Some Employers Could See Discounts Under Humana Cost Pledge

Kentucky-based health insurer Humana will offer some large employers a guarantee that health care costs will stay below a certain level or the insurer will refund a portion of the employer's administrative costs, the Louisville Courier-Journal reports (Howington, Louisville Courier-Journal, 4/19).

The program, called SmartResults, is intended for employers who self-fund health benefits for 300 or more employees. Employers would set a target annual rate increase of between 6% and 9% based on their level of participation in wellness and health assessment plans. If an employer's health care costs exceed the target rate, Humana will reduce the fees it charges to administer the company's health plan by as much as 40%.

Companies must sign a three-year contract with Humana to participate in the program. In addition, employees would be required to undergo annual health risk assessments. In a sample analysis, Humana said that a company with 472 employees spending $3.8 million on medical claims would save $1.8 million over three years if claims were held to increases of 6% annually when they were expected to rise by 15% (Anstett, Detroit Free Press, 4/18).

According to the Courier-Journal, "Humana's confidence that it can hold down health care costs is based on its experience in providing consumer-directed plans called SmartSuite," which from 2002 to 2006 had average annual claims-cost increases of 4.2%, compared with an average national increase of about 11% (Louisville Courier-Journal, 4/19).