Humana Raises 2024 Medicare Advantage Growth Outlook, Warns of Impact from CMS Payment Rates

Humana, a major player in the Medicare Advantage market, has announced an increase in its projected individual Medicare Advantage annual membership growth for 2024. The company now anticipates an annual growth of approximately 150,000, or 2.8%, which is an increase of 50,000 from previous estimates.

However, Humana has also expressed concerns about the potential impact of future Medicare Advantage pricing following the release of the Centers for Medicare and Medicaid Services payment rate notice earlier this month. The company is currently evaluating plan level pricing decisions and the expected impact on membership.

CEO Bruce Broussard highlighted that the finalization of MA bid pricing decisions, industry cost trends, and competitor pricing actions in 2025 will impact the company’s adjusted earnings per share growth outlook for that year. Broussard also noted that the current regulatory environment may negatively impact benefit levels, planned stability, and choice for seniors.

Despite these challenges, Broussard remains optimistic about the long-term prospects of the Medicare Advantage industry. He believes that the industry will adjust to the current funding regulatory over time, delivering strong top-line growth and normalizing at an appropriate margin of at least 3%.

In terms of financials, Humana reported lower net profits for the first quarter of 2024 compared to the same period in 2023. The company’s net profit of $741 million represents a 40% decrease from the first quarter of 2023. Despite this, Humana’s net profits for the quarter still exceeded Wall Street expectations.

Following the earnings report, Humana shares dipped roughly 4% in early trading. The company also warned of higher-than-expected medical costs impacting its results into 2024 and beyond.

Overall, Humana is facing challenges in the Medicare Advantage market but remains committed to margin recovery and profitable growth through multi-year pricing actions. The company believes in the strong core fundamentals and growth outlook of the MA industry, despite the current dynamic and challenging environment.