Humana’s shift from fee-for-service medicine to value-based payments for doctors is reducing costs and improving quality of care for seniors enrolled in Medicare Advantage plans, the insurer says, citing a new internal study.
Medical costs were 15 percent lower in Humana Medicare Advantage plans that paid physicians via value-based models last year compared to costs of those in traditional fee-for service Medicare, the Louisville-based insurer’s study, released Tuesday showed.
“We are talking about improvement in health which leads to improvement in the cost structure,” Humana chief medical officer Dr. Roy Beveridge, said in an interview.
The Humana study is the latest evidence of the potential value-based models have at slowing or reducing spending on Medicare. It also comes as the Republican-led Congress and the Donald Trump White House look at ways to cut entitlement spending to pay for tax cuts.
For the analysis, Humana looked at more than 1 million Medicare Advantage members in 2016 who were cared for by medical care providers paid via value-based models, which tie reimbursement to quality measures and outcomes. They were compared to about 200,000 Medicare members who were affiliated with providers under fee-for-service contracts Humana had with providers.
Physicians in value-based contracts with Humana also had 26 percent higher scores from the federal government’s standard Healthcare Effectiveness Data and Information set, known as HEDIS, the insurer’s analysis shows.
In the value-based approach, insurers reimburse providers for services plus additional pay if they meet quality measures, control costs and improve health outcomes of their patients. The traditional fee-for-service system pays for the volume of care delivered and can lead to excess costs and the focus isn’t on getting patients their care in the right place, in the right amount and at the right time.
As one example, patients with diabetes have to have aggressive management of their care from a case manager on the phone to a nurse visiting their residence to make sure they are taking their medications and eating a proper diet. “Have we improved someone’s health so their diabetic foot ulcer doesn’t progress to amputation?,” Humana ‘s Beveridge said, referring to Humana’s effort to closely monitor Medicare enrollees with chronic condtions.
In the Medicare Advantage space, Humana is fighting for enrollees with UnitedHealth Group, Aetna, Cigna, Anthem and an increasing number of provider-owned systems who see more seniors signing up for private Medicare coverage as an increasingly profitable market. Medicare Advantage plans provide extra benefits and services to seniors, such as disease management and nurse help hotlines, with some even providing vision and dental care and wellness programs.
Currently, about one-third of Medicare beneficiaries, or about 19 million Americans are enrolled in MA plans , the latest tally by Kaiser Family Foundation shows. But some health plans have predicted that it won’t be long until half of all Medicare-eligible seniors are in MA plans.
From a corporate strategy point, the study results released Tuesday are being used by Humana to show Wall Street, its customers and clients that the insurer is headed in the right direction with its focus on Medicare.
Humana last week is cutting more than $120 million in expenses related with cutting 2,700 jobs, or nearly 6 percent of the company’s workforce in part to free up money for capital investments and keep its product offerings price-competitive.
Humana said its efforts to “continuously proactively” helping seniors means investing in ways to improve clinical outcomes.
“Primary care physicians on their own, especially independent physicians, lack the capital, scale and the expertise to make the investments in technology and analytics necessary to thrive in a value-based environment,” Humana CEO Bruce Broussard told analysts earlier this month on the company’s third quarter earnings call. “To that end, we are making investments in payer-agnostic care coordination technology and analytics capability that enable providers to be successful in the Value-Based models, easing their administrative burden and enabling more time for clinical management of their patient population.”
Date: Nov 14, 2017