Medicare Advantage Enrollments Drive Humana’s 1Q15 Revenue Growth


Apr. 21 2015, Published 3:49 p.m. ET

Medicare Advantage enrollments

According to data published by CMS (Centers for Medicare and Medicaid Services), Humana’s MA (Medicare Advantage) enrollments were 3.17 million in 1Q15, an increase of 13% from the 2.8 million MA enrollments in 1Q14.

The total MA beneficiaries in the US rose by 1.3 million, from 16.1 million in 1Q14 to 17.4 million in 1Q15. CMS projects that an additional 37 million people are eligible to be enrolled in MA plans, indicating the scope of the MA opportunity.

The above graph shows that Humana’s expected revenues in 1Q15 should reach $13.5 billion, a 15.6% rise from the $11.7 billion earned in 1Q14. The Medicare segment, being Humana’s (HUM) core business, is expected to benefit from higher MA enrollments.

Based on March 2015 figures published by CMS, Humana accounts for 18% of the total MA enrollments in the US, while peers such as Anthem (ANTM), UnitedHealth Group (UNH), and Aetna (AET) account for 3.3%, 19.1%, and 7.1%, respectively.

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Medicare Advantage ratings

Humana projects that by 2015, 60% of its MA plans will have four-star ratings or better, while 36% of the plans will have ratings ranging from 3.5 to four. These star ratings determine the bonus payments paid by CMS to the health insurance companies (XLV).

Higher star ratings in 1Q15 are expected to lead to higher revenues for the company. To learn more about Humana’s MA business strategy, please refer to Humana to benefit from growing Medicare eligible population.

Medicare prescription drug plans

According to data released by CMS, about 4.3 million people were enrolled in Humana’s standalone Medicare PDP (prescription drug plan) program by the end of March 2015. This is an increase of 16.2% from 3.7 million enrollees in Humana’s PDP program in March 2014—substantially more than the 2.7% increase in the overall PDP enrollments in the US. Enrollments grew faster than those in the overall market, which is expected to boost Humana’s revenues in 1Q15.


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