Humana Inc. (NYSE:HUM) seems to be putting more emphasis on its Medicare operations than its employer group operations these days, but it took the time today to mention the effects of the new federal minimum medical loss ratio (MLR) rules on the employer group business.
Humana, Louisville, Ky., is reporting $199 million in net income for the fourth quarter of 2011 on $9.1 billion in revenue, up from $107 million in net income on $8.3 billion in revenue for the fourth quarter of 2010.
The company notes that fourth-quarter net earnings were significantly higher than earnings for the comparable quarter in 2010. Back in the fourth quarter of 2010, Humana added $139 million to the benefit reserves backing a closed block of 35,000 long-term care insurance (LTCI) acquired along with KMG America back in 2007.
The addition to the LTCI reserves amounted to an average of about $4,000 per policy.
No new policies have been added to the block since 2005, Humana says.
Humana ended the quarter providing for administering coverage for about 11 million people, up from about 10 million a year earlier.
Enrollment in the company’s HumanaOne individual commercial health insurance program increased 16%, to 433,600.
Fully insured commercial group plan enrollment fell 6%, to 1.2 million.
“This decline primarily reflected continued dedication to pricing discipline in a highly competitive environment for large group business partially offset by small group business membership gains,” Humana says.
The percentage of Humana group plan enrollment coming from small groups increased to 56% at the end of 2010, up from 48% a year earlier.
The minimum MLR provisions in the Patient Protection and Affordable Care Act of 2010 (PPACA) now require carriers to spend at least 85% of large group revenue and 80% of individual and small group revenue on health care and quality improvement efforts. Companies that miss those thresholds are supposed to send customers rebates.