Specialist
Former regional president at Humana Inc
Agenda
- Recent developments in the managed healthcare industry and updated pandemic impact
- Medicare Advantage enrolment guidance cut, potential rationale and detriment to business performance
- Humana’s (NYSE: HUM) turnaround strategy for 2022 and ability to regain Medicare Advantage positioning
- Competitive positioning relative to managed care peers such as UnitedHealthcare (NYSE: UNH), CVS Health (NYSE: CVS) and Anthem (NYSE: ANTM)
- Outlook for Q1 2022, M&A dynamics and service line expansion
Questions
1.
What major trends and developments pertaining to Humana have you been following in the managed care market over the past 12 months or so?
2.
How are you assessing medical utilisation trends for H1 2022 amid the surging Omicron variant? How could utilisation and MLR [medical loss ratio] be impacted, considering the impact on Medicaid, Medicare and the marketplace segements, respectively?
3.
Why do you believe Humana was too conservative in 2021 on estimating COVID-19 costs?
4.
Could you discuss some of the stipulations of the Biden administration’s Build Back Better plan, currently being deliberated in Congress? How might provisions phasing down the Federal Medical Assistance Percentages impact rates, if that ends the same quarter as the public health emergency is suspended? How could this affect Humana’s current guidance projections?
5.
CMS [Centers for Medicare and Medicaid Services] announced it’s further extending final Risk Adjustment Data Validation timeline for an extra year, to November 2022. How much of a net positive is this delay for Medicare Advantage-focused plans such as Humana’s? What are the main implications for managed care organisations industry-wide?
6.
How are you considering increased regulatory scrutiny around in-home health evaluations and general misappropriated risk coding for in-home health visits? How exposed is Humana to this regulatory headwind, especially considering its investments in companies such as Heal and its August 2021 acquisition of Kindred at Home?
7.
How aggressive is Humana in risk coding compared to other insurers? The recent report from the Department of Health and Human Services’ Office of Inspector General seems to call out other large payers in this area. Do you expect a similar risk for Humana? Which other companies are known to be particularly aggressive?
8.
What are your thoughts on Humana slashing its individual Medicare Advantage enrolment growth guidance by about half for 2022? What do you think were the underlying drivers of this reduction, apart from higher churn this annual election period?
9.
Why do you think managed care organisations such as United, CVS and Aetna have essentially refuted Humana’s claims and said nothing has really changed with market competitiveness and distribution? What are they doing differently from Humana that might cause the discrepancy in guidance?
10.
What’s important to understand about Humana’s relationships with third-party brokers, or what the company has referred to as ‘third-party marketing organisations’? Is this a big piece of its membership acquisition strategy and could you explain how different distribution channels work?
11.
How much of the enrolment guidance cut could be due to Humana being conservative on Medicare Advantage pricing or market competition vs underwhelming enrolment growth execution?
12.
Do you think some insurtech start-ups such as Bright Health, Oscar Health and Oak Street are meaningfully capturing market share from Humana? How competitive can these companies be on benefits, given their lesser size and scale? Do they really pose a material threat to Humana’s membership base, or is this a problem only in select markets?
13.
Could Humana add any lower-cost benefits to its health plans to help it win back Medicare Advantage share while still protecting the bottom line? Additionally, what are some higher-cost benefit options?
14.
How do Humana’s benefit offerings compare to those of other major managed care names such as United, Anthem and Centene? Are any managed care organisations with superior packages capturing membership at others’ expense?
15.
What does the turnaround strategy in Medicare Advantage look like for Humana? What’s important to understand about balancing pricing and margin considerations when trying to grow membership and win back market share?
16.
Do you think Humana may have overestimated its brand recognition and reputation in certain markets? What can the company do in underperforming regions to increase visibility and build back brand equity?
17.
Humana has noted that engagement with clinical programmes has been lower than desired. What can the company do to increase membership engagement and how important is this to profitability and retention in health plan membership bases, particularly in Medicare Advantage?
18.
How does profitability increase with Medicare Advantage members over time? Could you quantify the margin uptick as engagement increases and population health management capabilities mature?
19.
How are you assessing Humana’s growth runway and strategy in its ancillary primary care healthcare services businesses, such as Conviva and CenterWell?
20.
Is there a risk that Humana’s investment in some of its ancillary assessments is dragging on its legacy insurance revenue driver? How can the company optimise capital deployment across growth interests?
21.
Could any of Humana’s ancillary assets be spun off or divested to free up capital that could be better utilised elsewhere?
22.
Could you discuss Humana’s acquisition of Kindred at Home and the financial opportunity in the home healthcare market?
23.
The plurality of Kindred’s payment arrangements are currently fee-for-service. Humana has expressed interest in shifting towards more value-based models in home health. Could there be any marked hurdles around moving to value-based arrangements or taking on increased risk?
24.
How do you expect Humana’s acquisitive appetite to develop? Do you think the company could make another large acquisition in 2022? What might be some attractive adjacencies to expand into to complement its core offerings?
25.
What do you think are Humana’s 2-3 biggest risks in 2022, as well as any opportunities for margin expansion or revenue growth?
26.
Is anything else especially important to highlight about Humana?
27.
What’s your 12-18-month outlook for Humana, highlighting the most important factors to monitor over that time frame?
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