Because the twentieth Birthday rolls on I assumed I’d deliver out a more moderen piece first revealed in October 2020, albeit one which depends closely on 25 yr outdated information to make some extent. That is some proof to again up Jeff Goldsmith’s touch upon the unique that for all of the speak “ ‘Worth based mostly” cost is a non secular motion, not a enterprise pattern’ ” By the way in which, Humana up to date these numbers final yr and there’s been principally no change — Matthew Holt
Humana is out with a report saying that its Medicare Benefit members who’re coated by value-based care (VBC) preparations do higher and price lower than both their Medicare Benefit members who aren’t or individuals in common Medicare FFS. To us wonks that is motherhood, apple pie, and so forth, significantly as proportionately Humana is the insurer that depends essentially the most on Medicare Benefit for its enterprise and has one in every of the larger publicity machines behind its innovation group. To not point out Humana has first rate slugs of possession of at-home doctors group Heal and the now publicly-traded capitated medical group Oak Street Health.
Humana has 4m Medicare benefit members with ~2/3rds of these in value-based care preparations. The report has plenty of information about how Humana makes all the things higher for these Medicare Benefit members and the way VBC exhibits barely higher outcomes at a decrease price. However that wasn’t actually what caught my eye. What did was their chart about how they pay their physicians/medical group
What it says on the floor is that of their Medicare Benefit members, 67% are in VBC preparations. However that covers a variety of various cost schemes. The 67% VBC schemes embrace:
- World capitation for all the things 19%
- World cap for all the things however not medication 5%
- FFS + care coordination cost + some shared financial savings 7%
- FFS + some share financial savings 36%
- FFS + some bonus 19%
- FFS solely 14%
What Humana doesn’t say is how a lot danger the center group is at. These are the 7% of PCP teams being paid “FFS + care coordination cost + some shared financial savings” and the 36% getting “FFS + some share financial savings.” My guess is just not a lot. So they may have been put within the non-VBC group. However the attention-grabbing factor is the outcomes.
First up Humana is spending a lot extra on major take care of all their VBC suppliers, 15% of all well being care spend vs 6.6% for the FFS group, which is greater than double. That is extra well being coverage wonkdom motherhood/apple pie, and so forth and possibly represents plenty of these journeys by Oak Street Health coaches to seniors houses fixing their sinks and loose carpets. (A narrative typically instructed by the Pleasant Hills folks in 1994 too).
However then you definately get into some fuzzy math.
In line with Humana their VBC Medicare Benefit members price 19% lower than if they’d been in conventional FFS Medicare, and subsequently these financial savings throughout their 2.4m members in VBC are $4 billion. Nicely, Brits of a sure age like me are wont to misquote Mandy Rice-Davis — “they’d say that wouldn’t they”.
However on the exact same web page Humana compares the price of their VBC Medicare Benefit members to these 33% of their Medicare Benefit members in non-VBC preparations. Ponder this chart a tad.
Yup, that’s proper. Regardless of the strung and dram and pleasure about VBC, the associated fee distinction between Humana’s VBC program and its non-VBC program is a rounding error of 0.4%. The $90m saved in all probability barely coated what they spent on the fancy website & report they wrote about it
Perhaps there’s one thing occurring in Humana’s total method that implies that FFS PCPs in Medicare Benefit apply decrease price drugs that PCPs in common ol’ Medicare. This is perhaps that a few of the prevention, care coordination or utilization evaluate executed by the plan has a huge impact.
Or it is perhaps that the 19% financial savings versus common outdated Medicare is illusionary.
It’s additionally somewhat irritating that they didn’t escape the distinction between the total danger teams and the VBC “lite” who’re getting FFS but additionally some shared financial savings and/or care coordination funds, however it’s a must to assume there’s a restricted distinction between them if all VBC is barely 0.4% cheaper than non-VBC. Presumably, if the total danger teams had been means completely different they’d have damaged that information out. Hopefully they could launch a few of the underlying information, however I’m not holding my breath.
Lastly, it’s value remembering how many individuals are in these preparations. In 2019 34% of Medicare recipients had been in Medicare Benefit. Humana has been one of the crucial aggressive in its use of value-based care so it’s honest to imagine that my estimates listed here are in all probability on the high finish of how Medicare Benefit sufferers receives a commission for. So we’re speaking perhaps 67% of 34% of all Medicare recipients in VBC, and solely 25% of that 34% = 8.5% in what appears like full danger (together with these not in danger for the medication). This doesn’t rely ACOs which Dan O’Neill factors out are about one other 11m individuals or about 25% of these not in Medicare Benefit. (Though so far as I can inform Medicare ACOs don’t save bupkiss except they are run by Aledade).
I did a survey in 1997 which some might recall as the peak of the (pretend) managed care revolution. These round on the time might recall that managed care was how the medical insurance trade was going to avoid wasting America after they killed the Clinton plan. (Ian Morrison used to name this “The market is working however managed care sucks”). On the time there was nonetheless plenty of pleasure about medical teams taking full danger capitation from well being plans after which like now there was a raft of newly publicly-traded medical teams that had been going to just accept full danger capitation, put hospitals and over-priced specialists out of enterprise, and do all of it for 30% much less. The Advisory Board, bless their very costly hearts, put out a report known as The Grand Alliance which mentioned that 95% of America would quickly be beneath capitation. Yeah, proper. Each hospital in America purchased their reviews for $50k a yr and made David Bradley a billionaire whereas they spent tens of millions on medical teams that they then offered off at a large loss within the early 2000s. (A course of they then reversed within the 2010s however with the clear want to not settle for capitation however to lock up referrals, however I digress!).
Within the 1997 IFTF/Harris Well being Care Outlook survey I requested medical doctors how they/their group bought paid. And the reply was that they had been at full danger/capitation for ~3.6% of their sufferers. Keep in mind that is everybody, not simply Medicare, so it’s not apples to apples with the Humana information. However in case you take a look at the remainder of the 36% of their sufferers that had been “managed care” it form of compares to the VBC break down from Humana. There’s plenty of “withholds” which was Nineties communicate for shared financial savings and discounted fee-for-service. The opposite 65% of People had been in some degree of PPO-based or straight Medicare fee-for-service. Final yr I heard BCBS Arizona CEO Pam Kehaly say that regardless of all the massive speak, the trade was at about 10% VBC and the Humana information suggests that is nonetheless about proper.
So this coverage wonk is a bit depressed, and he’s not alone. There’s somewhat faculty of rebels (for instance Kip Sullivan on THCB last year) saying that Medicare Benefit, capitated major care and ACOs don’t actually transfer the needle on price and anyway nobody’s actually adopted them. On this proof they’re proper.
Matthew Holt is the Writer of THCB and remains to be allowed to write down for it often.
