Humana 2014 Annual Report Download - page 50

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• Medicare stand-alone PDP membership increased 717,800 members, or 21.9%, from December 31, 2013 to
December 31, 2014 reflecting net membership additions, primarily for our Humana-Walmart plan offering,
for the 2014 plan year. January 1, 2015 Medicare stand-alone PDP membership, excluding the LI-NET
prescription drug plan program, increased approximately 230,500 members, or 5.8%, from December 31, 2014
reflecting net membership additions for the 2015 enrollment season.
• Our state-based Medicaid membership as of December 31, 2014 increased 213,000 members from
December 31, 2013, primarily due to the addition of members under our Florida Medicaid and Florida Long-
Term Support Services contracts.
• Individual commercial medical membership of 1,148,100 at December 31, 2014 increased 548,000 members,
or 91.3%, from December 31, 2013 primarily reflecting new sales, both on-exchange and off-exchange, of
plans compliant with the Health Care Reform Law. At December 31, 2014, individual commercial medical
membership in plans compliant with the Health Care Reform Law, both on-exchange and off-exchange, was
686,300 members. In addition, federal and state regulatory changes in December 2013 allowed certain
individuals to remain in their existing underwritten health plans that are not compliant with the Health Care
Reform Law, which has led to much higher than previously expected retention of our existing underwritten
health plans. We believe that this is occurring at other health insurance issuers as well and will result in an
overall deterioration of the risk pool in plans compliant with the Health Care Reform Law, as more previously
underwritten members remain with their current health plans rather than enter the exchanges. However, we
expect that the commercial risk adjustment, risk corridor, and reinsurance provisions of the Health Care Reform
Law will mitigate this deterioration to some extent.
Employer Group Segment
• As discussed in the detailed Employer Group segment results of operations discussion that follows, the
Employer Group segment pretax income declined 10.3% for the year ended December 31, 2014 primarily
reflecting higher utilization, mainly due to higher specialty prescription drug costs associated with a new
treatment for Hepatitis C, as well as the continuing impact of transitional policy changes which allowed
individuals to remain in plans not compliant with the Health Care Reform Law.
• Fully-insured group Medicare Advantage membership of 489,700 at December 31, 2014 increased 60,600
members, or 14.1%, from 429,100 at December 31, 2013 primarily due to the January 2014 addition of a new
large group account.
• Membership in HumanaVitality®, our wellness and loyalty rewards program, rose 36.2% to 3,856,800 at
December 31, 2014 from 2,831,000 at December 31, 2013 primarily due to the addition of group Medicare
members as well as individual Medicare Advantage and fully-insured individual commercial medical
membership growth.
Healthcare Services Segment
• As discussed in the detailed Healthcare Services segment results of operations discussion that follows, our
Healthcare Services segment pretax income improved 41.8% for the year ended December 31, 2014 primarily
due to a decline in the operating cost ratio in 2014 on a revenue base that reflects growth from our pharmacy
solutions and home based services businesses as they serve our growing Medicare membership.
• Programs to enhance the quality of care for members are key elements of our integrated care delivery model.
We have accelerated our process for identifying and reaching out to members in need of clinical intervention.
At December 31, 2014, we had approximately 420,700 members with complex chronic conditions in the
Humana Chronic Care Program, a 50.1% increase compared with approximately 280,200 members at
December 31, 2013, reflecting enhanced predictive modeling capabilities and focus on proactive clinical
outreach and member engagement, particularly for our Medicare Advantage membership. We believe these
initiatives lead to better health outcomes for our members and lower health care costs.