Humana reaffirmed its guidance in the face of likely cuts in Medicare Advantage (MA) payment rates for 2025 despite saying the proposed decrease was higher than it expected.
The Centers for Medicare & Medicaid Services (CMS) last week issued its proposed advance notice, which sets payment rates in MA for 2025. Based on the proposal, benchmark payments would incur a 0.16% decrease next year.
In a filing with the Securities and Exchange Commission, Humana said the proposed notice would lead to a change in funding that's 160 basis points lower than what it had projected for a flat rate environment.
"This difference is primarily due to the proposed effective growth rate restatements, which the company did not anticipate in light of the higher medical cost trends experienced across the industry, as well as the negative impact of CMS’ proposed normalization factors," Humana wrote in the filing.
It's not uncommon for CMS to upwardly adjust rates in the final version of the annual notice, and Humana said it "will provide actuarial data with respect to its concerns" about increased utilization and other factors.
Humana and others will weigh in on the proposal during the comment window, and the final notice will publish by April 1. As the proposals are preliminary, the insurer did not adjust its guidance for 2025, which is between $6 and $10 in earnings per share.
While the benchmarks are set to decline, CMS said in its proposal that it expects payments to MA plans overall to increase by 3.7%.