Health insurance giant Humana is cashing in on its transition to value-based care (VBC): Medical costs for its Medicare Advantage (MA) members in plans with value-based reimbursement were 20% lower compared with costs for seniors in traditional fee-for-service Medicare in 2018, Forbes reports.
This translates to a total of $3.5 billion in annual savings, per Humana. The majority of US patients still aren’t covered under a value-based plan, but as insurers continue to tally the model’s cost savings potential, they’ll likely kick up their efforts to help docs make a seamless transition.
Guiding the transition to VBC will become even more crucial to insurers as they double down on growing their MA membership and strategize on how to clamp down on high costs associated with more senior members. The US’ largest insurers are building out their MA businesses because, as enrollment balloons, the market stands to present a $360 billion opportunity by 2023: For example, Humana controlled 18% of the MA market in 2019 and expects its member base to hit 500,000 by the end of 2019, which would mark a 16% year-over-year bump.
But with a larger percentage of MA beneficiaries — or seniors — comes heightened spending on medical care, like costly chronic conditions: 80% of seniors suffer from at least one chronic condition compared with 40% of the general population, and they account for a disproportionate number of annual hospitalizations. Thus, covering a larger volume of seniors should incentivize insurers to forge value-based reimbursement contracts with physicians so they won’t have to pay as much whenever a member seeks out a healthcare service.
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While insurers are bullish on VBC, an industry-wide shift might only be plausible if they bridge technological gaps for their provider networks. US providers have a largely negative outlook on the pivot thus far, with 79% saying that the switch to VBC was not yet successful in 2018. And that’s likely attributable, in part, to technological hurdles: Nearly 60% of payers think physicians lack the proper digital tools to find success under VBC, for example.
Successfully shuffling to VBC requires a sturdy IT backbone that includes capabilities like data analytics and easily accessible patient records. And without a solid tech foundation, adopting preventive and personalized care plans that boost value of care would prove difficult. This is why we think we’ll see insurers help set up the necessary tech infrastructure see the fastest transition and the most cost savings: For example, UnitedHealth Group is leveraging its analytics tools to connect partnered providers and establish a “digital ecosystem” to set up a value-based payment structure.
Source: Business Insider