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Humana Saves $3.5B, Drives Down Hospital Use Through Value-Based Care in Medicare Advantage


Humana outlined its progress in its third annual Value-Based Care Report, which details growth and evolution in this area since 2016, both in the number of agreements and in its spread across more parts of the country.

Two-thirds of Humana’s Medicare Advantage (MA) 3.56 million members are enrolled in some type of value-based care, a shift that in 2018 saved $3.5 billion compared with what would have been spent under traditional fee-for-service (FFS) models.

Humana outlined its progress toward these payment models in its third annual Value-Based Care Report, which details growth and evolution in this area since 2016, both in the number of agreements and in its spread across more parts of the country. Best of all, Humana officials say, seniors’ health is improving thanks to innovations such as connecting members with healthy food sources, offering transportation, and tackling social isolation.

“What excites us most about these results is what they say about how we’re helping seniors improve their health, while also helping them better afford the care they receive,” Humana president and chief executive officer Bruce Broussard said in a statement. “Our members count on us every day to improve their overall healthcare experience, and we are doing that. At the same time, as these results demonstrate, we’re getting better at supporting doctors, nurses and other care providers in their work to help people live healthier lives. In 2020 and beyond, we will keep at this.”

Value-based care, which can take many forms, seeks to reinvent the way physicians are paid—physicians are rewarded for encouraging healthy behavior instead of waiting for patients to become ill and treating disease. The movement away from FFS toward value-based care was called for under the Affordable Care Act in 2010, and the specific shift in payment models was spelled out in the 2015 Medicare Access and CHIP Reauthorization Act (MACRA).

Some forms of value-based care give physicians bonuses for meeting quality care benchmarks along with meeting savings targets, while more advanced models call on practices to take on risk—sharing in both savings and losses, depending on how much is spent on patient care. Humana agreements employ elements of each—20% are “global value” contracts with providers that take on full responsibility for Parts A, B, and D under capitated payments.

The Value-Based Care Report features the following highlights:

  • MA enrollees in value-based programs in had 27% fewer hospital admissions compared with original Medicare, which translates to 131,200 fewer admissions.
  • Those in value-based care had 14.6% fewer emergency department (ED) visits compared with original Medicare, or 110,700 fewer visits.
  • MA enrollees served by primary care physicians (PCPs) in value-based agreements had 9% more breast cancer screenings; screening rates were also higher for colorectal cancer, osteoporosis, and glycemic control than those in MA in a non-value based setting.
  • More patients in MA value-based care have annual wellness visits (36.1%) compared with those MA enrollees not in value-based care (28%).
  • Physicians operating under value-based agreements with Humana from 2016 to 2018 had higher quality ratings at the end of 2018 than those who were not under value-based agreements. The average Healthcare Effectiveness Data and Information Set (HEDIS) Star score, based on 1.13 million MA members, was 4.44 at the end of 2018; the average HEDIS score for 454,000 members outside value-based care was 3.10.

Humana had 29 agreements in 6 states in 2017, and in 2019 had 101 agreements in 22 states. Notably, Humana has brought value-based care to states with some of the highest rates of diabetes and obesity, including Alabama and Arkansas, and the report highlighted efforts in those states.

William Shrank, MD, MPHS, Humana’s chief medical and corporate affairs officer, told The American Journal of Managed Care® in an interview that Humana’s results show how the idea of value-based care addresses “the many needs of our segmented healthcare system—by lining up incentives and goals of payers and providers with that of patients.”

“We’re excited that the evidence is suggesting that our experience at Humana is lining up with that vision,” he said. The alignment of payer and provider goals “is delivering the outcomes and the savings that we want to see.”

Food Insecurity Addressed

Humana’s commitment to addressing food insecurity is seen in examples throughout this year’s report. One example tells the story of one grandmother who lost 30 pounds after being able to access fruits and vegetables through a Humana partnership; the healthy food is shared with grandchildren, so the good eating habits are being passed to the next generation.

“One of the structural advantages of Medicare Advantage is being provided a capitated payment to manage the population we serve,” Shrank said. This allows dollars to be distributed to manage social determinants of health, sending resources “upstream” to prevent diabetes or obesity through better nutrition. It’s an area where Humana is particularly aggressive, he said, explaining that Humana screened over 1 million MA enrollees for food insecurity, social isolation, or transportation issues.

With 1 in 10 seniors reporting food insecurity and mounting evidence linking this condition to chronic disease, Shrank said, linking seniors to healthy food makes sense. “We are rapidly seeing what the business case is to meaningfully reduce the total cost of care,” he said.

The Importance of Good Data

This year’s report states that as value-based care matures, the importance of having good data becomes clear. But Shrank said not every provider is at the same point in the journey, and not everyone is ready to receive data in the same way.

“It’s critical for us to know that we can’t have a once have a one-size-fits-all data package,” he said. “It’s essential that we be nimble and flexible, that we get them data in the form that’s most useful to them.”

Shrank pointed to a company called Iora Health, which works with primary care providers that help vulnerable patients. That company preferred to get bulk data, and the experience with Humana is serving as a model for receiving data from CMS. Other providers want more actionable data, Shrank said.

Good Deal for Physicians

If value-base care is such a good way to deliver care, why isn’t everyone doing it?

Humana, the fifth-largest insurer in the country overall, is typically not the largest in any given market, although it has its biggest footprint in Medicare. (The company recently announced 800 layoffs, which some analysts attributed to the need to prepare for new federal tax.) Shrank explained that in areas where most of the market has not moved to value-based care, “it’s a little harder to build momentum on our own.”

But value-based care is proving to be a good financial deal for physicians. “We are building a more compelling story for providers to participate in value-based models,” Shrank said, noting that PCPs who take part in MA value-based models earn 167% of Medicare’s fee-for-service schedule.

Upcoming plans, according to the report, including Humana’s plans to implement new dialysis-at-home models, and a national, value-based care program for oncology.

The report derived original Medicare costs from CMS’ Limited Data Set Files from 2017. Since the end of 2018, Humana’s MA population continues to grow, and it stood at 4.07 million members as of September 30, 2019, according to the statement.

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