medical documentation from a member’s visit with a provider in the year prior. The revenue risks coming in lower than expected as volumes were significantly depressed in 2020.
Executives said they’re hopeful the risk-adjusted revenue will return to normal in 2022 as members continue to re-engage with their physicians this year.
Humana kicked off the first quarter earnings by announcing it was acquiring the remaining 60% stake in Kindred at Home, betting on the continued move to providing care in the home while joining other payers expanding healthcare services beyond insurance coverage.
The payer now expects the deal to close mid August pending regulatory approvals.