Walmart’s potential interest in buying Humana is the latest buzz around the emerging symbiotic relationship between retail and health insurance. It’s a combination that aligns well from a consumer perspective—with both companies serving a growing population of seniors—and from a technology perspective, according to industry analysts.
Both companies possess IT prowess and data that could help facilitate efforts to provide consumers, particularly senior citizens and Medicare beneficiaries, with improved services.
“The majority of the business certainly that Humana has is senior business,” says Ashraf Shehata, a principal in KPMG’s healthcare life sciences advisory practice and in its Global Healthcare Center of Excellence. “Walmart and other retail organizations are very interested in expanding that footprint of clinics and operating capabilities as well as the pharmacy business in the retail environment. It’s really a nice combination of seniors and their propensity to use pharmaceuticals.”
Walmart’s interest in Humana no doubt stems from the fact that it has the second-largest Medicare Advantage presence of any insurer as well as a highly effective pharmacy benefits management business, contends Shehata. Walmart, he notes, is the nation’s fourth largest provider of prescription drugs.
Humana’s main focus has been selling private insurance under Medicare, the federal health insurance program for people who are 65 or older and use a lot of prescription drugs. According to Humana, as of the end of 2017, it has 14 million medical members—with a Medicare membership of 8.6 million, of which 3.3 million are Medicare Advantage members.
In particular, growing enrollments in Humana’s Medicare Advantage plans are seen as being attractive to Walmart. Similarly, CVS last year agreed to buy Aetna, the third largest Medicare Advantage insurer, for the same reasons.
“We’ve seen the strength of the Medicare Advantage market for really the last four years, and it’s going to continue to get better,” says Shehata, who adds that the Centers for Medicare and Medicaid Services announced on Monday that it would increase payments to insurers running private Medicare Advantage plans by nearly twice as much as previously projected.
A KPMG research report released in January concluded that the Medicare Advantage plans are “providing a service worthy of their current government support, in part because of ongoing confidence in the commercial market’s ability to reduce costs through care management tools” and the fact that consumers “generally favor MA plans, given their predictability, added benefits and reduced estimated costs.”
From Humana’s perspective, an alignment in the supply chain is where Walmart’s retail side could streamline partnerships for pharmacy and common medical supplies for which payers like Humana are responsible, says Bryan Komornik, a director in the healthcare practice at consultancy West Monroe.
“Walmart’s expertise in tracking and distribution of those items is a strong plus for Humana,” says Komornik. “Walmart’s footprint could provide a large network of sites to place clinics and other customer interaction points. This would compete with a potential CVS-Aetna deal.”
Komornik observes that Walmart’s per-store sales have been on a steady decline, similar to other retailers. And, as Amazon looks to build an online pharmacy presence, he sees Humana’s membership as providing Walmart with a more direct link to consumers.
“There’s also some offense here—in recognizing their common consumer base, Walmart and Humana are developing a bulwark in rural America with an ability to address inadequate access and medical services,” adds Komornik. “And, one more—this offers Walmart an easier way to manage its own employee population. After all, it is the largest employer in the United States by far with 2.3 million employees, equivalent to 7 percent of the nation’s population.”
When it comes to technology, Shehata points out that Humana has been a pioneer and innovator in the use of data and analytics to empower consumers.
Humana operates a Digital Center of Excellence, which focuses on creating “simple, connected and personalized digital experiences that empower its members to achieve their best health,” the company’s information says. Humana’s goal is to improve the healthcare in the communities it serves by 20 percent by 2020, with seniors as a major target for these efforts.
“The team is focused on the end-to-end experiences that we create for the consumers,” says Nick Walter, director of pharmacy digital strategy in Humana’s Digital Center of Excellence.
In late 2017, Humana released a new tool to enable its members to more easily maintain an up-to-date list of their medications in one place to improve medication management, safety and clinical outcomes. Members access the RxMentor tool via the MyHumana.com website or by downloading the app for iPhone and Android devices. The app pulls from claims data in addition to medication and allergy information that members report themselves.
“We have access to up to three years of their claims data that we’ll pull in, but we start with claims within the past 180 days,” adds Walter.
According to Walter, the RxMentor tool serves as a “single source of truth” for Humana members when it comes to their medications, which is shared with their care team—including pharmacists and physicians—to ensure better prescription management. Members receive a prompt to update their medication list when there is new claims data; for members with multiple conditions who might be on several medications, the tool prompts them to schedule a complimentary one-on-one consultation with a Humana pharmacist to conduct a medication review.
Because nearly three out of four Americans do not take their medications as directed, it results in nearly $300 billion a year in additional doctor and emergency department visits as well as hospitalizations. Walter contends that Humana’s RxMentor tool is a way to help its members stay organized by keeping prescription medications, vitamins and supplements, other over-the-counter items and personal allergy information in one convenient and easy-to-access place. In addition, users of the tool can make notes in the app about a medication—such as how to take it, when to take it, and any reactions.
Data is also being used by Humana to help its members manage the costs of medications through transparency, notes Walter. “We’ll take that list of medications and forecast out for the whole plan year how much they’re going to spend,” he says, providing members with “savings opportunities they may not be aware of,” such as alternative generic drugs and moving their prescriptions from a retail pharmacy to a mail order pharmacy.
Last year, Humana also launched a new Medicare enrollment tool called Rx Calculator to help members and non-members determine annual drug and premium costs to ensure the medications they are taking are covered by their Medicare Advantage or Part D plan. The tool can be used by members and the public online, as well as by Humana licensed sales representatives and by licensed sales agents through Humana’s agent portal, giving them the ability to guide prospective members through the Medicare enrollment process and to determine what plans best meet their needs.
“We have a pretty robust self-service pricing tool,” concludes Walter, who says users can enter the drug name, dose, quantity and frequency to see if medications are covered. “There are a lot of innovation-type projects like that that we’re working through—test and learn to identify the right experience to go to market at scale.”
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