About Humana Insurance Company

Medicare has made Humana a big-time player in the insurance game. One of the largest Medicare providers and a top health insurer, Humana provides Medicare Advantage plans and prescription drug coverage to more than 7.7 million members throughout the US. It also administers managed care plans for other government programs, including Medicaid plans in Florida and Puerto Rico and TRICARE (for military personnel) in 11 southern states. Additionally, Humana offers commercial health plans and specialty (life, dental, and vision) coverage; it also provides health management services and operates outpatient care clinics. All told, it covers more than 21 million members in the US.

Operations

In 2015 Humana realigned it business segments into Retail, Group, and Healthcare Services.

Some 60% of Humana's sales come from government program (primarily Medicare) premiums, which are sold through the Retail segment (which brings in about half of revenues). That segment also provides some commercial individual health plans (including HMOs and PPOs) and includes the company's specialty benefits unit, which provides dental, vision, life, and third-party administration service. New to the group are a collection of contracts with states to provide Medicaid, dual-eligible, and long-term support services benefits as well as its contracts with the Centers for Medicaid and Medicare Services (CMS).

The Group segment (10% of sales) sells commercial health plans (including HMOs and PPOs) to corporate accounts on a fully-insured basis or an ASO (administrative services only) basis. This segment also includes health and wellness business HumanaVitality.

Humana's Healthcare Services segment accounts for about 30% of sales and provides wellness programs that encourage its members to make healthy lifestyle choices. The division manages prescription drug coverage for its other segments through Humana Pharmacy Solutions, as well as mail-order pharmacy (RightSourceRx) services. The segment also included the Concentra subsidiary, but Humana sold Concentra in mid-2015.

Geographic Reach

Humana has expanded the geographic reach of its Medicare plans, and now has at least one Medicare product available in every state in the US, with its largest markets located in the southern and midwestern US (including Florida, Texas, and Kentucky). Florida alone accounted for more than 40% of its total medical centers and administrative offices.

In addition to its headquarters in Louisville, Kentucky, the company has locations for customer service, enrollment, and/or claims processing in Tampa, Florida; Cincinnati, Ohio; San Juan, Puerto Rico; San Antonio, Texas; and Green Bay, Wisconsin.

Sales and Marketing

Humana markets its products through television and radio ads, the internet, telemarketing, and direct mailings. It employs some 1,600 sales representatives and around 1,400 telemarketing representatives to sell its retail products; additionally, the company markets its individual Medicare products through an alliance with Wal-Mart. Humana uses licensed independent brokers, independent agents, and employees to sell its group products.

Health and supplemental coverage is offered to individuals, families, service personnel, and veterans.

In 2015, Humana made nearly three-fourths of its total premiums and service earnings from contracts with the federal government.

Financial Performance

Humana's aggressive and creative expansion strategies have led to positive financial growth. The firm has experienced climbing revenues each year over the past decade, including a 12% increase to some $54.3 billion in 2015. That growth came from increased membership levels (leading to higher premium revenues) in both the Retail and Group segments. The Healthcare Services segment's revenue gained 17% due to growth in the pharmacy solutions and home-based services operations. All of these gains reflect the company's growing Medicare membership.

Net income rose 11% to $1.3 billion, thanks to the higher revenue as well as a gain on the sale of Concentra. Cash flow from operations has been on the decline, though. It fell $750 million to $868 million as it used more cash toward liabilities.

Strategy

Humana climbed the ranks to become a top Medicare plan provider by aggressively pursuing organic and acquisitive growth within its government operations. It is ambitious in its retail marketing efforts to sign up Medicare recipients for its Medicare Advantage and Part D prescription plans. 

Additionally, the company works to maintain its competitive edge by forming partnerships with other health care-related companies. After experiencing sharp reductions in the number of Medicare prescription drug plan (PDP) members due to competition, the company has found renewed success by partnering with Wal-Mart to offer low-premium PDPs. In addition, Humana partners with Medicaid provider CareSource to provide services to dual-eligibility Medicare/Medicaid members.

While the company remains focused on Medicaid expansion, Humana is also diversifying its revenue stream to reduce its dependence on government operations, which leave the company vulnerable to challenges including reimbursement cuts and contract disputes. The company is focused on growing its commercial products by participating in new health insurance exchanges, introducing new products and benefit designs, growing its specialty products (dental, vision, and other supplemental coverage), adopting new technologies, and successfully integrating acquired businesses and contracts. 

Humana is also working to widen its wellness and care coordination offerings, which are increasingly popular with clients as a means of controlling health spending levels and improving the quality of care. Towards that end, Humana's HumanaVitality, a partnership with South African firm Discovery Holdings, provides wellness management services to Humana's commercial members (and will eventually serve Medicare patients as well). Humana is also expanding its chronic care and disease management programs.

The company sold subsidiary Concentra for $1.1 billion in 2015. Although it acquired the unit in 2010 to provide additional care benefits to its members, management ultimately decided that Concentra's focus on providing occupational injury care didn't fully align with its own strategy for growth.

In 2014 the company established or extended partnerships with Dignity Health, providing members access to that firm's facilities in Arizona; the Colorado-based Boulder Community Health, providing retail care for those purchasing Connect for Health Colorado insurance as well as commercial HMO plans; and Wisconsin's United Hospital System, for Medicare coverage. Humana also has agreements with Saint Luke's Health System, Banner Network Colorado, and MDX Hawai'i.

In 2017, a federal judge put the kibosh on a planned $34 billion acquisition of Humana by larger rival Aetna. The deal was blocked on antitrust grounds; Humana stands to receive a $1 billion breakup fee from Aetna.

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Humana Insurance Company

1100 Employers Blvd
Green Bay, WI 54344-0002
Phone: 1 (502) 580-1000
Fax: 1 (920) 337-5432

Stats

  • Employer Type: Public
  • Contract Analyst: Trudi Kryzanek
  • Pres: Michael McAllister
  • Chief Learning Officer Vice President Director Manager of Corporate Education: Brenda Roubal

Major Office Locations

  • Green Bay, WI