Humana exiting employer group insurance business

Photo: Raymond Gehman/Getty Images

Humana has said it will be exiting the Employer Group Commercial Medical Products business, which includes all fully insured, self-funded and Federal Employee Health Benefit medical plans, as well as associated wellness and rewards programs.

The insurer said it will be exiting the business in a "phased manner" over the next 18 to 24 months, and will shift more of its focus to government-funded programs and specialty businesses.

Following a strategic review, the company determined that the Employer Group Commercial Medical Products business was no longer positioned to "sustainably meet the needs of commercial members" over the long term, or support the company's long-term strategic plans.

"This decision enables Humana to focus resources on our greatest opportunities for growth and where we can deliver industry leading value for our members and customers," said Humana president and CEO Bruce Broussard.

WHAT'S THE IMPACT?

Financial results for Employer Group Commercial Medical Products will be adjusted for non-GAAP purposes going forward, said Humana, and are not expected to impact the company's full-year 2023 adjusted earnings per share guidance.

Based on the seasonality of the business' earnings, the company now expects first quarter 2023 earnings to represent about 33% of full-year 2023 adjusted EPS, after considering the non-GAAP treatment of the Employer Group Commercial Medical business. This compares to the approximately 35% estimate the company had previously disclosed, which did not take into account the non-GAAP treatment of those earnings.

The insurer said that, due to this seasonality dynamic, the non-GAAP treatment of Employer Group Commercial Medical results is also anticipated to increase the first quarter 2023 Insurance segment benefit ratio by around 30 basis points, with no impact expected on the full-year 2023 insurance segment benefit ratio.

THE LARGER TREND

Last summer, Humana announced it was simplifying its organizational structure and paring itself down into two main units, Insurance Services and CenterWell.

The restructuring follows on the heels of other organizational changes. In April 2022, Humana signed a definitive agreement with private investment firm Clayton, Dubilier & Rice to divest a majority interest in Humana's Kindred at Home subsidiary, KAH Hospice.

In June, the company said it was adding 14 states to its ongoing initiative to rebrand the home health division of Kindred at Home as CenterWell Home Health. KAH home health services have already begun transitioning to the CenterWell brand in a number of other states, with Phase 2 bringing the total up to 21 states overall.

ON THE RECORD

"Humana exiting the Employer Group Commercial Medical Products business speaks to a reduction of yet another carrier in the commercial space with significant business – leaving a number of employers and PEOs without a renewal in the coming year," said Caleb Parker, chief commercial officer at Angle Health. "And given that Humana offers level funding and self funding, employers will be looking for a new home for their benefits in the coming year. On a larger scale, this illustrates that the market is seeking modern platforms that push past the old guard. Members want digital-first, frictionless experiences that meet them where they are. They also want flexibility through custom packages, rather than off-the-shelf plans."
 

Twitter: @JELagasse
Email the writer: Jeff.Lagasse@himssmedia.com