Humana's guidance solution is key to success
- Employers and employees rein in medical spending through SmartSuite's
unique integrated approach -- product design, financial planning tools,
clinical programs and consumer education
- Engaged employers hold premium increases to single digits
- Consumers improve drug compliance rates and maintain use of preventive
services
- SmartSuite is successful across various industries and demographics
- Study is largest and most comprehensive of its kind
LOUISVILLE, Ky., June 28 /PRNewswire/ -- Humana Inc. (NYSE: HUM) today
announced the results of a definitive three-year actuarial study of its
SmartSuite health plans and related programs that make up the Humana Guidance
Solution. Called "Health Care Consumers: Passive or Active?" the study --
presented at the annual meeting of the Society of Actuaries (SOA) this month
-- revealed:
- SmartSuite customers, on average, experience sustained annualized
claims trends in the 5-6 percent range (compared to a national health
cost inflation rate of 12-14 percent per year during the same period)
- Engaged SmartSuite employers are holding premium increases in the
single-digit range, comparing favorably to ongoing national trends of
double-digit increases
- SmartSuite consumers exceed prevailing prescription drug compliance
rates for effective management of chronic illnesses, such as heart
disease, diabetes and depression, and access preventive health care
services on a par with national utilization standards.
The Humana study is the largest of its kind ever completed that analyzes
the impact of consumer-choice products. A full text of the study is available
on the Humana web site at http://www.humana.com under the "It Works" banner.
The study is also one of several on consumer-driven health plans being
reviewed by an American Academy of Actuaries work group, which is developing a
paper on the emerging experience of these types of plans.
Since Humana was among the first carriers to widely offer consumer-choice
plans -- integrating the plans with clinical, financial and consumer-
engagement tools to create the unique Humana Guidance Solution -- the study
data is unmatched in its depth and breadth. It involved 143,000 health plan
members in 155 employer groups, including small, mid-sized and large companies
across a variety of industries, between 2002 and 2005.
The cumulative savings for Humana's SmartSuite customers over the life of
the study reached $32 million. On a per-employee basis, this represented a
savings of $207 per employee during the three years of the study.
"This landmark three-year customer experience study has no parallel in the
health benefits industry," said Michael B. McCallister, president and chief
executive officer of Humana. "It demonstrates that Humana's SmartSuite
solution is more than just a series of products -- it unites product design,
financial planning tools, clinical programs and consumer education to produce
breakthrough results."
The study's analysis of the SmartSuite group characteristics shows that
the success of SmartSuite is not dependent on the group's demographics -- age,
sex, group size or industry, types of medical conditions, previous plans types
or region. It comes on the heels of a recent Towers-Perrin analysis showing
that over the past four years, employee health-care costs have risen 56
percent, while employer costs went up 63 percent over the same period.
"What the Humana actuarial study illustrates is that any kind of group,
regardless of size, industry type or employee demographics, was able to reduce
its medical costs while ensuring their employees received the health benefits
they need," McCallister said. "One of the keys to that success was the level
of integration among employer, employee and health plan. The greater the
connectivity -- the willingness of employers to support the engagement
strategy accompanied by an equal desire by employees to participate in the
education and benefits selection process -- the more likely cost savings and
consumer satisfaction were realized."
How Savings Are Achieved
The study identified that annual cost savings were achieved through a
variety of unique and proprietary tools embedded in Humana's Guidance
Solution. Employers who opted for employee self-enrollment tools and Web-
accessible information platforms (the Humana Plan Wizard, for example) versus
traditional enrollment and plan administration services saw increases in
medical spending that averaged 10.8 percent lower than the increases for
employers who didn't take full advantage of the tools.
When used successfully, such tools helped reduce the health plan's
administration and marketing paperwork and were part of the price concessions
that some groups were able to secure through Humana's unique, proprietary
SmartAssurance second-year rate cap program.
"At the same time," McCallister explained, "we saw that SmartSuite tools
helped consumers navigate and better select their benefits. They could
customize their insurance coverage, based on what was being offered, and had
high levels of satisfaction with their selection as a result. Employers,
meanwhile, could more accurately hold the line on annual benefits costs while
their employees had an array of plans to select from based on their personal
health care needs and family budgets."
Although SmartSuite offers a broad spectrum of plan options, from
traditional managed care to Humana's newer CoverageFirst consumer-choice
offerings, the study showed that over time, employees tended more and more to
select the consumer-choice plans -- where savings and consumer engagement
opportunities are maximized. For plans like SmartSuite that are sold in
"bundles," 41 percent of employees chose Humana's consumer-choice options,
compared to an industry average of 16 percent, the study showed.
Improving Access to Care and Producing Better Medical Outcomes
Humana's SmartSuite plan participants, as profiled in the study, changed
their behavior over the study's three years toward the use of more preventive
services with less reliance on costly, "after-the-fact" interventions like
inpatient hospital stays. The net effect of this behavior change was that
SmartSuite members did not receive less medical care but rather received
different kinds of care in different settings, the study showed.
One way this was demonstrated was that SmartSuite members had higher
prescription drug compliance rates than their traditional health plan peers.
For example, SmartSuite members had an appreciably higher utilization of
medications for chronic conditions (76.8 percent) than their traditional
health-plan colleagues (62.7 percent).
SmartSuite members used a variety of online health information services,
such as those available on MyHumana.com, 50 percent more frequently than their
peers in traditional plans.
"Consumer engagement strategies like SmartSuite are still in their early
stages of acceptance," said Rick Remmers, vice president, middle markets for
Humana. "We're very aware of the concerns some have had with respect to the
effect this level of consumer engagement and cost sharing can have. The
results of this study have shown that the critical key to success is embedding
our guidance process into these plans.
"For those consumers who are using the planning and enrollment tools --
taking full advantage of the comprehensive Humana Guidance Solution -- they're
maintaining and, in many cases, even elevating their use of preventive care
while creating real opportunities for reducing unnecessary medical spending
that impacts premiums and causes insurance to go up disproportionately to the
general inflation rate."
The study also contradicted the notion that consumer-choice plans are a
means by which employers merely shift costs to consumers. The percentage of
overall employee benefit costs borne by consumers stayed constant at around 21
percent over the life of the study, with the employer share at around 79
percent.
The unique Humana Guidance Solution involves the integration of four
distinct disciplines that enable consumers to lower costs, change behavior and
improve health outcomes. The disciplines are:
Product design: A wide spectrum of plan choices, from traditional managed
care to consumer-choice options, that are offered to all of a company's
employees -- not just those who opt for a "consumer-directed" plan.
Clinical programs and forecasting: Humana's predictive modeling identifies
and helps the "pre-sick" through such innovative programs as Personal Nurse,
which pairs a highly trained medical professional with a plan member at risk
for medical intervention.
Financial analysis and forecasting: Humana's proprietary SmartStart tool
lets employers "pick their trend" by aggregating the risk pool and offering
various contribution strategies for the employer to choose.
Consumer education and engagement: PlanWizard and other online tools
enable consumers to choose and use their benefits with confidence and success.
About Humana
Humana Inc., headquartered in Louisville, Ky., is one of the nation's
largest publicly traded health benefits companies, with approximately 7
million members. Humana offers coordinated health insurance coverage and
related services -- through traditional and Internet-based plans -- to
employers groups, government-sponsored plans, and individuals.
More information regarding Humana is available via the Internet at
http://www.humana.com, including copies of:
- Annual report to stockholders;
- Securities and Exchange Commission filings;
- Quarterly earnings news releases;
- Replay of most recent earnings release conference call;
- Calendar of events (includes upcoming earnings, conference call dates,
time and access number as well as planned participation in investor
conferences);
- Corporate Governance information
About the Society of Actuaries
The Society of Actuaries is an educational, research and professional
organization dedicated to serving the public and its 17,000 members. The
SOA's vision is for actuaries -- business professionals who analyze the
financial consequence of risk -- to be recognized as the leading professionals
in the modeling and management of financial risk and contingent events. The
SOA's mission is to advance actuarial knowledge and to enhance the ability of
actuaries to provide expert advice and relevant solutions for financial,
business and societal problems involving uncertain future events. To learn
more, visit http://www.soa.org.
About the American Academy of Actuaries
The Academy is the public policy organization for actuaries of all
specialties within the United States. In addition to setting qualification and
practice standards, a major purpose of the Academy is to act as the public
information organization for the profession. The Academy is nonpartisan and
assists the public policy process through the presentation of objective
analysis. The Academy regularly prepares comments on proposed federal
regulations, and works closely with state officials on issues related to
insurance. The Academy also develops and upholds actuarial standards of
conduct, qualification and practice, and the Code of Professional Conduct for
all actuaries practicing in the United States. To view any of our publications
or to learn more about the Academy, please visit the Academy website
http://www.actuary.org.
SOURCE Humana Inc.
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http://www.humana.com
http://www.soa.org http://www.actuary.org
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CONTACT:
Tom Noland of Humana Corporate
Communications, +1-502-580-3674, or tnoland@humana.com
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