Understand how we got here — and how to move forward.


May 1, 2018

Humana launches value-based hospital compensation plan

Daily Briefing

    As the health care industry moves toward value-based care, Humana on Wednesday announced its Hospital Incentive Program (HIP)—a value-based compensation plan that will offer hospitals more money for positive results in certain quality and efficiency metrics.

    May 9 webconference: Learn how to deliver a best-in-class patient financial experience

    How it works

    HIP, which took effect at the beginning of 2018, offers participating hospitals extra money based on their performances in three key areas:

    • Patient experience;
    • Patients outcomes; and
    • Patient safety.

    Specifically, HIP will measure hospitals' performances on metrics including:

    • Follow-up appointments 14 days after discharge;
    • The Hospital Consumer Assessment of Healthcare Providers and Systems survey;
    • Length of stay;
    • 30-day readmission rate;
    • Infection rates; and
    • Palliative care performance.

    HIP will also incorporate two certification programs created by The Joint Commission.

    HIP will be available to all hospitals that have commercial contracts with Humana. According to Ben Lunsford, Humana's VP of value-based strategies, hospitals won't be penalized for failing to improve on any of these metrics if they participate in the program.

    Humana said that a number of hospitals are already participating but declined to give an exact number, saying it would announce the figure soon.


    Lunsford said that HIP is a "natural extension" of Humana's "other value-based models that are already out there." He added, "HIP provides hospitals with an opportunity to participate in a value-based program that recognizes a hospital's continuous patient improvement efforts via earned annual rate increases."

    Caraline Coats, the VP of Humana's Provider Development Center of Excellence, said that HIP "expands Humana's reach in value-based care as we broaden our efforts to provide a better experience for our members and help them achieve their best health."

    However, according to Modern Healthcare, HIP will likely be used by hospitals who have a large number of Humana members.

    Andrew Wilson, research team leader at the Altarum Center for Value in Health Care, said, "If (Humana) is a smaller proportion of your patients, what's the benefit?" He added, "The investment might not be worth it."

    Wilson also suggested that the program may have a limited effect in improving provider performance because the quality measures are broadly defined, and the program doesn't assess any financial penalty for failing to improve on the program's metrics (Commins, HealthLeaders Media, 4/26; AHA News, 4/26; Haefner, Becker's Hospital Review, 4/26; Castellucci, Modern Healthcare, 4/25; Stankiewicz, Fierce Healthcare, 4/26).

    May 9 webcon: Learn how to deliver a best-in-class patient financial experience

    Join us for a webconference on May 9 to learn how to transform your revenue cycle to meet your patients' financial expectations, increase revenue, and maintain loyalty. Secure your spot for the webconference today.

    Register Now

    Have a Question?


    Ask our experts a question on any topic in health care by visiting our member portal, AskAdvisory.