HUMs 2022 MA Enrollment Update

Credit Suisse http://www.credit-suisse.com reports on January 6, 2022, that Humana (HUM) https://www.humana.com updated their 2022 MA membership Y/Y growth guidance to 150-200k (vs +325-375k prev).

The company attributes the change in outlook to higher terminations during the Annual Enrollment Period (AEP) and higher terminations for the remainder of 2022.

Credit Suisse published the note, Implications of HUM’s MA Enrollment Outlook Reduction for Our Coverage highlighting the implication of the update for their coverage, primarily Tech-enabled Primary Care providers, e-Brokers, and Tivity Health.

HUM updated their 2022 MA membership Y/Y growth guidance to 150-200k (vs +325-375k prev). The company attributes the change in outlook to higher terminations during AEP and higher terminations for the remainder of 2022.

Credit Suisse analysts caught up with some of the companies in their coverage and fielded several questions around the implication of the update on their coverage, primarily Tech-enabled PCP’s e-Brokers, and TVTY.

As highlighted before by AJ Rice in his note, HUM’s new MA sales have largely tracked expectations. HUM expects to have CMS data files by next week. That will show which plans the members HUM lost have joined.

At a conference today, HUM noted that geographical market dynamics drove some of the challenges but overall arching was that some of their competitors were investing aggressively in their marketing and distribution channels.

HUM called out some markets in LA and FL, and some other markets in the Southeast and Midwest. HUM also highlighted the increased shopping behavior driven by the distribution channels leveraging telephonic sales and aggregators.

While HUM is one of the leaders in MA, the analysts note that most of the companies in their coverage are payor-agnostic, and until we have clarity which MCOs gained the lives HUM lost, it is difficult to have full clarity on the impact of this update from Credit Suisse’s coverage perspective.

With respect to CANO, since HUM represents ~40% of its membership (higher exposure on revenues), the company emphasized that their model is generally payor agnostic and more often than not, members select CANO as a provider first and then pick an MA plan. By way of background, CANO Health generally has a benefits/medical coordinator at their medical centers, who orient members on the MA plan, and then connect them to the insurance agent, etc.

Additionally, MA members can switch providers and select CANO as their provider all year long (unlike MA plans). Further, around 50% of CANO members are Duals, and Credit Suisse understands that the majority of the switching was likely concentrated in the non-Duals MA population.

Among other tech-enabled PCPs, ONEM is exposed to HUM via their Iora Health business, which historically has had an exclusive relation with the insurer. However, by the end of 2020, the company had expanded into additional geographies, ended their exclusive relationship with Humana and entered at-risk arrangements with a variety of Medicare Advantage-focused health insurance plans, including large national and regional payers.

HUM’s comments seem to imply increased shopping behavior as more members leverage these e-broker platforms for their plan selections. While this would imply an increase in churn for e-brokers (and thus pressure on LTV), it also implies increased enrollment volume on e-broker platforms. Among e-brokers, based on the most recent disclosures, GOCO is most exposed to HUM (~33% of revenues). Followed by EHTH and SLQT (both at 18% revenues).

However, more concerning commentary from Credit Suisse’s perspective was HUM’s willingness to scale down their investments in these telephonic sales distribution channels. Given the quiet period, none of the e-Brokers are willing to comment.

UNH and Cl are the two MA plans where TVTR’s SilverSneakers business currently doesn’t have any relationship in Individual MA. Despite that, SilverSneakers currently has close to 18 min MA eligible lives, with HUM being the largest MA plan.

The shortfall of 175K members for HUM represents ~1% TVTY’s MA eligible lives (before any corresponding offsetting gains at other MA plans TVTY works with). TVTY also notes that SilverSneakers has a strong brand recognition among seniors and that there were no significant changes to HUM’s SilverSneakers offerings for 2022.

For information on the note Implications of HUM’s MA Enrollment Outlook Reduction for Our Coverage, ask questions, provide feedback or news, email Jailendra.singh@credit-suisse.com, or call 212-325-8121.

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