LOUISVILLE, Ky.--(BUSINESS WIRE)--On Friday, February 20, 2009 after the stock market close, the Centers
for Medicare and Medicaid Services (CMS) announced preliminary 2010
Medicare Advantage payment rates. CMS has invited public comment on
these preliminary rates before releasing final rates on April 6, 2009.
Humana Inc. (NYSE: HUM) is closely analyzing all aspects of the CMS
announcement because the company finds certain assumptions behind the
preliminary 2010 rates to be unusual and inconsistent with decades of
experience and with past CMS practice. In addition, the rates as
announced would have a significant adverse impact on 2010 premiums and
benefits for Medicare Advantage members if these rates become final.
In particular, the company is carefully examining:
the assumed rate of change in medical cost trend,
the assumption about the impact of general economic conditions on
assumptions concerning payment methodology differences between
Original Medicare and Medicare Advantage, and
the assumption that payment cuts to physicians of approximately 20
percent are likely to occur.
Humana is joining with the entire health benefits industry in this
analysis and plans to be part of a formal industry comment on the CMS
The company is also reiterating today its 2009 earnings per share
guidance of $5.90 to $6.10.
This news release includes forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. When used in
investor presentations, press releases, Securities and Exchange
Commission (SEC) filings, and in oral statements made by or with the
approval of one of our executive officers, the words or phrases like
"expects," "anticipates," "intends," "likely will result," "estimates,"
"projects" or variations of such words and similar expressions are
intended to identify such forward-looking statements. These
forward-looking statements are not guarantees of future performance and
are subject to risks, uncertainties, and assumptions, including, among
other things, information set forth in the "Risk Factors" section of our
SEC filings, a summary of which includes but is not limited to the
If Humana does not design and price its products properly and
competitively, the premiums Humana charges are insufficient to cover
the cost of health care services delivered to its members, or if its
estimates of benefits payable or future policy benefits payable based
upon its estimates of future benefit claims are inadequate, Humana's
profitability could be materially adversely affected. Humana estimates
the costs of its benefit expense payments, and designs and prices its
products accordingly, using actuarial methods and assumptions based
upon, among other relevant factors, claim payment patterns, medical
cost inflation, and historical developments such as claim inventory
levels and claim receipt patterns. These estimates, however, involve
extensive judgment, and have considerable inherent variability that is
extremely sensitive to payment patterns and medical cost trends.
If Humana fails to effectively implement its operational and strategic
initiatives, including its Medicare initiatives, Humana's business
could be materially adversely affected.
If Humana fails to properly maintain the integrity of its data, to
strategically implement new information systems, or to protect
Humana's proprietary rights to its systems, the company's business
could be materially adversely affected.
Humana is involved in various legal actions, which, if resolved
unfavorably to Humana, could result in substantial monetary damages.
Increased litigation and negative publicity could increase Humana's
cost of doing business.
As a government contractor, Humana is exposed to additional risks
including reimbursement and payment changes that could adversely
affect its business or its willingness to participate in government
health care programs.
Humana's industry is currently subject to substantial government
regulation, which along with possible increased governmental
regulation or legislative reform, could increase the company's cost of
doing business and could adversely affect Humana's profitability.
Humana is also subject to potential changes in the political
environment that can affect public policy and can adversely affect the
markets for its products.
Any failure to manage administrative costs could hamper Humana's
Any failure by Humana to manage acquisitions and other significant
transactions successfully could harm the company's financial results,
business and prospects.
If Humana fails to develop and maintain satisfactory relationships
with the providers of care to its members, Humana's business could be
Humana's mail order pharmacy business subjects it to regulations in
addition to those the company faces with its core health benefits
Humana's ability to obtain funds from its subsidiaries is restricted
by state insurance regulations.
Downgrades in Humana's debt ratings, should they occur, may adversely
affect Humana's cost and availability of funds.
Extreme volatility and disruption in the securities and credit markets
may adversely affect Humana's business, results of operations, and
Changes in economic conditions could adversely affect Humana's
business and results of operations.
In making forward-looking statements, Humana is not undertaking to
address or update them in future filings or communications regarding its
business or results. In light of these risks, uncertainties, and
assumptions, the forward-looking events discussed herein might not
occur. There also may be other risks that we are unable to predict at
this time. Any of these risks and uncertainties may cause actual results
to differ materially from the results discussed in the forward-looking
Humana advises investors to read the following documents as filed by the
company with the SEC for further discussion both of the risks it faces
and its historical performance:
Form 10-K for the year ended December 31, 2008;
Form 8-Ks filed during 2009.
Humana Inc., headquartered in Louisville, Kentucky, is one of the
nation’s largest publicly traded health and supplemental benefits
companies, with approximately 10.6 million medical members. Humana is a
full-service benefits solutions company, offering a wide array of health
and supplemental benefit plans for employer groups, government programs
Over its 48-year history, Humana has consistently seized opportunities
to meet changing customer needs. Today, the company is a leader in
consumer engagement, providing guidance that leads to lower costs and a
better health plan experience throughout its diversified customer
More information regarding Humana is available to investors via the
Investor Relations page of the company’s web site at www.humana.com,
including copies of:
Annual reports to stockholders;
Securities and Exchange Commission filings;
Most recent investor conference presentations;
Quarterly earnings news releases;
Replays of most recent earnings release conference calls;
Calendar of events (including upcoming earnings conference call dates
and times, as well as planned interaction with research analysts and
Corporate Governance information.