Humana posts $274 million loss in the fourth quarter

Humana ended 2020 on a down note, posting a record net loss of $274 million in the fourth quarter, financial documents show.

An earnings call transcript from the insurance giant reveals that a sharp increase in COVID-19 admissions occurred across its markets during the last couple months of the year, though most of those expenses were balanced out by a decline in non-coronavirus care. 

The loss was a stark contrast to the $512 million profit Humana posted in Q4 2019. Despite the sizable net loss, however, the organization still managed a $3.1 billion profit for the year, a significant 25% increase from 2019. Its pre-tax income was $4.6 billion for the year, a 33% year-over-year increase.

WHAT'S THE IMPACT?

Humana, like many insurers, benefited from consumer reluctance to seek medical care, though in 2021 patients may seek to make up care they missed, swinging the pendulum in the other direction. In the earnings call, executives said the absence of certain groups of patients created challenges, especially when it came to Humana's Medicare offerings.

Medicare Advantage organizations, for example, are paid based on a beneficiary's expected cost, and, to calculate that cost, plans are tasked with documenting their health conditions to gauge their risk level. Humana had planned on seeing its members throughout the pandemic by utilizing telehealth for this documentation, but plummeting utilization threw a wrench into those plans. 

Medicare risk-adjustment revenue is projected to be down by as much as $700 million to $1 billion in 2021, or about 1.5% of its Medicare premium for the year.

The insurers' fourth-quarter revenues were up 17% from the year prior, clocking in at $19.1 billion, but this was slightly outpaced by the $19.4 billion in operating expenses during the quarter. That's a 21.8% year-over-year increase. Commercial membership was down 14% from the prior year, due in part to a ravaged economy.

Still, the news wasn't all bad for the insurer. Its Medicare and Medicaid segment saw enrollment growth for the overall year in its individual and group Medicare Advantage plans, and also saw improvement in its medical loss ratio.

THE LARGER TREND

This week Humana said it's teaming with in-home medical care provider DispatchHealth to provide its members with advanced home healthcare services. The services will initially be available in Denver and in Tacoma, Washington, with expansion to additional markets in Texas, Arizona and Nevada planned for later this year.

Last November, the Centers for Medicare and Medicaid Services announced a waiver program to allow qualified healthcare providers to offer acute, hospital-level care in the home. The Dispatch-Humana agreement is believed to be the country's first program to provide hospital-level care involving a national payer, according to Humana.

Twitter: @JELagasse
Email the writer: jeff.lagasse@himssmedia.com