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LOUISVILLE - Humana Inc. (NYSE:HUM), a prominent player in the Healthcare Providers & Services industry with annual revenue exceeding $120 billion, announced Tuesday it will eliminate approximately one-third of prior authorizations for outpatient services by January 1, 2026, as part of an effort to reduce administrative burdens for physicians and improve patient care. According to InvestingPro analysis, the company appears undervalued at its current market capitalization of approximately $27 billion.
The health insurer plans to remove authorization requirements for diagnostic services including colonoscopies, transthoracic echocardiograms, and select CT scans and MRIs. The company also committed to providing decisions on at least 95% of complete electronic prior authorization requests within one business day by 2026, up from its current rate of more than 85% for outpatient procedures. This initiative comes as Humana maintains strong financial metrics, with InvestingPro data showing a healthy P/E ratio of 15.8 and a consistent dividend payment history spanning 15 years.
"Today’s healthcare system is too complex, frustrating, and difficult to navigate, and we must do better," said Jim Rechtin, President and CEO of Humana, in a press release statement.
Additionally, Humana will launch a "gold card" program in 2026 that waives prior authorization requirements for providers with proven records of submitting coverage requests that meet medical criteria and deliver high-quality care with consistent outcomes.
The company also pledged to increase transparency by publicly reporting prior authorization metrics in 2026, including requests approved, denied, approved after appeal, and average decision times.
These initiatives build upon commitments previously announced by health plans, including Humana, through AHIP and the Blue Cross Blue Shield Association. Humana stated it supports the bipartisan Improving Seniors’ Timely Access to Care Act, which aims to modernize the prior authorization process.
The company said it is working to enhance electronic health record integration and increase adoption of electronic prior authorization submissions to further reduce administrative burdens on healthcare providers. With an InvestingPro Financial Health score rated as "GOOD" and strong cash flow metrics, Humana appears well-positioned to implement these strategic initiatives. Discover more insights about Humana and access comprehensive analysis through InvestingPro’s detailed research reports, available for over 1,400 US stocks.
In other recent news, Humana faced a setback as a Texas federal court dismissed its lawsuit concerning Medicare Advantage star ratings. The U.S. District Court ruled that the lawsuit was premature since Humana had not exhausted all administrative appeals. This decision affects Humana’s Medicare Advantage plans, with a significant drop in members in plans rated four stars or higher anticipated for 2025. Despite this, Humana had already accounted for potential losses in its future financial projections. Analysts from UBS, Guggenheim, Morgan Stanley, Leerink Partners, and Raymond James have maintained their respective ratings on Humana, ranging from Neutral to Outperform. Guggenheim estimates a potential $2 billion to $3 billion profit headwind for Humana’s 2026 earnings due to the rating downgrade. Raymond James noted that the star ratings are reassessed annually, with potential improvements impacting Humana’s earnings per share. Humana is exploring options, including possibly refiling the lawsuit.
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