Humana CEO Broussard: We’re Very Excited About PDGM

Don’t count Humana Inc. (NYSE: HUM) among those worried about the major home health reimbursement overhaul coming up in 2020.

While some shun the forthcoming payment changes, Humana is actually excited about them, according to CEO and President Bruce Broussard.

In addition to being one of the country’s largest health insurance organizations and a dominant player in the Medicare Advantage (MA) market, Louisville, Kentucky-based Humana oversees at-home care outlets Humana At Home and Kindred at Home, which it acquired in 2018 with two PE firms for $4.1 billion. 

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“In general, when we went into the Kindred investment, we went into it with the view that there would be reimbursement changes, and that those reimbursement changes would not only [impact rates] but also … drivers of the business,” Broussard said Wednesday during Humana’s 2019 third-quarter earnings call.

Scheduled for a Jan. 1 implementation date, the Patient-Driven Groupings Model (PDGM) is the biggest overhaul to the home health reimbursement landscape in two decades.

Among its key provisions, for example, PDGM sets higher reimbursement rates for things like wound care and shifts therapy payment away from a per-visit framework. PDGM also ties higher reimbursement rates to patients who start home health services following an instuitional stay.

It’s PDGM’s built-in incentives toward nursing and caring for medically complex patients that Humana finds particularly exciting, Broussard said. Since the Prospective Payment System (PPS) has been in place, therapy has been the main moneymaker for many home health providers.

“We are very excited about the changes of the reimbursement model, moving to a model that’s rewarding more for nursing and more for chronic conditions as opposed to just for therapy,” Broussard said.

To prepare for PDGM and improve operational efficiency, Humana spent much of 2019 forming or strengthening technology partnerships.

As finalized by the Centers for Medicare & Medicaid Services (CMS), the overhaul comes with a 4.36% behavioral adjustment cut, which makes improved efficiencies paramount to 2020 home health success. 

Moving forward, Humana expects PDGM to help move care downstream and lower re-hospitalizations among its members.

“The structural changes, we find, are very helpful,” Broussard said.

PDGM aside, Humana posted a solid Q3 2019 financial performance, buoyed by robust Medicare Advantage numbers.

Quarterly revenue totaled $16.24 billion, an increase of more than 14% compared to the $14.21 billion Humana brought in a year ago.

Based on early observations during the open enrollment window, Humana now projects MA enrollment growth of 530,000 — a significant increase compared to its initial estimated growth range of 480,000 to 500,000 members.

As of Sept. 30, Humana’s individual MA membership was 3.55 million, which was up 17% from 3 million at the end of the 2018 third quarter.

In part, Humana’s robust MA enrollment projects are due to its innovative benefits design incorporating home- and community-based care and access to provider organizations such as Papa and Heal.

“We are continuing to meaningfully advance our strategy [centered] on improving health outcomes through the most impactful areas of health: home, primary care, pharmacy, behavioral health and social determinants,” Broussard said.

Humana’s Q3 call came roughly a week after news broke that the company will lay off 2% of its overall workforce. Broadly, those layoffs are tied to the multibillion-dollar Health Insurance Tax (HIT) coming next year.

“As a result [of HIT], we’ve had to make some tough decisions,” Broussard said.

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