Humana Earnings Call Insights: Transitioning to HMO Products and Base Rate Update for 2014

Humana (NYSE:HUM) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.

Transitioning to HMO Products

Matthew Borsch – Goldman Sachs: Could you just talk in a little more granularity about the transition process to HMO products and what have you set quantitative goals that you can share there and maybe just tell us how that’s going with some market examples?

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James E. Murray – EVP and COO: Well, this is Jim Murray. Yes, we’ve set targets. I think that the targets that we had shared with a lot of you in the November Investor Day here in Humana detailed a lot of those, I don’t know have those in front of me, but if you reference those materials you can see those. Philosophically what we’re attempting to try to do on a market-by-market basis have a conversation with our members about the additional benefits and lower premiums that they can enjoy with the HMO products. As you know, the HMO products are more like the integrated care delivery model that Bruce detailed in his remarks and that’s where we can create a lot of economic benefits for the members that we serve and also the satisfaction measures and experience for the members is enhanced with that model. The conversations at our market point selling representatives have with the individual members goes through a lot of that discussion with them.

James H. Bloem – SVP, CFO and Treasurer: Matt, I’d like to add to that. I think you know we are (indiscernible) that process was building capacity and building the capacity is around bringing the providers to the risk-based contracting as we’ve talked about we’ve had great progress in that. Then the second aspect is I was alluding to we are also focusing in certain markets I think when everyone was here in November we talked about five markets maybe increasing that to seven markets, but our intention to be very, very strong in those five to seven market and the ability to build the integrated deliveries.

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