What changed in this filing

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Item 1. Business

2023-02-16 compared with 2022-02-17 · 167 added, 167 removed, 298 unchanged (53% of the section changed)

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Business Segments

We manage our business with three reportable segments:

Retail, Group and Specialty, and Healthcare Services.

The reportable segments are based on a combination of the type of health plan customer and adjacent businesses centered on well-being solutions for our health plans and other customers, as described below.

During December 2022, we realigned our businesses into two distinct segments:

Insurance and CenterWell.

The Insurance segment includes the businesses that were previously included in the Retail and Group and Specialty segments, as well as the Pharmacy Benefit Manager, or PBM, business which was previously included in the Healthcare Services segment.

The CenterWell segment (formerly Healthcare Services) represents our payor-agnostic healthcare services offerings, including pharmacy dispensing services, provider services, and home services.

In addition to the new segment classifications being utilized to assess performance and allocate resources, we believe this simpler structure will create greater collaboration across the Insurance and CenterWell businesses and will accelerate work that is underway to centralize and integrate operations within the organization.

Prior period segment financial information has been recast to conform to the 2022 presentation.

For a recast of prior period segment financial information, refer to Note 18 to the audited Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Form 10-K.

Our two reportable segments, Insurance and CenterWell, are based on a combination of the type of health plan customer and adjacent businesses centered on well-being solutions for our health plans and other customers.

These segment groupings are consistent with information used by our Chief Executive Officer, the Chief Operating Decision Maker, to assess performance and allocate resources.

See Note 18 to the consolidated financial statements included in Item 8.

- Financial Statements and Supplementary Data for segment financial information.

For additional information on our business segments and segment financial information, refer to Note 18 to the audited Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Form 10-K.

Our medical and specialty insurance products allow members to access health care services primarily through our networks of health care providers with whom we have contracted.

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In general, POS plans allow members to choose, at the time medical services are needed, to seek care from a provider within the plan’s network or outside the network.

In addition, we offer services to our health plan members as well as to third parties that promote health and wellness, including pharmacy solutions, provider, and home solutions, as well as services and capabilities to advance population health.

In addition, we offer services to our health plan members as well as to third parties that promote health and wellness, including pharmacy, provider services, and home solutions, as well as services and capabilities to advance population health.

At the core of our strategy is our integrated care delivery model, which unites quality care, high member engagement, and sophisticated data analytics.

Three core elements of the model are to improve the consumer experience by simplifying the interaction with us, engaging members in clinical programs, and offering assistance to providers in transitioning from a fee-for-service to a value-based arrangement.

Our approach to primary, physician-directed care for our members aims to provide quality care that is consistent, integrated, cost-effective, and member-focused.

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The discussion that follows describes the products offered by each of our segments.

Our Retail Segment Products

This segment is comprised of products sold on a retail basis to individuals including medical and supplemental benefit plans described in the discussion that follows.

The following table presents our premiums and services revenue for the Retail segment by product for the year ended December 31, 2021:

Retail Segment

Our Insurance Segment Products

The Insurance segment is comprised of products serving Medicare and state-based contract beneficiaries sold on a retail basis to individuals including medical and supplemental benefit plans.

This segment also includes products consisting of employer group commercial fully-insured medical and specialty health insurance benefits marketed to individuals and employer groups, including dental, vision and life insurance benefits, as well as administrative services only, or ASO.

In addition, our Insurance segment includes our military services business as well as the operations of our PBM business.

These products are described in the discussion that follows.

The following table presents our premiums and services revenue for the Insurance segment by product for the year ended December 31, 2022:

Insurance Segment

Services Revenue Percent of

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Medicare stand-alone PDP 2,269 2.5 %

Total Retail Medicare 67,980 82.1 %

State-based Medicaid 5,109 6.2 %

Total Medicare 75,157 81.3 %

Medicare Supplement 743 0.8 %

Commercial fully-insured 3,733 4.0 %

Total fully-insured 4,476 4.8 %

Medicaid and other 6,376 6.9 %

Specialty 1,703 1.8 %

Total premiums 87,712 94.8 %

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Pursuant to Medicare Part C, Medicare Advantage organizations contract with CMS to offer Medicare Advantage plans to provide benefits at least comparable to those offered under Medicare FFS.

Our Medicare Advantage, or MA, plans are discussed more fully below.

Advantage, or MA, plans are discussed in the following sections.

Prescription drug benefits are provided under Part D.

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We contract with CMS under the Medicare Advantage program to provide a comprehensive array of health insurance benefits, including wellness programs, chronic care management, and care coordination, to Medicare eligible persons under HMO, PPO, Private Fee-For-Service, or PFFS, and Special Needs Plans, including Dual Eligible Special Needs, or D-SNP, plans in exchange for contractual payments received from CMS, usually a fixed payment per member per month.

With each of these products, the beneficiary receives benefits in excess of

Medicare FFS, typically including reduced cost sharing, enhanced prescription drug benefits, care coordination, data analysis techniques to help identify member needs, complex case management, tools to guide members in their health care decisions, care management programs, wellness and prevention programs and, in some instances, a reduced monthly Part B premium.

With each of these products, the beneficiary receives benefits in excess of Medicare FFS, typically including reduced cost sharing, enhanced prescription drug benefits, care coordination, data analysis techniques to help identify member needs, complex case management, tools to guide members in their health care decisions, care management programs, wellness and prevention programs and, in some instances, a reduced monthly Part B premium.

Most Medicare Advantage plans offer the prescription drug benefit under Part D as part of the basic plan, subject to cost sharing and other limitations.

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Individuals in these plans pay us a monthly premium to receive typical Medicare Advantage benefits along with the freedom to choose any health care provider that accepts individuals at rates equivalent to Medicare FFS payment rates.

CMS uses monthly rates per person for each county to determine the fixed monthly payments per member to pay to health benefit plans.

These rates are adjusted under CMS’s risk-adjustment model which uses health status indicators, or risk scores, to improve the accuracy of payment.

The risk-adjustment model, which CMS implemented pursuant to the Balanced Budget Act of 1997 (BBA) and the Benefits Improvement and Protection Act of 2000 (BIPA), generally pays more for members with predictably higher costs and uses principal hospital inpatient diagnoses as well as diagnosis data from ambulatory treatment settings (hospital outpatient department and physician visits) to establish the risk-adjustment payments.

Under the risk-adjustment methodology, all health benefit organizations must collect from providers and submit the necessary diagnosis code information to CMS within prescribed deadlines.

CMS is phasing-in the process of calculating risk scores using diagnoses data from the Risk Adjustment Processing System, or RAPS, to diagnoses data from the Encounter Data System, or EDS.

The RAPS process requires MA plans to apply a filter logic based on CMS guidelines and only submit diagnoses that satisfy those guidelines.

For submissions through EDS, CMS requires MA plans to submit all the encounter data and CMS will apply the risk adjustment filtering logic to determine the risk scores.

For 2021, 75% of the risk score was calculated from claims data submitted through EDS.

CMS will complete the phased-in transition from RAPS to EDS by using only EDS data to calculate risk scores in 2022.

For more information refer to Note 17 to the consolidated financial statements included in Item 8.

– Financial Statements and Supplementary Data and Item 1A.

- Risk Factors.

CMS uses a risk-adjustment model which adjusts premiums paid to Medicare Advantage, or MA, plans according to health status of covered members.

Under this model, rates paid to MA plans are based on actuarially determined bids, which include a process whereby our prospective payments are based on our estimated cost of providing standard Medicare-covered benefits to an enrollee with a "national average risk profile." That baseline payment amount is adjusted to account for certain demographic characteristics and health status of our enrolled members.

Under the risk-adjustment methodology, all MA plans must collect from providers and submit the necessary diagnosis code information to CMS within prescribed deadlines.

The CMS risk-adjustment model uses the diagnosis data, collected from providers, to calculate the health status-related risk-adjusted premium payment to MA plans, which CMS further adjusts for coding pattern differences between the health plans and the government fee-for-service (FFS) program.

We generally rely on providers, including certain providers in our network who are our employees, to code their claim submissions with appropriate diagnoses, which we send to CMS as the basis for our health status-adjusted payment received from CMS under the actuarial risk-adjustment model.

We also rely on these providers to document appropriately all medical data, including the diagnosis data submitted with claims.

In addition, we conduct medical record reviews as part of our data and payment accuracy compliance efforts, to more accurately reflect diagnosis conditions under the risk adjustment model.

For additional information, refer to Note 17 to the audited Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" and Part I, Item 1A, "Risk Factors" of this Form 10-K.

At December 31, 2022, we provided health insurance coverage under CMS contracts to approximately 4,565,600 individual Medicare Advantage members, including approximately 771,900 members in Florida.

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Our individual Medicare Advantage products covered under Medicare Advantage contracts with CMS are renewed generally for a calendar year term unless CMS notifies us of its decision not to renew by May 1 of the calendar year in which the contract would end, or we notify CMS of our decision not to renew by the first Monday in June of the calendar year in which the contract would end.

All material contracts between Humana and CMS

relating to our Medicare Advantage products have been renewed for 2022, and all of our product offerings filed with CMS for 2022 have been approved.

All material contracts between Humana and CMS relating to our Medicare Advantage products have been renewed for 2023, and all of our product offerings filed with CMS for 2023 have been approved.

Individual Medicare Stand-Alone Prescription Drug Products

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Our revenues from CMS and the beneficiary are determined from our PDP bids submitted annually to CMS.

These revenues also reflect the health status of the beneficiary and risk sharing provisions as more fully described in Note 2 to the consolidated financial statements included in Item 8.

These revenues also reflect the health status of the beneficiary and risk sharing provisions as more fully described in Note 2 to the audited Consolidated Financial Statements included in Item 8.

– Financial Statements and Supplementary Data, titled “Medicare Part D.” Our stand-alone PDP contracts with CMS are renewed generally for a calendar year term unless CMS notifies us of its decision not to renew by May 1 of the calendar year in which the contract would end, or we notify CMS of our decision not to renew by the first Monday in June of the calendar year in which the contract would end.

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Medicare Supplement

We also offer Medicare supplement products that helps pay the medical expenses that Medicare FFS does not cover, such as copayments, coinsurance and deductibles.

We also offer Medicare supplement products that help pay the medical expenses that Medicare FFS does not cover, such as copayments, coinsurance and deductibles.

State-based Medicaid Contracts

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Through Medicaid Managed Long-Term Support Services (MLTSS) programs, states offer programs to deliver support services to people who receive home and community or institution-based services for long-term care.

We have contracts in multiple states to serve Medicaid-eligible members, including Florida, Kentucky, Ohio, South Carolina and Wisconsin.

We have contracts in multiple states to serve Medicaid-eligible members, including Florida, Kentucky, Louisiana, Ohio, South Carolina and Wisconsin.

The Louisiana contract was effective January 1, 2023.

We also serve members who qualify for both Medicaid and Medicare, referred to as "dual eligible", through our Medicaid, Medicare Advantage, and stand-alone prescription drug plans.

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Some states are also moving to support the dual eligible population by linking D-SNP participation to enrollment in a plan that also participates in a state-based Medicaid program to coordinate and integrate both Medicare and Medicaid benefits.

Our Group and Specialty Segment Products

The Group and Specialty segment consists of employer group commercial fully-insured medical and specialty health insurance benefits marketed to individuals and employer groups, including dental, vision and life insurance benefits, as well as administrative services only, or ASO products as described in the discussion that follows.

The following table presents our premiums and services revenue for the Group and Specialty segment by product for the year ended December 31, 2021:

Group and Specialty

Services Revenue Percent of

Services Revenue

(dollars in millions)

External Revenue:

Fully-insured commercial group $ 4,271 5.2 %

Specialty 1,731 2.1 %

Total premiums 6,002 7.3 %

Services 816 1.0 %

Total premiums and services revenue $ 6,818 8.3 %

Intersegment services revenue $ 40 n/a

n/a – not applicable

Group Commercial Coverage

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On January 1, 2018, we began to deliver services under the T2017 East Region contract.

The T2017 East Region contract comprises 32 states and approximately six million TRICARE beneficiaries.

The T2017 East Region contract is a 5-year contract set to expire on December 31, 2022, unless extended, and is subject to renewals on January 1 of each year during its term at the government's option.

Our Healthcare Services Segment Products

The products offered by our Healthcare Services segment are key to our integrated care delivery model.

This segment includes pharmacy, provider, and home services, along with other services and capabilities to promote wellness and advance population health.

The Healthcare Services segment also includes the operations of Kindred at Home (of which we recently acquired the remaining 60% ownership), as well as the company's strategic partnership with Welsh, Carson, Anderson & Stowe (WCAS) to develop and operate senior-focused, payor-agnostic, primary care centers are also included in the Healthcare Services segment.

The T2017 East Region contract comprises 32 states and approximately 6 million TRICARE beneficiaries.

The T2017 East Region contract, which was originally set to expire on December 31, 2022, was subsequently extended by the DoD and is currently scheduled to expire on December 31, 2023, unless further extended.

In December 2022, we were awarded the next generation of TRICARE Managed Care Support Contracts, or T-5, for the TRICARE East Region by the Defense Health Agency of the DoD.

The contract is expected to go into effect in 2024.

Until then the T2017 contract remains in place.

Under the terms of the award, our service area covers approximately 4.6 million beneficiaries in a region consisting of 24 states and Washington, D.C.

The length of the contract is one base year with eight annual option periods, which, if all options are exercised, would result in a total contract length of nine years.

Our CenterWell Segment Products

The products offered by our CenterWell segment are key to our integrated care delivery model.

This segment includes our pharmacy, provider services, and home solutions operations.

The CenterWell segment also includes our strategic partnerships with Welsh, Carson, Anderson & Stowe, or WCAS, to develop and operate senior-focused, payor-agnostic, primary care centers, as well as our minority ownership interest in hospice operations.

Services offered by this segment are designed to enhance the overall healthcare experience.

These services may lead to lower utilization associated with improved member health and/or lower drug costs.

Our intersegment revenue is described in Note 18 to the consolidated financial statements included in Item 8.

– Financial Statements and Supplementary Data.

The following table presents our services revenue for the Healthcare Services segment by line of business for the year ended December 31, 2021:

Healthcare Services

For information on our intersegment revenues, refer to Note 18 to the audited Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Form 10-K.

The following table presents our services revenue for the CenterWell segment by line of business for the year ended December 31, 2022:

Services Revenue Percent of

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(dollars in millions)

Intersegment revenue:

Intersegment revenues:

Home solutions $ 553 n/a

Pharmacy solutions 25,855 n/a

Pharmacy 9,841 n/a

Provider services 2,979 n/a

Total intersegment revenue $ 29,022

Total intersegment revenues $ 13,373

External services revenue:

Home solutions $ 2,333 2.5 %

Pharmacy solutions 637 0.8 %

Pharmacy 1,025 1.1 %

Provider services 568 0.6 %

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n/a – not applicable

Pharmacy solutions

Humana Pharmacy Solutions ® , or HPS, manages traditional prescription drug coverage for both individuals and employer groups in addition to providing a broad array of pharmacy solutions.

HPS also operates prescription mail order services for brand, generic, and specialty drugs and diabetic supplies through Humana Pharmacy, Inc.

Our pharmacy business includes the operations of CenterWell Pharmacy (our mail-order pharmacy business), CenterWell Specialty Pharmacy, and other retail pharmacies located within CenterWell Primary Care clinics for brand, generic, specialty drugs, over the counter medications and supplies, and hospice pharmacy drugs.

Provider Services

We operate full-service, multi-specialty medical centers in a number of states, including Georgia, Florida, Kansas, Louisiana, Missouri, Nevada, North Carolina, South Carolina, and Texas, staffed by primary care providers and medical specialists with a primary focus on the senior population under our Primary Care Organization, or PCO.

PCO operates these clinics primarily under the Conviva and CenterWell brands.

We operate full-service, value-based senior focused primary care centers in a number of states, including Georgia, Florida, Kansas, Louisiana, Missouri, Nevada, North Carolina, South Carolina, Texas, Arizona and

Kentucky staffed by primary care providers and medical specialists with a primary focus on the senior population under our Primary Care Organization, or PCO.

PCO operates these clinics primarily under the Conviva Care Centers and CenterWell Senior Primary Care brands.

Our primary care subsidiaries operate our medical center business through both employed physicians and care providers, and through third party management service organizations with whom we contract to arrange for and manage certain clinical services.

PCO currently operates 206 primary care clinics and employs or contracts with 1,001 primary care providers, serving approximately 352,800 patients, primarily under risk sharing arrangements with Humana Medicare Advantage health plans, third party Medicare Advantage health plans and CMS administered risk sharing arrangements for Original Medicare.

PCO currently operates 235 primary care clinics and employs approximately 670 primary care providers.

PCO serves approximately 247,900 patients, primarily under risk sharing arrangements with Humana Medicare Advantage health plans, third party Medicare Advantage health plans and CMS administered risk sharing arrangements for Medicare FFS.

PCO also operates a Medical Services Organization, or MSO, through Conviva that coordinates medical care for Medicare Advantage beneficiaries in Florida and Texas.

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Conviva’s MSO collaborates with physicians, medical groups and integrated delivery systems to successfully transition to value-based care by engaging, partnering and offering practical services and solutions.

In the first quarter of 2020, our Primary Care Organization entered into a strategic partnership with Welsh, Carson, Anderson & Stowe, or WCAS, to accelerate the expansion of our primary care model.

As of December 31, 2021, there were 31 primary care clinics operating under the partnership and we intend to open an additional 36 in future periods under the existing arrangement.

See Note 4 to the consolidated financial statements included in Item 8.

- Financial Statements and Supplementary Data.

In 2020, our Primary Care Organization entered into a strategic partnership with Welsh, Carson, Anderson & Stowe, or WCAS, to accelerate the expansion of our primary care model.

In May 2022, we established a second strategic partnership with WCAS to develop additional centers between 2023 and 2025.

As of December 31, 2022, there were 50 primary care clinics operating under the partnership and we intend to open approximately 100 additional primary care clinics in future periods under the existing arrangements.

For additional information, refer to Note 4 to the audited Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Form 10-K.

Home Solutions

Via in-home care, telephonic health counseling/coaching, and remote monitoring, we are actively involved in the care management of our customers with the greatest needs.

Now included in our Home solutions business is Kindred at Home, or KAH, which we fully acquired on August 17, 2021.

KAH is the nation’s largest home health and hospice provider and has locations in 40 states, providing extensive geographic coverage with approximately 65% overlap with our individual Medicare Advantage membership.

The KAH acquisition reflects our continued commitment to investing in home-based clinical solutions.

When combined with KAH, our Home solutions geographic scale and clinical breadth provides the opportunity to offer care beyond our members.

Fully integrating KAH's home health operations into our Home solutions business will allow us to accelerate clinical innovation and roll out a value-based operating model at scale, more closely aligning incentives to focus on improving patient outcomes and reducing the total cost of care.

CenterWell Home Health

We are actively involved in the care management of our customers with the greatest needs via in-home care.

On August 17, 2021, we fully acquired Kindred at Home, or KAH, the nation’s largest home health and hospice provider with locations in 40 states, providing extensive geographic coverage with approximately 65% overlap with our individual Medicare Advantage membership.

Our home solutions geographic scale and clinical breadth provides the opportunity to offer care beyond our health plan members.

We have fully-integrated the home health operations, now branded CenterWell Home Health, allowing us to accelerate clinical innovation and the development and roll out of a value-based operating model at scale, more closely aligning incentives to focus on improving patient outcomes and reducing the total cost of care.

This is critical to deploying a value-based, advanced home health model at scale that makes it easier for patients and providers to benefit from our full continuum of home-based capabilities, leveraging the best channel to deliver the right care needed at the right time.

Hospice care is an important offering in the full continuum of care we intend to offer patients.

However, we have been successful in delivering the desired patient experience and outcomes through partnership models, including through participation in the CMS hospice Value-Based Insurance Design, or VBID, model.

As such, we continue to explore various alternatives for the long-term ownership structure of our Hospice business as part of our strategic investment.

There is no assurance about the timing and certainty of any such transaction.

Also included in our Home solutions business are the operations of Humana At Home, Inc., or Humana At Home ® .

As chronic-care managers for seniors, we provide innovative and holistic care coordination services for individuals living with multiple chronic conditions, individuals with disabilities, fragile and aging-in-place members and their care givers.

The clinical support provided by Humana At Home is designed to improve health outcomes and result in a higher number of days members can spend at their homes instead of in an acute care facility.

Our care management programs include member enrollment in D-SNP plans, which are a large and growing part of our care

management activities at Humana.

Through these programs, care managers collaborate with physicians and other healthcare professionals to help patients manage their healthcare needs while addressing their physical, behavioral, cognitive, social and financial needs.

We believe these initiatives lead to better health outcomes for our members and lower health care costs.

We are committed to the integrated physical and mental health of our members.

Accordingly, we take a holistic approach to healthcare, offering care management and wellness programs.

These programs use our capabilities that enable us to create a more complete view of an individual’s health, designed to connect, coordinate and simplify health care while reducing costs.

These capabilities include our health care analytics engine, which reviews billions of clinical data points on millions of patients each day to provide members, providers, and payers real-time clinical insights to identify evidence-based gaps-in-care, drug safety alerts and other critical health concerns to improve outcomes.

Additionally, our technology connects Humana and disparate electronic health record systems to enable the exchange of essential health information in real-time to provide physicians and care teams with a single, comprehensive patient view.

For a detailed discussion of the KAH acquisition, please refer to Note 3 to the consolidated financial statements included in Item 8.

– Financial Statements and Supplementary Data.

The following table summarizes total medical membership in our Retail and Group and Specialty Segments at December 31, 2021, by market and product:

Retail Segment Group and Specialty Segment

(in thousands)

Onehome serves as the convener for the value-based model meeting the needs of health plans by serving their members through a full-risk model for integrated home-based services.

Onehome manages a full range of post-acute patient needs, integrating and coordinating with physicians, hospitals and health plans for the provision of home health and infusion services as well as the distribution of durable medical equipment, or DME, at patients’ homes.

Onehome served 15% of our MA members with our value-based model as of December 31, 2022.

Hospice care is an important offering in the full continuum of care we offer patients, and we have been successful in delivering the desired patient experience and outcomes through partnership models, including through participation in the CMS hospice Value-Based Insurance Design, or VBID, model.

As such, on August 11, 2022, we completed the sale of a 60% i nterest in Humana’s Kindred at Home Hospice subsidiary, or KAH Hospice, to Clayton, Dubilier & Rice, or CD&R .

Upon closing, KAH Hospice was restructured into a new stand-alone company.

We continue to own a 40% minority ownership in hospice operations.

For additional information on the

sale of KAH Hospice, refer to Note 3 to the audited Consolidated Financial Statements included in Part II, Item 8, "Financial Statements and Supplementary Data" of this Form 10-K.

The following table summarizes total medical membership (in thousands) at December 31, 2022, by market and product:

Advantage Group

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Florida 771.9 7.3 158.3 17.3 835.0 105.2 32.2 — 1,927.2 11.30 %

Texas 354.3 4.2 244.0 27.2 2.1 99.5 38.2 — 769.5 4.5 %

Kentucky 112.8 75.2 169.5 9.3 172.9 73.7 145.8 — 759.2 4.40 %

Texas 366.5 4.3 239.5 26.8 2.0 78.8 40.8 — 758.7 4.40 %

California 103.7 1.4 401.3 17.7 4.0 — — — 528.1 3.10 %

Georgia 278.4 2.8 94.7 9.0 — 64.4 72.3 — 521.6 3.10 %

North Carolina 217.7 163.8 115.3 6.2 — — — — 503.0 2.90 %

California 103.9 1.0 363.5 19.4 — — — — 487.8 2.9 %

Illinois 154.8 27.6 139.7 7.4 17.5 20.8 38.4 — 406.2 2.4 %

Ohio 176.0 18.8 104.3 34.1 — 24.2 23.9 — 381.3 2.20 %

Missouri/Kansas 113.4 6.6 148.7 12.5 — 31.6 27.3 — 340.1 2.0 %

Tennessee 184.4 7.5 88.5 7.9 36.1 29.6 15.5 — 369.5 2.20 %

Illinois 157.4 30.4 126.8 6.8 17.1 16.3 2.5 — 357.3 2.10 %

Missouri/Kansas 109.9 7.4 150.9 10.9 — 23.0 22.7 — 324.8 1.90 %

Louisiana 211.3 14.5 50.5 4.1 — 22.9 18.1 — 321.4 1.90 %

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Virginia 140.7 3.2 100.6 6.5 — — — — 251.0 1.50 %

Michigan 104.8 27.1 94.6 5.4 — 0.9 1.8 — 234.6 1.4 %

New York 107.5 10.7 120.4 8.3 1.1 — — — 248.0 1.50 %

Michigan 113.9 27.9 87.6 4.6 — 0.7 1.7 — 236.4 1.40 %

Alabama 93.3 86.1 47.6 4.1 — — — — 231.1 1.40 %

South Carolina 154.7 0.4 49.1 6.3 17.5 — — — 228.0 1.30 %

Pennsylvania 87.7 4.5 116.1 5.4 — — — — 213.7 1.30 %

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Some physicians may have arrangements under which they can earn bonuses when certain target goals relating to the provision of quality patient care are met.

We have available care management programs related to complex chronic conditions such as congestive heart failure and coronary artery disease.

We have available care management programs related to complex chronic conditions

such as congestive heart failure and coronary artery disease.

We also have programs for prenatal and premature infant care, asthma related illness, end stage renal disease, diabetes, cancer, and certain other conditions.

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Under the typical capitation arrangement, we prepay these providers a monthly fixed-fee per member, known as a capitation (per capita) payment, to cover all or a defined portion of the benefits provided to the capitated member.

We believe these risk-based models represent a key element of our integrated care delivery model at the core of our strategy.

Our health plan subsidiaries may enter into these risk-based contracts with third party providers or our owned provider subsidiaries.

At December 31, 2021, approximately 1,654,000 members, or 9.7% of our medical membership, were covered under risk-based contracts, which provide all member benefits, including 1,427,100 individual Medicare Advantage members, or 32.4% of our total individual Medicare Advantage membership.

We believe these value-based arrangements represent a key element of our integrated care delivery model at the core of our strategy.

Our health plan subsidiaries may enter into these value-based arrangements with third party providers or our owned provider subsidiaries.

At December 31, 2022, approximately 1,850,500 members, or 10.8% of our medical membership, were covered under shared risk value-based arrangements, which provide all member benefits, including 1,563,700 individual Medicare Advantage members, or 34.2% of our total individual Medicare Advantage membership.

Physicians under capitation arrangements typically have stop loss coverage so that a physician’s financial risk for any single member is limited to a maximum amount on an annual basis.

We typically process all claims and measure the financial performance of our capitated providers and require guarantees in certain instances.

However, we delegated claim processing functions under capitation arrangements covering approximately 247,200 HMO members, including 241,700 individual Medicare Advantage members, or 16.9% of the 1,427,100 individual Medicare Advantage members covered under risk-based contracts at December 31, 2021, with the provider assuming substantially all the risk of coordinating the members’ health care benefits.

However, we delegated claim processing functions under capitation arrangements covering approximately 250,900 HMO members, including 246,100 individual Medicare Advantage members, or 15.7% of the 1,563,700 individual Medicare Advantage members covered under value-based contracts at December 31, 2022, with the provider assuming substantially all the risk of coordinating the members’ health care benefits.

Capitation expense under delegated arrangements for which we have a limited view of the underlying claims experience was approximately $3.0 billion, or 3.9% of total benefits expense, for the year ended December 31, 2022.

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A committee composed of a peer group of providers reviews the applications of providers being considered for credentialing and recredentialing.

We maintain accreditation for certain of our health plans and/or departments from NCQA, the Accreditation Association for Ambulatory Health Care (AAAHC), and/or Utilization Review Accreditation Commission (URAC).

We maintain accreditation for certain of our health plans and/or departments from NCQA, the Accreditation Association for Ambulatory Health Care (AAAHC), and/or URAC.

Certain commercial businesses, such as those impacted by a third-party labor agreement or those where a request is made by the employer, may require or prefer accredited health plans.

NCQA reviews our compliance based on standards for quality improvement, population health management, credentialing, utilization management, network management, and member experience.

We have achieved and maintained NCQA accreditation in many of our commercial, Medicare and Medicaid HMO/POS and PPO markets and our wellness program, Go365.

We have achieved and maintained NCQA accreditation in many of our commercial, Medicare and Medicaid markets for HMO, POS, and PPO products, and our wellness program, Go365.

Humana’s pharmacy organization is accredited by URAC.

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We use various methods to market our products, including television, radio, the Internet, telemarketing, and direct mailings.

At December 31, 2021, we employed approximately 1,300 sales representatives, as well as approximately 1,500 telemarketing representatives who assisted in the marketing of Medicare products, including Medicare Advantage

and PDP, in our Retail segment and specialty products in our Group and Specialty segment, including making appointments for sales representatives with prospective members.

At December 31, 2022, we employed approximately 1,400 sales representatives, as well as approximately 1,900 telemarketing representatives who assisted in the marketing of Medicare products, including Medicare Advantage and PDP, and specialty products in our Insurance segment, including making appointments for sales representatives with prospective members.

We have a marketing arrangement with Wal-Mart Stores, Inc., or Wal-Mart, for our individual Medicare stand-alone PDP offering.

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We also pay additional commissions based on aggregate volumes of sales involving multiple customers.

In our Group and Specialty segment, individuals may become members of our commercial HMOs and PPOs through their employers or other groups, which typically offer employees or members a selection of health insurance products, pay for all or part of the premiums, and make payroll deductions for any premiums payable by the employees.

In our Insurance segment, individuals may become members of our commercial HMOs and PPOs through their employers or other groups, which typically offer employees or members a selection of health insurance products, pay for all or part of the premiums, and make payroll deductions for any premiums payable by the employees.

We attempt to become an employer’s or group’s exclusive source of health insurance benefits by offering a variety of HMO, PPO, and specialty products that provide cost-effective quality health care coverage consistent with the needs and expectations of their employees or members.

We use licensed independent brokers, independent agents, digital insurance agencies, and employees to sell our group products.

Many of our larger employer group customers are represented by insurance brokers and consultants who assist these groups in the design and purchase of health care products.

Many of our larger employer group customers are

represented by insurance brokers and consultants who assist these groups in the design and purchase of health care products.

We pay brokers and agents using the same commission structure described above for our specialty products.

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We remain liable in the event these insurance companies are unable to pay their portion of the losses.

Centralized Management Services

We provide centralized management services to each of our health plans and to our business segments from our headquarters and service centers.

Centralized Intercompany Services

We provide centralized intercompany services to each of our health plans and to our business segments from our headquarters and service centers.

These services include management information systems, product development and administration, finance, human resources, accounting, law, public relations, marketing, insurance, purchasing, risk management, internal audit, actuarial, underwriting, claims processing, billing/enrollment, and customer service.

Through intercompany service agreements approved, if required, by state regulatory authorities, Humana Inc., our parent company, charges a management fee for reimbursement of certain centralized services provided to its subsidiaries.

Through intercompany service agreements approved, if required, by state regulatory authorities, Humana Inc., our parent company, charges a services fee for reimbursement of certain centralized services provided to its subsidiaries to the extent that Humana Inc.

is the service provider.

Human Capital Management

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We are committed to recruiting, developing, and retaining strong, diverse teams, actively promoting a culture of inclusion and diversity.

As of December 31, 2021, we had approximately 95,500 associates and approximately 1,400 additional medical professionals working under management agreements primarily between us and affiliated physician-owned associations.

We believe that our members' experience is linked to our associates' experience and that engaged, productive associates are the key to building a healthy company, creating a caring environment that enables our associates to go above and beyond for our members, driving innovation, and allowing for fulfilling experiences that incentivize them to stay with us over the long-term.

Each year, we measure our success and opportunities to advance through our annual, third-party administered Associate Experience Survey.

Results of the 2021 survey showed that 91% of associates are highly engaged.

To continue to build on these results, we provide the survey results to our entire associate population and encourage leaders to use the information to create open, honest action plans with their teams to further deepen our collective engagement.

As of December 31, 2022, we had approximately 67,100 associates.

We believe that our members’ experience is linked to our associates’ experience and that engaged, productive associates are the key to building a healthy company and a caring environment where our associates go above and beyond for our members, driving innovation, and offering fulfilling experiences that incentivizes them to stay with us over the long-term.

We provide opportunities for our associates to add to their personal well-being experiences that go beyond health to enhance their individual need for purpose, belonging and security.

We regularly measure our success and opportunities to advance engagement through methods like a third-party administered Associate Experience Survey and continuous listening campaigns.

Continuous listening involves our proactive solicitation, analysis and response to associate feedback.

Pulse surveys are sent to associates throughout the year to get feedback on how we’re doing, allowing us to assess our approach to work and act when needed.

We believe this helps to strengthen our culture and support associate engagement.

We also provide survey results to our entire associate population and encourage leaders to use the information to create open, honest action plans with their teams to build upon and further deepen our collective engagement.

Our culture is further strengthened by optimizing the well-being and effectiveness of our workforce.

Through alternative work styles, we help associates work more productively, communicate more easily and collaborate more freely.

Alternate work styles enable associates to work from a job-appropriate location of their choice for all or some portion of their work schedule and to create a work schedule that better fits the diverse demands of today’s work environment.

When managed effectively, alternative work styles can enhance a company’s employment brand, foster the development and effective delivery of innovative and diverse business solutions, right-size a company’s energy-consumption footprint, and increase associate engagement and well-being.

Similar to many companies, we experienced lower engagement and higher turnover in 2022 and 2021 than in prior years.

Our associate voluntary turnover rate, or VTR, for 2022 was 17.0%, up from 15.1% in 2021.

However, associate engagement and well-being rates remained higher than average, despite challenges posed by the Great Resignation, COVID-19 and workforce optimization efforts to fulfill our commitment to execute on our value creation initiative to allow for increased investment in our Medicare Advantage benefits and healthcare services capabilities.

Inclusion and Diversity

Our associates’ vast experiences and perceptions, their unique characteristics, backgrounds and beliefs, drive the groundbreaking, strategic thinking that gives our Company its competitive edge.

We are committed to having balanced diversity at all levels of the Company and have developed a pathway for top, diverse talent within our recruiting initiatives.

To achieve our recruiting and hiring goals we partner with local and national advocacy groups to provide information about open roles, assistance with resume preparation and application submission.

We have also incorporated balanced interview panels into our interview process, through which we strategically engage a broad spectrum of interviewers that bring greater diversity and perspective.

This proven best practice

strengthens the candidate experience and hiring of diverse talent, ensuring we get the right talent for any given role, and minimizes the potential for personal blind spots when evaluating candidates.

Our Office of Inclusion & Diversity, or I&D Office, efforts are led by our Chief Inclusion and Diversity Officer, who reports directly to the Chief Administrative Officer.

The I&D Office connects to business groups across the enterprise to cultivate a diverse and inclusive culture that is representative of the communities we serve.

By prioritizing I&D across our business, we enable associates to bring their whole selves to work, while also driving the innovation and insights needed to better serve our diverse members and communities.

We strive to accelerate our culture of inclusion to build deep relationships and create simple, personalized experiences for all of our stakeholders.

To help integrate inclusion and diversity into the fabric of the organization from the top down, the Executive Inclusion & Diversity Council is led by our President and CEO, with top priorities consisting of (i) leading and informing the strategy to drive the hiring, development, promotion and retention of our full diverse workforce;

(ii) creating and maintaining an inclusive culture;

(iii) reviewing our supply base and spend for diversification

opportunities;

and (iv) improving transparency and accountability to sustain outcomes.

We are committed to having balanced diversity at all levels and have developed a pathway for diverse talent within our recruiting initiatives.

We’ve also incorporated balanced interview panels into our interview process, through which we strategically engage a broad spectrum of interviewers that bring greater diversity and perspective.

This proven best practice strengthens the candidate experience and hiring of diverse talent, ensuring we get the right talent for any given role, and minimizes the potential for personal blind spots when evaluating candidates.

Our inclusion and diversity objectives also aim to build an awareness of biases and beliefs, identify differences and similarities of our multi-generational workforce and enable associates to leverage differences to drive innovation and create value.

We are committed to growing our associates’ inclusion skills and diversity knowledge and provide a variety of associate training programs and workshop opportunities in areas of unconscious bias, disability awareness, cultural competency, racial equity, and social justice, among others.

It is also our fundamental belief that every person has the right to a safe workplace.

This includes having freedom of gender identity and expression, which we have included within our non-discrimination and anti-harassment policies.

Our associates’ vast experiences and perceptions, unique characteristics, backgrounds and beliefs, drive the groundbreaking, strategic thinking that gives our Company its competitive edge in a diverse marketplace.

Our approach fosters innovative thinking and creativity, expands insights and generates better business outcomes.

Pay and Benefits Philosophy, Compensation and Financial Security

Our Company’s pay and benefits structure is designed to motivate and reward our associates at all levels of the organization for their skill development, demonstration of our values and performance.

While our programs vary by location and business, they may include:

We believe all of our associates have the right to receive a fair living wage and we are committed to maintaining a pay and benefits philosophy that is market-based and recognizes an associate’s contributions so that we can attract and retain an engaged, talented team.

Our Company’s pay and benefits structure is designed to motivate, incentivize and reward our associates - at all levels of the organization - for their skill development, demonstration of our values and performance.

While our programs vary by location, associate type and business, they generally include:

Competitive Base Pay

Medical, Dental and Vision Benefits

Paid time off, paid holidays and jury duty pay

Paid Time Off, Paid Holidays, Paid Volunteer Time Off and Jury Duty Pay

Associate Incentive Plan (Annual Bonus)

Supplemental Health Benefits

Paid Parental Leave

Adoption Assistance

Supplemental Pay (Including Overtime)

Long-term Care Insurance

Caregiver Time Off Program

Paid Parental Leave Program (6 weeks)

Recognition Pay and Service Awards

Wellness and Rewards Program

Employee Assistance Program

Paid Caregiver Time Off Program (2 weeks)

401(k) Retirement Savings Plan with Company Match Program

Health Plan Incentives

Associate Discount Programs and Services

Employee Assistance Program

Life Insurance

On-site Health and Fitness Centers

Helping Hands Program

Associate Discount Programs and Services

Short- and Long-Term Disability Insurance

On-site Health Screenings and Vaccinations

Transit Services

Helping Hands Program

Tuition Assistance Program Transit Services

Talent Development and Growth Opportunities

We champion the individual goals and development of our associates, and provide a number of programs to ensure that our associates have the resources and support they need to deliver on their passion.

We champion the individual goals and development of our associates, and provide a number of programs and resources to support their efforts.

We provide opportunities for our associates to earn professional certifications through continued education programs and to participate in instructor-led and online courses designed to strengthen soft and hard-skills and enhance leadership development.

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Additionally, we utilize development programs to enhance talent within our organizations through targeted internal initiatives, where we aim to upskill and reskill existing associates for opportunities in new career pathways.

Additional information related to our human capital can be found by referencing our Definitive Proxy Statement of the Annual Meeting of Stockholders scheduled to be held on April 21, 2022 appearing under the captions "Human Capital Management."

Additional information related to our human capital can be found by referencing our Definitive Proxy Statement of the Annual Meeting of Stockholders scheduled to be held on April 20, 2023 appearing under the caption "Human Capital Management."

Information About Our Executive Officers

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48 Chief Strategy and Corporate Development Officer 12/18 (2)

Carroll Cox 51 Chief Digital Health and Analytics Officer 08/18 (3)

Agwunobi, M.D.

57 Segment President, Home Solutions 02/22 (3)

Deshpande 58 Chief Information Officer 07/17 (4)

Diamond 49 Chief Financial Officer 07/19 (5)

Felter 39 Senior Vice President, Chief Accounting Officer and Controller 08/22 (6)

Fleming, PharmD 55 Segment President, Pharmacy Solutions & Chief Corporate Affairs Officer 03/17 (7)

Huval 56 Chief Administrative Officer 12/12 (8)

George Renaudin II 54 President, Medicare & Medicaid 02/23 (9)

Schick 60 Segment President, Group and Military Business 09/21 (10)

Shrank, M.D., MSHS 50 Chief Medical Officer 04/19 (9)

Ventura 46 Chief Legal Officer 02/19 (11)

Alan Wheatley 54 Segment President, Retail 03/17 (11)

Zipperle 59 Senior Vice President, Chief Accounting Officer and Controller 12/14 (12)

Broussard currently serves as Director, President and Chief Executive Officer (Principal Executive Officer), having held these positions since January 1, 2013.

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Agrawal served as President of Harris Healthcare Solutions from January 2013 to December 2015.

Cox currently serves as Chief Digital Health and Analytics Officer, having joined the Company in August 2018.

Prior to joining the Company, Ms.

Cox served as Chief Technology and Digital Officer at USAA, where she led the teams responsible for designing and building personalized and digitally-enabled end-to-end experiences for USAA members.

Prior to USAA, Heather was the CEO of Citi FinTech at Citigroup, Inc., helping the company adapt to a future dominated by mobile technology, and she headed Card Operations, reshaping customer and digital experience for Capital One.

Agwunobi currently serves as Segment President, Home Solutions, having joined Humana in February 2022.

Prior to joining the Company, Dr.

Agwunobi served as Interim President of the University of Connecticut (UConn) from May 2021 until February 2022, and the Chief Executive Officer and Executive Vice President for Health Affairs for UConn Health from 2014 to February 2022.

Deshpande currently serves as Chief Information Officer, having been elected to this position in July 2021, from his prior role as Chief Technology and Risk Officer.

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He previously served as the Business Chief Risk Officer and Head of Enterprise Services for the Financial Services Division, responsible for Business Risk, Data Science, Data Quality, Process Excellence and Project Management.

He also led marketing and analysis for the Home Loans, Auto Finance, and Credit Card businesses, with responsibilities for business strategy, credit, product and marketing.

He also led marketing and

analysis for the Home Loans, Auto Finance, and Credit Card businesses, with responsibilities for business strategy, credit, product and marketing.

Diamond currently serves as Chief Financial Officer, having been elected to this position in June 2021, from her prior role as Segment President, Home Business.

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Diamond also served for two and a half years as the Enterprise Vice President of Finance, where she was responsible for enterprise planning and forecasting, trend analytics and had responsibility for each of the Company’s line of business CFOs and controllers.

Felter currently serves as Senior Vice President, Chief Accounting Officer and Controller, having been elected to this position in August 2022.

Before joining the Company, Mr.

Felter served as Senior Director - Investment Finance for OneAmerica Financial Partners, Inc.

from May 2022 until June 2022.

Prior to OneAmerica, Mr.

Felter spent nearly 11 years as a Senior Manager at Ernst & Young LLP where he oversaw large audit engagements for public and private entities with a concentration in the health insurance sector.

Fleming currently serves as Segment President, Pharmacy Solutions and Chief Corporate Affairs Officer, having been elected to this position in July 2021, from his prior role as Segment President, Clinical and Pharmacy Solutions.

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Huval spent 10 years at Bank of America in multiple senior-level roles, including Human Resources executive and Chief Information Officer for Global Wealth & Investment Management, as well as Human Resources executive for both Global Treasury Services and Technology & Global Operations.

Renaudin currently services as President, Medicare & Medicaid, having been elected to this position in February 2023.

He joined the Company in April 2004 and since then has held various leadership roles of increasing responsibility, most recently holding the position of President, Medicare.

Schick currently serves as Segment President, Group and Military Business, having been elected to this position in September 2021.

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Schick spent 16 years in a range of senior-level leadership roles at United Healthcare in its Medicaid and Commercial businesses.

Shrank currently serves as Chief Medical Officer, having been elected to this position in July 2021, from his previous role as Chief Medical and Corporate Affairs Officer.

Before joining the Company in April 2019, Dr.

Shrank served as Chief Medical Officer, Insurance Services Division at the University of Pittsburgh Medical Center, from 2016-2019, where he oversaw approximately $9 billion in annual health care expenditures for approximately 3.5 million members in Medicare, Medicaid, behavioral health, Managed Long Term Social Supports and commercial lines of business.

He also developed and evaluated population health programs to further advance the medical center’s mission as an integrated delivery and financing system.

Prior to that, Dr.

Shrank served as Senior Vice President, Chief Scientific Officer, and Chief Medical Officer of Provider Innovation at CVS Health from 2013 to 2016.

Prior to joining CVS Health, Dr.

Shrank served as Director, Research and Rapid-Cycle Evaluation Group, for the Center for Medicare and Medicaid Innovation, part of CMS from 2011 to 2013, where he led the evaluation of all payment and health system delivery reform programs and developed the rapid-cycle strategy to promote continuous quality improvement.

Shrank began his career as a practicing physician with Brigham and Women’s Hospital in Boston and as an Assistant Professor at Harvard Medical School.

His research at Harvard focused on improving the quality of prescribing and the use of chronic medications.

He has published more than 200 papers on these topics.

Ventura currently serves as Chief Legal Officer.

He joined the Company in January 2009 and since then has held various positions of increasing responsibility in the Company's Law Department, including most

recently, Senior Vice President, Associate General Counsel & Corporate Secretary from July 2017 until February 2019.

Wheatley currently serves as Segment President, Retail, having held this position since March 2017.

During his long-tenured career with the Company, Mr.

Wheatley has served in a number of key leadership roles, including Vice President of Medicare Service Operations and President of the East Region, one of the Company’s key Medicare geographies.

Zipperle currently serves as Senior Vice President, Chief Accounting Officer and Controller, having held this position since December 2014.

Zipperle previously served as the Vice President - Finance from January 2013 until election to her current role, and as the Assistant Controller from January 1998 until January 2013.

He joined the Company in January 2009 and since then has held various positions of increasing responsibility in the Company's Law Department, including most recently, Senior Vice President, Associate General Counsel & Corporate Secretary from July 2017 until February 2019.

Executive officers are elected annually by our Board of Directors and serve until their successors are elected or until resignation or removal.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business