Humana Ties Executive Pay to Health Outcomes

SAP Partners | <b>Humana</b>

The change comes ahead of a proposed merger with Aetna; executive pay tied to that transaction is not affected by this pay-for-performance initiative.

With the rest of the healthcare world tying payment to better health, the insurer Humana decided it was time to practice what it preached.

A portion of executive bonuses will now be tied to metrics that include whether patients with chronic conditions have better health outcomes and improved medication adherence, according to a proxy statement reported by Insider Louisville, where Humana is based.

The move comes as CMS just announced it has met its 2016 of tying at least 30% of all Medicare reimbursements to alternate payment models, which seek to reward value instead of volume as healthcare moves away from a fee-for-service model.

Previously, bonuses were based solely on whether Humana met earnings-per share targets. Now, 80% of the bonus will be based on this traditional measure, with 20% based on the health outcomes measures.

According to the report, Humana has created a 5-part “consumer health participation performance metric,” which calls for getting members to take steps to improve their health and lower the cost of care. The goal is to align managers’ compensation with a “vision of improving the health of communities we serve 20% by 2020.”

Indicators included the metric are:

· Getting patients to complete a health risk assessment, to find those at-risk of needing clinical care

· Connecting at-risk members with the Home Chronic Care Program

· Getting at-risk members to use the Humana Pharmacy to improve adherence

Health targets set for 2015, which were based on 2014 levels, were not high enough to merit bonuses, even though financial targets were met.

Compensation for senior executives related to the proposed merger with Aetna and patients who are new to Humana due to the Affordable Care Act are not part of the incentive program, according to the report.

The report comes as the Humana-Aetna merger winds it way through regulatory approvals at both state and federal levels, and it was disclosed that Humana CEO Bruce Broussard would be owed slightly more than $40 million, including $6 million in severance, if he departs due to the merger. Most of the value of his compensation is in stock.

Humana covers 14.2 million medical members in all 50 states, Washington D.C. and Puerto Rico, including 3.2 million Medicare Advantage members and 4.5 million Medicare prescription drug members.