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Humana Sees COVID-19 Reducing Hospice Patient Counts

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What You Need to Know

  • The hospice admissions drop was under 5%.
  • Some of the decline was due to a drop in post-acute care facility volumes.
  • Medicare Advantage membership increased to about 5 million, from 4.6 million a year earlier.

The COVID-19 pandemic killed enough terminally ill people in the fourth quarter of 2021, and in all of 2021, that it had a small but noticeable effect on hospice admissions volumes, according to Humana executives.

The executives mentioned that grim effect of the pandemic Wednesday on a conference call the company held to go over earnings for the fourth quarter of 2021 with securities analysts.

The Louisville, Kentucky-based health insurer became actively involved in providing hospice services in August, when it acquired complete control of Kindred at Home, the largest U.S. home health and hospice provider, from joint venture partners.

Bruce Broussard, Humana’s CEO, noted on the analyst call that the company is working to sell a majority stake in the hospice business to another owner or owners.

Susan Diamond, Humana’s chief financial officer, said the integration of the Kindred at Homes operations is on track, despite the impact of the pandemic.

Home health care services admissions were up in the “low single digits,” or somewhere under 5%, between the fourth quarter of 2020 and the fourth quarter of 2021 and between all of 2020 and all of 2021, Diamond said.

In the fourth quarter of 2021, “hospice experienced a low single-digit decline as compared to the fourth quarter of 2020,” and, for all of 2021, “hospice admissions were down low single single digits, year-over-year,” she added.

“It is important to note that hospice volumes have been impacted by the higher mortality rates driven by COVID, as well as by lower post-acute facility volumes,” Diamond said.

The Earnings

Humana is reporting a $13 million net loss for the fourth quarter of 2021 on $21 billion in revenue, compared with a $274 million net loss on $19 billion in revenue for the fourth quarter of 2020.

Operating income, which excludes a variety of unusual gains and charges, increased to $61 million. For the year-earlier quarter, the company recorded a $346 million operating loss.

Humana ended 2021 providing or administering health coverage for 17 million people, up from 16.8 million people a year earlier.

Medicare Advantage plan enrollment increased to about 5 million, from 4.6 million.

Full insured commercial plan enrollment fell 9.8%, to 1 million.

Humana did not provide the number of people served by its Home Solutions unit, which includes the hospice business, but it said it generated $982 million in Home Solutions revenue in the latest quarter.

Chronic Conditions

Diamond said later on the call that Humana has been studying the effects of the increase in mortality rates for patients receiving hospice services for some time.

“The members who passed away as a result of COVID had higher-than-average risk scores, as well as high-than-average claims,” Diamond said.

She said the difference was due to the fact that people with multiple chronic conditions tend to be more susceptible than other patients to severe COVID complications.

Because the hospice members who died tended to have higher risk scores than other patients receiving hospice care, their deaths may lead to a slight decrease in Humana’s hospice member premium yield for 2022, Diamond said.

Medicare Advantage Competition

Early in January, Humana got investors’ attention by noting that it was holding firm on Medicare Advantage plan prices in response to what it saw a “highly competitive market.”

Steven Valiquette, an analyst with Barclays, asked Humana executives about the possibility that the company might not be “paying maximum commissions in certain channels,” especially to distributors that sell coverage through big call centers.

Broussard said Humana pays the maximum commissions allowed by Medicare Advantage rules to the producers who make the plan sales.

When an insurer sells Medicare plans through the call center channel, it also spends money on marketing support and on incentives for the distribution company, Broussard said.

“How the company distributes those and does that, we really don’t get involved in that,” he said.

Broussard said Humana has been “more reserved” about where it spends the distribution partner support budget, “just because we find there are more effective ways to do that.”

Distribution partner support changes seem to have more of an effect on enrollee retention than on new sales, he said.

Broussard declined to provide details on Wednesday’s call about how Humana’s commission and distribution partner support strategy might change in the future.

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Pictured: Bruce Broussard (Photo: Andrea Yanks/White House)