Courtesy of the U.S. Navy

Humana has created an incentive program that, for the first time, will provide financial bonuses to hospitals based in part on how well they take care of patients with short-term medical conditions, such as heart attacks, broken bones and gunshot wounds.

The Hospital Incentive Program, which covers hospitals that provide care to Humana customers who receive insurance through their employers, has a potentially far-reaching impact: As of Dec. 31, Humana had more than 1.5 million group commercial members nationwide, including nearly 300,000 in Kentucky and Indiana.

Humana previously had started similar incentive programs for specialty care, such as maternity care providers, and primary care doctors for a majority of its Medicare Advantage customers. Now, the company is targeting hospitals as they are taking care of patients who are admitted with short-term medical problems.

Ben Lunsford

Ben Lunsford, vice president of value-based strategies for Humana, told Insider via email that the company views the HIP program as a “natural extension” of its efforts to foster value-based care, which focuses on paying health care providers based on performance — rather than the number of procedures they perform.

Participation in the Hospital Incentive Program is voluntary, Humana said, and the hospitals must have enough claims volume so that any data that Humana analyzes has statistical significance.

Humana will measure the facilities’ performance in three main areas — patient experience, patient safety, patient outcome — and if hospitals show continuous improvements, they can earn an increase in the rate at which Humana reimburses them for the care they are providing.

The idea is to incentivize hospitals to provide care that provides the best long-term outcomes, in part because it lowers costs related to readmissions, infections and other complications. Humana declined to provide information about how much it costs to implement and operate the program.

Impact? Experts disagree

Two health care experts interviewed by Insider disagree on whether the program will reach many customers.

Andrew Wilson

Andrew Wilson, research team leader for the Altarum Center for Value in Health Care, said that the program’s potential benefits for providers might not be big enough for them to invest in making sure that they meet Humana’s thresholds.

The Ann Arbor, Mich.-based institute is a nonprofit health systems research and consulting organization that aims to solve complex systems problems to improve human health.

Participants in Humana’s program will incur costs to measure how close they are to Humana’s thresholds — and even more costs to figure out how to improve, Wilson said.

In addition, he said, hospitals may not have enough Humana customers to warrant the expenses. If most of a hospital’s patients are covered by Anthem or Aetna, Humana’s incentives may be negligible.

Wilson said that while Humana’s program provides a (potentially very small) carrot to get hospitals to improve their quality of care, it provides no stick to pressure hospitals that perform worse than their peers.

A better approach, he said, would be to reward hospitals if they cut costs and give them with more money if the provide better quality care — but also financially penalize those hospitals whose costs and quality of care compare unfavorably with their peers.

Jeff Micklos

However, Jeff Micklos, executive director of the Washington, D.C.-based Health Care Transformation Task Force, said that for many hospitals, the expenditures to comply with Humana’s program requirements might be small.

Many hospitals already have similar agreements with other insurance companies and federal and state governments for Medicaid and Medicare services, he said.

“The infrastructure is already being developed inside providers,” Micklos said.

The task force is a membership fee-driven nonprofit that tries to get health care providers, insurance companies and consumer groups to work together to move away from the fee-for-service model and to embrace value-based payment models.

Humana is not a member of the task force — but Aetna and Anthem are, as well as Dignity Health, the San Francisco-based health system that wants to merge with Catholic Health Initiatives, the parent company of KentuckyOne Health.

Micklos acknowledged that while many hospitals might be familiar with value-based payment models, they may hold back on participating in voluntary programs because the industry has not yet found a consensus on the appropriate metrics for value-based care.

A hospital that is complying with a set of mandated government metrics and has an agreement with a private insurer on another set of metrics may be disinclined to enter agreements with additional payers that require compliance with a third, fourth and fifth set of metrics, even if there’s some overlap.

For patients, such arrangement generally mean more help, especially after the medical procedure has been completed.

Micklos said that to meet some of the metrics, health care providers have to make sure that the patients take their medications and complete their post-surgery physical rehabilitation. That means the patients will receive reminders and follow-up inquiries to make sure that any complications are caught early so that the providers can take corrective actions quickly.

“Patients, as a whole, should benefit,” Micklos said.

Correction: This post was updated to correct merger plans of Dignity Health and CHI.