Humana 2015 Annual Report Download - page 64

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56
claims reserve development primarily was due to a relatively small number of higher severity claims in the
2015 period associated with prior periods.
Operating costs
• The Group segment operating cost ratio of 24.0% for 2015 decreased 250 basis points from 26.5% for 2014,
reflecting a decline in our group ASO commercial medical membership which carries a higher operating cost
ratio than our fully-insured commercial medical membership, as well as operating cost efficiencies associated
with our fully-insured business. Operating cost efficiencies were the result of both sustainable cost reduction
initiatives and discretionary reductions. These declines were partially offset by the impact of an increase in
the non-deductible health insurance industry fee. The non-deductible health insurance industry fee increased
the operating cost ratio by approximately 140 basis points in 2015 as compared to 100 basis points in 2014.
Healthcare Services Segment
Change
2015 2014 Dollars Percentage
(in millions)
Revenues:
Services:
Provider services $ 515 $ 1,147 $ (632) (55.1)%
Home based services 140 107 33 30.8 %
Pharmacy solutions 30 99 (69) (69.7)%
Total services revenues 685 1,353 (668) (49.4)%
Intersegment revenues:
Pharmacy solutions 20,551 16,905 3,646 21.6 %
Provider services 1,291 1,149 142 12.4 %
Home based services 875 585 290 49.6 %
Clinical programs 203 208 (5) (2.4)%
Total intersegment revenues 22,920 18,847 4,073 21.6 %
Total services and intersegment revenues $ 23,605 $ 20,200 $ 3,405 16.9 %
Income before income taxes $ 981 $ 738 $ 243 32.9 %
Operating cost ratio 95.2% 95.6% (0.4)%
Pretax results
• Healthcare Services segment pretax income of $981 million for 2015 increased $243 million, or 32.9%, from
2014 primarily due to higher earnings from our pharmacy solutions and home based services businesses as
they serve our growing Medicare membership.
Script Volume
• Humana Pharmacy Solutions® script volumes for the Retail and Group segment membership increased to
approximately 398 million in 2015, up 21% versus scripts of approximately 329 million in 2014. The increase
primarily reflects growth associated with higher average medical membership for 2015 than in 2014.
Services revenue
• Services revenue decreased $668 million, or 49.4%, from 2014 to $685 million for 2015 primarily due to the
completion of the sale of Concentra on June 1, 2015.