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Humana Trying to Help Brokers Cope With Social Distancing

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Humana Inc. has been recording strong call center sales since COVID-19-related social distancing started, but the freeze on face-to-face meetings has been hard on traditional brokers.

Brian Kane, the chief financial officer of the Louisville, Kentucky-based health insurer, and other company executives talked about the effects of the pandemic Wednesday, during a conference call the company help to go over its first-quarter results with securities analysts.

“We’ve had to encourage brokers to adopt digital chanels, telephonic, digital, any way we can get to potential members,” Kane said. “For some of our distribution channel, that’s a very different distribution mechanism than they typically use. But we’re very focused on making ure that all of our brokers have the digital capabilities to engage with our members telephonically and digitally.”

Resources

Although sales through brokers have been soft, sales through call centers have been strong, Kane said.

From January through mid-March, both sales and enrollee retention were strong, and commercial enrollment has been running in line with expectations, Kane said.

Humana is expecting to feel the effects of group health plan terminations at small companies, and furloughs and layoffs at large employers, but, at this point, group health plan enrollment has been holding steady, Kane said.

The company has received some COVID-19 claims, but not enough to affect earnings, and enrollees’ use of health care has fallen at least 30%, Kane said.

At this point, employers’ use of premium payment flexibility arrangements has been “reasonably modest,’ Kane said.

Earnings

Humana is reporting $473 million in net income for the first quarter on $19 billion in revenue, compared with $566 million in net income on $16 billion in revenue for the first quarter of 2019.

The Louisville, Kentucky-based company ended the year providing or administering health coverage for 16.6 million people, up from 16.5 million people a year earlier.

Enrollment

Here’s what happened to seven types of health plan enrollment:

  • Individual Medicare Advantage: 3.8 million (up from 3.4 million)
  • Group Medicare Advantage: 607,40 (up from 517,900)
  • Medicare Supplement: 314,000 (up from 267,300)
  • Fully Insured Employer Plans: 861,600 (down from 958,200)
  • Fully Insured Dental: Held steady at 2.7 million
  • Vision: Held steady at 2.1 million

Pandemic Response

Bruce Broussard, Humana’s chief executive officer, said during the conference call that nearly all of the company’s 46,000 employees are now working at home.

The company has taken many steps to support the community, including providing about 500,000 free meals, and by accelerating about $1 billion in payments to health care providers, he said.

He noted that the company has eased access to use of telehealth services.

Use of established telehealth services has doubled, and many brick-and-mortar health care providers are now using telehealth systems to deliver care, Broussard said.

Liquidity

Kane, Humana’s CFO, reported that the company is carrying more debt than usual because it wanted to increase the amount of cash and cash equivalents on hand.

The company issued $1.1 billion in senior notes in March and drew $1 billion from a one-year term loan bank commitment.

The company now has access to a total of about $4.4 billion in cash, Kane said.

If Use of Care Stays Low

Broussard says Humana will take steps to help providers and customers if COVID-19 results in a long-lasting reduction in claims, because of enrollees’ inability to get medical care.

“To the extent we continue to see reduced utilization for an extended time, we are committed to taking actions similar to those we’ve taken to date to address health and financial concerns,” Broussard said. “These actions could include, incremental benefits for members for employer groups, further clinical community support, and continued assistance for payers.”

The Future of Health Care

Broussard said the COVID-19 disruption could cause some health care providers to switch to new ways of getting paid, and that some older physicians may retire.

— Read Centene Braces for COVID-19 Impacton ThinkAdvisor.

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