Humana’s Bruce Broussard touts upside to Medicare Advantage cut

The massive health insurance industry may be mustering its forces to fight proposed cuts to Medicare Advantage rates next year, but one CEO doesn’t seem too worried.

Humana will indeed benefit from lower rates and has in the past, President and CEO Bruce Broussard said Tuesday during the TD Cowen conference call in Boston. “We found over the years that there is pressure on rate notices, we do much better,” he said. “I think 2024 will be like that.”

Humana is the second largest Medicare Advantage carrier with 5.1 million members, or 18% of the marketWhile the leading insurer, UnitedHealthcare has 7.1 million policyholders and 29% market share.

Centers for Medicare and Medicaid Services Released A proposal last month to cut Medicare Advantage rates by 2.3% through 2024, but risk adjustments and other factors will result in varying effects among insurers. The insurance industry has characterized the draft policy as cutbacks, but CMS claims it will result in an average 1% increase in Medicare Advantage revenue for insurers. The agency plans to finalize Medicare Advantage rates by April 3. In addition, CMS announced last month recover $4.7 billion Over 10 years from Medicare Advantage carriers the agency concluded were overpaid.

Humana would see an overall rate reduction of 1% under the proposed rate notice, Gary Taylor, TD Cowen’s managing director for health care and senior equity research analyst, said on the conference call.

The risk-adjustment and indirect medical education components of CMS’ proposal are limited in duration and will not affect Medicare Advantage growth over time, Broussard said. Humana has high enrollment, favorable quality ratings and positive relationships with insurance brokers, which will give the company an advantage over competitors whether CMS cuts rates or withdraws from its offer, he said.

Health insurance trade associations AHIP and UnitedHealth Group are less optimistic about the proposed rate cuts and other recent policy announcements.

“We remain focused on strengthening and improving Medicare Advantage and urge the administration to roll back its flawed payment model modification for 2024,” Matt Isles, CEO of AHIP, said in a news release Tuesday. UnitedHealthcare also believes CMS should withdraw its rate notice, a spokesperson wrote in an email.

Broussard echoed the claims of the AHIP and others that vulnerable Medicare beneficiaries, including those eligible for Medicaid, could suffer from reduced benefits if rates were cut. Similarly, insurers and providers engaged in value-based payment arrangements and those operating in struggling markets could suffer, he said.

Humana reintroduced Medicare Advantage as its core line of business last month when it announced Prohibition on sale of commercial insurance policies, which Broussard described as a “distraction” from his government-sponsored business. He added that the company considered selling its commercial operations to another insurer, but opted to close it. “We decided that we really needed to get out of this as a result of not being competitive in the market and the opportunity cost of it for us as an organization,” he said.

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