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Humana (HUM) Ties Up With Allina Health to Boost Value-Based Care

Humana Inc. HUM recently extended the value-based agreement with Minnesota-based Allina Health in a bid to offer enhanced health outcomes to Humana Medicare Advantage (“MA”) members across the state.

Effective from the beginning of 2022, the multi-year deal with Allina Health underscores Humana’s consistent efforts to deliver value-based care across the United States. The agreement is primarily focused on devising personalized care plans with the aid of well-versed medical teams, and offering proactive health screenings and programs best suited for each patient’s needs.

Value-based agreements utilize advanced technologies to enhance care coordination between physicians and patients. This integrated care delivery model is basically a transition from fee-for-service, which reimburses physicians on the basis of the number of services provided, to the value-based payment model that reimburses the physicians on the basis of the recovery of the patients they treat.

Initiatives similar to the latest one are expected to strengthen Humana’s MA business. Concurrently, the move aims to include additional members within HUM’s value-based relationships. As of Sep 31, 2021, roughly 68% of the individual MA members of Humana were in value-based relationships under its integrated care delivery model compared to 66% in the prior-year comparable period.

The latest initiative also highlights HUM’s efforts to bolster its presence in Minnesota, wherein it provides cost-effective HMO-POS and local PPO plans. Meanwhile, Allina Health, with its robust healthcare network, seems to be the apt partner for expanding Humana’s Minnesota footprint.

Humana boasts of a strong Medicare business across the United States, where it has been offering a minimum of one Medicare plan across 50 states. HUM has been providing private health plans coming under the Medicare program for more than 30 years. The COVID-19 outbreak coupled with an aging population in the United States has further spurred the demand for MA plans, which remains the preferred choice for consumers owing to several bundled benefits, improved care coordination and affordable nature.

Humana continues to pursue collaborations with physicians and well-established health care professionals to deliver enhanced care to patients. These initiatives have enabled HUM to bolster its nationwide footprint and delve into underserved areas.

The MA business of Humana continues to witness increased membership, which has fetched higher premiums. Several contract wins and renewals similar to the latest one have been driving the Medicare business.

Higher premiums have been contributing the most to Humana’s revenues, which have risen consistently since 2010, except in 2017. HUM’s Medicare products contribute significantly to the consistent top-line growth and the nine months of 2021 was no exception to the trend. In the said time frame, Medicare products accounted for around 83% of the total premiums and services revenues fetched by Humana.

Similar to HUM, other medical stocks such as Cigna Corporation CI, Centene Corporation CNC and UnitedHealth Group Incorporated UNH also cater to healthcare needs of people through MA plans.

Cigna’s MA business has performed well courtesy of constant product expansions, growing membership, and new collaborations or contract extensions with renowned healthcare systems. This has been bolstering CI’s partner networks and strengthening its U.S. footprint. Cigna remains on track to achieve MA customer growth in the targeted range of 10-15% this year.

Centene caters to more than 1.1 million MA members across 33 states. Several contract wins and renewals have resulted in higher membership growth for the MA business. For 2022, with enhanced MA offerings, Centene has plans to foray into 327 new counties and three new states, namely Massachusetts, Nebraska and Oklahoma. This will bring the count of MA states to 36.

UnitedHealth Group remains well-poised to benefit from a strong MA business. The business has performed well courtesy of numerous business wins and robust membership rise in individual MA business amid the annual enrollment period. The 2021 Medicare enrollment season marked the largest MA footprint expansion of UNH in five years. UnitedHealth Group expects to add nearly 900,000 people to its Medicare plans in 2021.

Shares of Humana have gained 5.9% in a year compared with the industry’s rally of 26.9%.

Image Source: Zacks Investment Research

Humana presently has a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Cigna, Centene and UnitedHealth Group gained 0.8%, 16.9% and 30.2%, respectively, in a year.

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UnitedHealth Group Incorporated (UNH): Free Stock Analysis Report
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Centene Corporation (CNC): Free Stock Analysis Report
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