Payers' Optimism Tempered By Economic Realities

Humana
Q2 Profit: -23%
Analyst expectations: Lower
Forecast: Mixed

Humana completed the acquisition of SeniorBridge in July 2012. This is a chronic care provider that offers in-home care to seniors with chronic diseases. Humana officials expect SeniorBridge to help reduce hospital readmissions by 50%.

The insurer is making significant investments in clinical nurses to increase participation in its acute and chronic care programs for seniors. Humana Cares, a telephone-based chronic care management program, is used by more than 50% of its senior members with chronic conditions and has reduced hospital admissions by 33%

But Humana is struggling with higher-than-expected medical cost trends, which it attributes to the preventive care provisions of the Patient Protection and Affordable Care Act. During the first six months of 2012 wellness visits per 1,000 members increased by 200% while the rate of routine physicals increased by 22%.

Company officials acknowledge that they did not expect the immediate and extensive utilization increases associated with the PPACA provisions. The insurer is adjusting its 2013 cost structure to accommodate the increases.