Humana Inc. (NYSE:HUM) Q4 2022 Earnings Call Transcript

Susan Diamond: Sure, George. So the impact that we saw in the fourth quarter of 2022 was a result of an increase in the ASPC schedule. That was defined as for claims paid on or after September 28, 2022. And there was no ability for CMS to provide any budget neutrality offset in 2022. And so the lack of a neutrality offset is what caused the higher cost that we incurred in the fourth quarter that we had not previously anticipated. As you think about going forward in 2023, we will have that same higher ASPC schedule in effect. However, CMS did implement a change in the outpatient conversion factor, which reduces the cost for other services and drive something much closer to budget neutrality, which is why you haven’t seen ongoing run rate impact into 2023.

George Hill: Thank you.

Operator: One moment. And our next question will come from Ben Hendrix of RBC. Your line is open.

Ben Hendrix: Yes. Hi. Thank you very much. With regard to CenterWell, you’ve noticed focus on payer-agnostic platform, but you’ve also noted strong margin contribution from integration with your MA book. Can you remind us how you are prioritizing engagement with your MA plans versus payer-agnostic development as you plan de novo center development going forward? Thank you.

Bruce Broussard: Well, we actively pursue and engage other payers on this. We do believe that’s an important part of our growth strategy and in addition, continuing to provide value back to the MA industry overall. But it is highly dependent on the growth of the plan. So this year, you saw significant growth as a result of our MA €“ the insurance side doing quite well. And so I would say our engagement is very broad and very oriented to continuing to be payer-agnostic, but it’s highly dependent on the insurance plans ability to grow.

Ben Hendrix: Thank you.

Operator: No further questions. I would now like to turn the conference back to Bruce Broussard for closing remarks.

Bruce Broussard: Thank you, operator, and thanks for your continued support. And most importantly, thanks for our 65,000 teammates that allow us to really report these wonderful results. As Susan and I have reiterated, we are entering 2023 with €“ in a position of strength and look forward to continuing to provide you updates throughout the year on based on this strength. So thank you and everyone have a wonderful day.

Operator: I would now like to conclude today’s conference. Thank you for participating. You may now disconnect.