Humana 2012 Annual Report Download - page 72
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products in 2011. Fully-insured group Medicare Advantage members represented 10.4% of total
Employer Group segment medical membership at December 31, 2011 compared to 9.1% at December 31,
2010. The Employer Group segment’s pretax income for 2011 included the beneficial effect of $114
million in favorable prior-period medical claims reserve development versus $73 million in 2010. This
favorable prior-period medical claims reserve development decreased the Employer Group segment
benefit ratio by approximately 130 basis points in 2011 versus approximately 80 basis points in 2010.
Operating costs
• The Employer Group segment operating cost ratio of 17.8% for 2011 increased 30 basis points from
17.5% for 2010 primarily reflecting the impact of lower premiums revenue due to the minimum benefit
ratio regulatory requirements which became effective in 2011.
Health and Well-Being Services Segment
Change
2011 2010 Dollars Percentage
(in millions)
Revenues:
Services:
Provider services ...................................... $ 880 $ 21 $ 859 nm
Integrated wellness services ............................. 12 13 (1) (7.7)%
Pharmacy solutions .................................... 11 0 11 100.0%
Total services revenues ............................. 903 34 869 nm
Intersegment revenues:
Pharmacy solutions .................................... 9,886 8,410 1,476 17.6%
Provider services ...................................... 185 170 15 8.8%
Integrated wellness services ............................. 175 167 8 4.8%
Home care services .................................... 84 39 45 115.4%
Total intersegment revenues ......................... 10,330 8,786 1,544 17.6%
Total services and intersegment revenues ............... $11,233 $8,820 $2,413 27.4%
Income before income taxes $ 353 $ 219 $ 134 61.2%
Operating cost ratio ........................................ 96.1% 97.2% (1.1)%
nm – not meaningful
Pretax results
• Health and Well-Being Services segment pretax income increased $134 million, or 61.2%, from 2010
to $353 million in 2011 primarily due to growth in our pharmacy solutions business together with the
addition of the Concentra business, acquired on December 21, 2010.
Services revenue
• Provider services revenue increased $859 million from 2010 to $880 million in 2011 primarily due to
the acquisition of Concentra on December 21, 2010.
Intersegment revenues
• Intersegment revenues increased $1.5 billion, or 17.6%, from 2010 to $10.3 billion for 2011 primarily
due to growth in our pharmacy solutions business as it serves our growing membership, particularly
Medicare stand-alone PDP.
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