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Humana reveals to investors how it pays physicians

The insurer uses its public filings to mark the health plan's movement toward an integrated care delivery model that relies less on fee for service.

By Pamela Lewis Dolan — Posted Feb. 27, 2013

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As part of what Humana then-CEO Michael McCallister described in November 2012 as his company's plans to push an integrated care delivery model “as far and as fast as we can take it,” the insurer said it wanted to satisfy investors by showing its progress in some way. (See correction)

Starting with its fourth-quarter 2012 earnings report delivered Feb. 4, Humana listed for investors the breakdown of how it pays its 180,000 contracted and employed “primary care providers,” including physicians. In its report, the Louisville, Ky.-based health insurer broke down its primary care population by the number of doctors paid by capitation, those who are paid by capitation but have no downside risk, and those paid by traditional forms of payment, such as fee for service (link).

Regina Nethery, Humana's vice president of investor relations, said the decision was made to share the data with investors because the company is still fairly new in its efforts to implement an integrated care delivery model that includes putting more members into HMOs.

More employed physicians

The company's earnings report showed an increase from 900 to 1,600 employed primary care health care professionals, who will be paid by capitation, assuming both upside and downside risks. The increase partially was due to the acquisition of some large-name health professional networks in late 2011 and 2012, including a $500 million deal to acquire Boca Raton, Fla.-based Metropolitan Health Networks in November 2012. Nethery said she expects the buying to continue in 2013.

The number of contracted primary care physicians and other health care professionals in full-risk payment arrangements remained unchanged at 2,900 from 2011 to 2012, according to the report. The number of those “on path to risk,” meaning they are paid by capitation and assume no downside risk but can qualify for bonus payments, rose from 12,000 to 18,200. The remainder were paid through fee for service.

Nethery said the goal is to move more physicians to the highest category of risk.

“What we have talked to investors about is that with the integrated care delivery model, we get the most effective care for the member at the least cost when the provider is in a full-risk arrangement. The provider is fully engaged, given lots of data to help them to ensure the member gets a high-quality experience. And the member satisfaction rates are the highest in those type of arrangements,” she said.

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Correction

An earlier version of this article did not make it clear that while Michael McCallister was CEO of Humana at the time he made his statement, he has since retired. He remains as chair of the insurer's board of trustees.

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