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Humana Selected to Participate in Illinois Medicare-Medicaid Alignment Initiative Demonstration, Serving Individuals Dually Eligible for Both Programs

Humana to administer health coverage for Medicare and Medicaid populations in Chicago area

LOUISVILLE, Ky.--(BUSINESS WIRE)--Nov. 12, 2012-- Humana Inc. (NYSE: HUM) announced today that the Illinois Department of Healthcare and Family Services has chosen the company to participate in Illinois’ demonstration project aimed at integrating health care for people who qualify for both Medicare and Medicaid (individuals often referred to as “dual eligibles”) as part of the Illinois Medicare-Medicaid Alignment Initiative (MMAI).

Under the new project, Humana will serve Illinois residents in the Greater Chicago area, consisting of Cook, Lake, Kane, DuPage, Will, and Kankakee counties. Approximately 118,000 dual-eligible residents reside in these counties. Humana is one of six plans selected to serve residents in the six-county region.

The MMAI is part of a Centers for Medicare and Medicaid Services (CMS) demonstration program, focused on integrating health care delivery and payment for dual eligibles. As one of the plans selected to serve residents in the Chicago area, Humana expects to provide the full spectrum of Medicare and Medicaid covered services to dual eligible residents through Humana’s best-in-class integrated care-delivery system.

“Humana is honored to partner with the State of Illinois in its Medicare-Medicaid Alignment Initiative,” said Alan Wheatley, President, Medicare at Humana. Wheatley also leads the company’s Medicaid operations. “Humana has developed a strong reputation for managing complex care for its members, particularly for Medicare beneficiaries who have the greatest health care needs.”

“Dual eligibles often have multiple chronic conditions which require high quality, integrated care. Utilizing Humana’s fully integrated care-delivery model, we expect to improve health outcomes for these members,” Wheatley said.

Humana is one of the largest Medicare companies in Illinois, with more than 200,000 state residents currently enrolled in Humana Medicare plans. Nationally, Humana has more than 5.3 million Medicare members, with more than 25 years of experience in Medicare. Humana also has approximately 600,000 Medicaid members, primarily in Puerto Rico and Florida.

Humana has formed critical relationships across Illinois, including partnerships with many key health care provider organizations, to develop comprehensive health centers focused on low-income seniors in medically underserved areas and on complex care management of dual-eligible populations.

The Illinois MMAI implementation is anticipated to begin in the second quarter of 2013, subject to CMS approval. Humana’s participation in the Illinois MMAI demonstration is not expected to have a material impact on the company’s financial earnings guidance for the year ending December 31, 2013.

Cautionary Statement

This news release includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. When used in investor presentations, press releases, Securities and Exchange Commission (SEC) filings, and in oral statements made by or with the approval of one of Humana’s executive officers, the words or phrases like “expects,” “anticipates,” “intends,” “likely will result,” “estimates,” “projects” or variations of such words and similar expressions are intended to identify such forward-looking statements. These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and assumptions, including, among other things, information set forth in the “Risk Factors” section of the company’s SEC filings, a summary of which includes but is not limited to the following:

  • If Humana does not design and price its products properly and competitively, if the premiums Humana charges are insufficient to cover the cost of health care services delivered to its members, if the company is unable to implement clinical initiatives to provide a better health care experience for its members, lower costs and appropriately document the risk profile of its members, or if its estimates of benefit expenses are inadequate, Humana’s profitability could be materially adversely affected. Humana estimates the costs of its benefit expense payments, and designs and prices its products accordingly, using actuarial methods and assumptions based upon, among other relevant factors, claim payment patterns, medical cost inflation, and historical developments such as claim inventory levels and claim receipt patterns. These estimates, however, involve extensive judgment, and have considerable inherent variability because they are extremely sensitive to changes in payment patterns and medical cost trends.
  • If Humana fails to effectively implement its operational and strategic initiatives, including its Medicare initiatives, the company’s business may be materially adversely affected, which is of particular importance given the concentration of the company’s revenues in the Medicare business.
  • If Humana fails to properly maintain the integrity of its data, to strategically implement new information systems, to protect Humana’s proprietary rights to its systems, or to defend against cyber-security attacks, the company’s business may be materially adversely affected.
  • Humana’s business may be materially adversely impacted by CMS’s adoption of a new coding set for diagnoses.
  • Humana is involved in various legal actions and governmental and internal investigations, including without limitation, an ongoing internal investigation and litigation and government requests for information related to certain aspects of its Florida subsidiary operations, any of which, if resolved unfavorably to the company, could result in substantial monetary damages. Increased litigation and negative publicity could increase the company’s cost of doing business.
  • As a government contractor, Humana is exposed to risks that may materially adversely affect its business or its willingness or ability to participate in government health care programs.
  • Recently enacted health insurance reform, including The Patient Protection and Affordable Care Act and The Health Care and Education Reconciliation Act of 2010, could have a material adverse effect on Humana’s results of operations, including restricting revenue, enrollment and premium growth in certain products and market segments, restricting the company’s ability to expand into new markets, increasing the company's medical and operating costs by, among other things, requiring a minimum benefit ratio on insured products (and particularly how the ratio may apply to Medicare plans, including aggregation, credibility thresholds, and its possible application to prescription drug plans), lowering the company’s Medicare payment rates and increasing the company’s expenses associated with a non-deductible federal premium tax and other assessments; financial position, including the company's ability to maintain the value of its goodwill; and cash flows. In addition, if the new non-deductible federal premium tax and other assessments, including a three-year commercial reinsurance fee, were imposed as enacted, and if Humana is unable to adjust its business model to address these new taxes and assessments, such as through the reduction of the company’s operating costs, there can be no assurance that the non-deductible federal premium tax and other assessments would not have a material adverse effect on the company’s results of operations, financial position, and cash flows.
  • Humana’s business activities are subject to substantial government regulation. New laws or regulations, or changes in existing laws or regulations or their manner of application could increase the company’s cost of doing business and may adversely affect the company’s business, profitability and cash flows.
  • Any failure to manage operating costs could hamper Humana’s profitability.
  • Any failure by Humana to manage acquisitions and other significant transactions successfully may have a material adverse effect on its results of operations, financial position, and cash flows.
  • If Humana fails to develop and maintain satisfactory relationships with the providers of care to its members, the company’s business may be adversely affected.
  • Humana’s pharmacy business is highly competitive and subjects it to regulations in addition to those the company faces with its core health benefits businesses.
  • Changes in the prescription drug industry pricing benchmarks may adversely affect Humana’s financial performance.
  • If Humana does not continue to earn and retain purchase discounts and volume rebates from pharmaceutical manufacturers at current levels, Humana’s gross margins may decline.
  • Humana’s ability to obtain funds from its subsidiaries is restricted by state insurance regulations.
  • Downgrades in Humana’s debt ratings, should they occur, may adversely affect its business, results of operations, and financial condition.
  • Changes in economic conditions could adversely affect Humana’s business and results of operations.
  • The securities and credit markets may experience volatility and disruption, which may adversely affect Humana’s business.
  • Given the current economic climate, Humana’s stock and the stock of other companies in the insurance industry may be increasingly subject to stock price and trading volume volatility.

In making forward-looking statements, Humana is not undertaking to address or update them in future filings or communications regarding its business or results. In light of these risks, uncertainties, and assumptions, the forward-looking events discussed herein may or may not occur. There also may be other risks that the company is unable to predict at this time. Any of these risks and uncertainties may cause actual results to differ materially from the results discussed in the forward-looking statements.

Humana advises investors to read the following documents as filed by the company with the SEC for further discussion both of the risks it faces and its historical performance:

  • Form 10-K for the year ended December 31, 2011;
  • Form 10-Q for the quarters ended March 31, 2012, June 30, 2012 and September 30, 2012;
  • Form 8-Ks filed during 2012.

About Humana

Humana Inc., headquartered in Louisville, Ky., is a leading health-care company that offers a wide range of insurance products and health and wellness services that incorporate an integrated approach to lifelong well-being. By leveraging the strengths of its core businesses, Humana believes it can better explore opportunities for existing and emerging adjacencies in health care that can further enhance wellness opportunities for the millions of people across the nation with whom the company has relationships.

More information regarding Humana is available to investors via the Investor Relations page of the company’s web site at www.humana.com, including copies of:

  • Annual reports to stockholders
  • Securities and Exchange Commission filings
  • Most recent investor conference presentations
  • Quarterly earnings news releases
  • Replays of most recent earnings release conference calls
  • Calendar of events (including upcoming earnings conference call dates and times, as well as planned interaction with research analysts and institutional investors)
  • Corporate Governance information

Source: Humana Inc.

Humana Corporate Communications
Jeff Blunt, 513-826-7094
jblunt@humana.com
or
Humana Investor Relations
Regina Nethery, 502-580-3644
rnethery@humana.com