Humana’s Bruce Broussard touts upside to Medicare Advantage cuts

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

Humana would actually benefit from lower rates and has in the past, President and CEO Bruce Broussard said during a TD Cowen conference in Boston on Tuesday. “We found in years that there’s pressure on the rate notice, we do much better,” he said. “I feel that 2024 will be that way.”

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

The Centers for Medicare and Medicaid Services issued a proposal last month to cut Medicare Advantage rates by 2.3% in 2024, but risk adjustment and other factors will result in disparate effects among insurers. The insurance industry has characterized the draft policy as a cut, but CMS asserts it would 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 it would reclaim $4.7 billion over 10 years from Medicare Advantage carriers the agency concluded were overpaid.

Humana would likely see an overall rate decrease of 1% under the proposed rate notice, TD Cowen managing director for healthcare and senior equity research analyst Gary Taylor said at the conference.

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

The health insurance trade association AHIP and UnitedHealth Group are less sanguine about the proposed rate reductions and other recent policy announcements.

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

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

Humana recommitted to Medicare Advantage as its core line of business last month when it announced it would halt sales of commercial insurance policies, which Broussard described as a “distraction” from its government-sponsored business. The company mulled selling its commercial operations to another insurer but opted to simply shut it down, he said. “We decided we really needed to exit it as a result of not being competitive in the marketplace and also the opportunity cost it had for us as an organization,” he said.

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