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Humana's Medicare Advantage value-based programs reduce healthcare costs by $3.5 billion, report shows

Humana's revenue is projected to increase on 17% rise in MA membership and premium increases, but return of HIF reduced workforce by 2%.

Susan Morse, Managing Editor

Medicare Advantage plans save the health system and members money when compared to original Medicare, Humana said in releasing its sixth annual value-based care report.

Humana Medicare Advantage members under the care of physicians in value-based agreements would have incurred an additional $3.5 billion in plan-covered medical expenses had they been under original

Medicare's fee-for-service model, the report said. MA members have 27% fewer hospital admissions and 14.6% fewer emergency room visits compared with original Medicare.

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Humana's Medicare Advantage membership continues to grow and is a big factor in the company's increased earnings in the third quarter, according to the earnings report released earlier this month.

Humana anticipates revenue growth percentages to once again be in the double-digits, primarily reflecting Medicare Advantage membership growth of 17% for 2019 and per member, per month premium increases, CFO Brian Kane said during the earnings call.

Humana touts 92% of its Medicare Advantage members are enrolled in 4-star and above plans for 2020.

Humana's Medicare Advantage beneficiaries affiliated with primary care physicians in value-based payment models represented 67% of Humana's total individual MA plan beneficiaries in 2018.


MA represents a growing business segment for many insurers who have gotten into the market. Seniors -- one of the fastest growing population segments -- like the plans for the added benefits, such as vision and dental, that are not offered under traditional Medicare.

During Humana's third quarter earnings call, CEO Bruce Boussard referred to a recent study published in the Journal of the American Medical Association, which deemed nearly 25% of the country's annual total healthcare spend as waste.

"That's one out of every four healthcare dollars or between $760.935 billion each year," Broussard said during the earnings call. "Our integrated approach to holistic health through programs like Medicare Advantage uniquely position us to evolve healthcare, driving affordability through improving clinical outcomes and simplifying the experience and reducing the waste in the system."

The holistic approach is reflected in this week's report findings that show Humana Medicare Advantage members affiliated with physicians in value-based agreements received screenings as much as 21% more often in categories such as colorectal cancer, osteoporosis and blood sugar control than those in an MA non-value-based setting and received 9% more breast cancer screenings.

An estimated 82.6% of Humana Medicare Advantage members have at least two chronic conditions.


Despite the positive third quarter report, Broussard said the likely return of the health insurance industry fee in 2020 will result in streamlining, including a 2% reduction in the workforce. Staff is being redeployed where and when appropriate to other positions. Approximately 2,000 jobs were impacted, he said.

Also some beneficiaries will see an increase in premiums or a reduction in benefits next year, given the magnitude of the HIF, he said. The premium-based fee disproportionately taxes the sicker and more vulnerable populations in Medicare Advantage and Medicaid.

There is bipartisan support to further suspend the HIF, which has been delayed in the past, with Humana adding its voice urging Congress to support another suspension, he said.

Also, Humana expects a decline in prescription drug benefit membership of at least a few 100,000 in 2020, Kane said.

"We expect to grow nicely in the new low priced Humana Walmart Value Rx plan, but we are seeing high plan-to-plan changes and terminations associated with the Premier Rx plan," Kane said.
As the premium is much lower in the lower-priced Walmart plan, an important part of profitability becomes the healthcare services side and the mail order uptick rate, according to Kane.

A crossover to the medical side is possible, Broussard said. Humana will explore further partnerships with Walmart and last year began a pilot program with Walgreens for senior-focused primary care clinics.


"In our relationships with retailers, we feel the combination of local convenience of both the pharmacy itself, but also the pharmacist is a very important part of the delivery both in Part D and also MA in total because we find the pharmacist is an important conversation to have not only about the drug but also about just conditions in general and so we – our relationships, whether it's a Walmart or Walgreens or other drug stores are very important for that and the delivery of that," Broussard said during the earnings call. "We've had a long standing and a very positive relationship with Walmart over the years and their drive of being low cost in the marketplace and our preference to be low cost in the marketplace is sort of an important synergy that we drive towards. And we feel that it continues to be that going forward."

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