Humana is the second largest Medicare Advantage insurer in the country. But during the company’s annual investor day on Monday, Humana was the program’s No. 1 defender.
Over the course of the four-hour event, Humana laid out a vociferous defense of the privatized Medicare plans, which are popular among seniors but face rising calls for reform amid evidence major insurers are gaming the program to pad their bottom line.
MA is misunderstood, Humana’s executives said. Its much-maligned payment structure incentivizes insurers to better coordinate care, leading to better outcomes. It saves seniors and taxpayers money, they said.
MA, in which the government contracts private payers to manage the care of Medicare seniors, has grown to cover more than half of all members in the federal insurance scheme. Historically, it’s enjoyed broad bipartisan support.
But the outlook on the privatized Medicare alternative has soured over the past few years, amid growing attention to bad behavior in MA as Republicans in Washington look to curb waste, fraud and abuse in federal programs.
Yet MA is essentially untouchable because of its support among reliable senior voters, according to Humana executives.
And concerns about controversial payer practices meant to prevent cherry-picking of healthier members, catch diagnoses earlier and control costs are overblown, Humana CEO Jim Rechtin argued — though, he allowed that there are ways they could be improved.
“Risk adjustment and home assessments and prior authorizations have become dirty words. And they should not be dirty words,” Rechtin said. “These are great clinical tools. And we’re going to defend them all day long … But we need to do it responsibly.”
Shielding the status quo — mostly
Humana, which covers 6 million members in MA, has a significant financial incentive to protect the program from major changes. The privatized Medicare plans accounted for $24.1 billion of its $27.8 billion in total premiums last year.
But the insurer has struggled to maintain profits amid headwinds in the program, including higher medical costs and unfavorable regulatory updates that have tamped down on reimbursement.
And stocks in major MA payers have been on the decline amid a slew of recent research and media reports drawing attention to insurers’ business practices that critics say excessively delay or deny care for members and improperly inflate payments from the government by billions of dollars each year.
For example, the CMS will pay MA insurers $84 billion more this year than it would have if those members had been in traditional Medicare, according to influential congressional advisory group MedPAC. Many of these overpayments will be driven by upcoding, in which MA payers game diagnosis codes to exaggerate the health needs of their members — nabbing higher payments from the government along the way.
Home assessments, wherein MA payers send a nurse or other clinician to visit a patient in their home, are one problematic area. Such visits generate billions of inflated revenue for MA payers by allowing them to capture more diagnoses, according to a Wall Street Journal investigation of Medicare Advantage practices.
Insurers say the at-home checks help them treat seniors in a more convenient and comfortable setting, and identify any additional needs that might go unnoticed at a doctor’s visit.
“It’s been talked about quite a bit that these annual wellness visits may not be a good thing. That’s not true. Our annual wellness visits, the at-home visits, are loved by our seniors,” said George Renaudin, Humana’s insurance president.
But earlier this month, the WSJ reported that Humana supports new limits on payments from diagnoses recorded by nurse practitioners during home visits that aren’t supported by other patient records.
“What we’re not going to be investing dollars in is chasing diagnosis codes that don’t drive the system to a better place,” Rechtin said.
Similarly, though prior authorization is necessary to ensure providers give only the most up-to-date and relevant clinical care, “we do know that the prior authorization process does create friction,” Renaudin said.
Renaudin said Humana was “working hard” to reduce that friction by removing codes that don’t require Humana’s greenlight and automating prior authorization determinations.
Despite a full-court press from insurers to prevent meaningful reform, regulators and lawmakers in Washington have taken notice of concerns about MA.
GOP leadership in the Senate considered weaving MA reform into Republicans’ massive reconciliation bill, according to reports. Though, senators more recently walked back those comments — and, preliminary text released by the Senate Finance Committee on Monday doesn’t propose any changes to Medicare.
Senators likely ran up against a political reality acknowledged at Humana’s investor day.
“We live in this world that is kind of the classic unstoppable force coming up against the immovable object,” Rechtin said. “The unstoppable force is U.S. fiscal pressures … and the immovable object are seniors who vote.”
“Seniors have a voice in this country. And they like Medicare Advantage,” the CEO added.
Renaudin cited a survey finding 9 in 10 senior voters with MA consider a candidate’s support for the program important when voting. And, more than half of U.S. congressional districts have over 50% of their seniors in MA, according to the executive.
But the threat to MA’s comfortable status quo is not only from the legislative branch, after top healthcare regulators in the Trump administration said they were interested in cracking down on upcoding in MA.
The CMS announced this spring plans to increase the number of MA plan payment audits and expedite its backlog of reviews.
Renaudin declined to comment specifically on the retroactive audits on Monday, citing litigation that Humana has filed against the process. But Humana already proactively deletes codes that it determines are unsupported by clinical documentation, the insurance president said.
As for the CMS’ more recent push, “the challenge is going to be there from the new audit process,” Renaudin said. “However, it’s really hard to extrapolate what the impact of that is going to be when the full methodology, exactly how they’re going to try to meet those timelines, isn’t all that well known at this point.”
Planning for the ‘worst-case scenario’
Humana’s investor day took place in Louisville, Kentucky, where the company is headquartered, instead of New York City, where such conferences are usually held. Insurers are increasingly battening down the hatches on public-facing events following the brazen killing of Brian Thompson, the CEO of UnitedHealthcare, in Manhattan late last year.
During the day, Humana updated investors on its push to improve margins by 2028 — including by improving its MA star ratings, quality metrics that are inextricably linked to reimbursement in the program.
Humana saw its average star rating plummet for 2025, which will lead to the payer losing $1 billion to $3 billion in 2026 as a result, according to industry data and analysts.
Though the insurer sued to reverse the changes late last year, a federal court has yet to rule on the case. In April, the company lost a separate administrative appeal to the CMS.
During the investor conference, Rechtin said Humana is planning for the future assuming it will lose that lawsuit.
“We have no new information,” Rechtin said. “We need to plan for worst-case scenario.”
Despite recent improvements to its stars metrics, Humana expects it won’t achieve the total points required for a four-star rating until the 2028 bonus year.
“[Humana’s] operating assumption of a lower Stars mix going forward strikes us as prudent,” J.P. Morgan analyst Lisa Gill wrote in a note on the payer’s investor day.
Management signaled that Humana’s earnings could shrink in 2026 because of the stars headwinds. However, Humana doesn’t expect to roll back benefits in its plans in order to retain existing members.
Despite MA’s shaky status, Humana is still pursuing growth in Medicaid and its CenterWell health services division, executives said. Medicaid’s profits should grow as the business matures in the coming years, given Humana’s relatively recent expansion into the safety-net program, executives said.
And Humana plans to buy more primary care practices to beef up CenterWell’s primary care organization — even after acquiring over 100 clinics in the past two years, leadership said. Currently, CenterWell has more than 325 primary care centers.
But “it is not lost on us that the core of our business is Medicare Advantage. When Medicare Advantage doesn’t work, the rest of our business struggles. And so we need Medicare Advantage to work,” Rechtin said.
