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Analysis

Humana Cuts $3.5B in Care Costs Through Medicare Advantage

By Jack O'Brien  
   November 21, 2019

The Louisville-based insurer's annual value-based care report found Medicare Advantage members are going to the hospital less often.

Humana Medicare Advantage (MA) members receiving care from physicians in value-based care arrangements saved $3.5 billion in costs, according to the insurer's annual value-based care report released Thursday morning.

The Louisville-based insurer found MA members had 27% lower hospital admission rates and 14.6% less emergency room visits compared to original Medicare members.

MA members also benefited from physicians in value-based care arrangements delivering improved quality care, along with 21% more preventive screenings than those in non-value-based care arrangements.

In Humana's Q3 earnings report released earlier this month, the insurer projected that MA membership will grow by 530,000 members, totaling a 17% increase for 2019.

Related: Humana Projects 17% Medicare Advantage Membership Growth for 2019

Sixty-seven percent of Humana's total individual MA plan members received care from physicians in value-based care arrangements in 2018.

The quality care provided by physicians under these arrangements is crucial for this patient population, as nearly 83% of MA members have at least two chronic care conditions.

"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," Bruce Broussard, CEO of Humana, said in a statement. 

Humana's report echoes the findings from an Avalere Health study in May that found the cost of care and rate of hospitalizations for dual eligible MA beneficiaries was considerably lower than dual eligibles under fee-for-service.

Dual eligible MA populations averaged healthcare costs of $11,159 compared to $13,398 for dual eligible FFS populations. Even among non-dual eligible populations, MA members only exceeded FFS non-dual eligibles by $820.

Related: Medicare Advantage Dual Eligibles Have Fewer ER Visits Than Those Under FFS

This shift from FFS has presented a challenge for health systems, as insurers expect health outcomes to improve or consider excluding providers that fail to comply. 

"MA plans will continue to encourage a higher quantity of value-based care reimbursement arrangements that align their provider partners to MA plans' quality, revenue, and cost incentives,"  Andrew Kadar, managing director and partner, healthcare services, at L.E.K. Consulting in San Francisco, told HealthLeaders in February.

Related: Shift to Medicare Advantage Ratchets Up Pressure on Hospitals

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.


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