Humana invests in Medicaid plan as dual-eligible market share rises

Humana will pay an undisclosed sum to buy Wisconsin-based Medicaid managed-care company Inclusa, cementing its foothold in the increasingly competitive market for dual-eligible patients. 

Inclusa provides long-term care services to approximately 16,600 older adults and individuals with disabilities, according to Humana. The deal, announced Friday, is subject to regulatory approval. 

Humana didn’t immediately respond to an interview request. 

The addition of Inclusa extends Humana’s fast-growing dual-eligible special needs plan membership, or D-SNPs, which is for individuals who qualify for both Medicare and Medicaid. 

Dual-eligible plans are a type of Medicare Advantage product whose popularity has helped power privatized Medicare’s increasing edge over the fee-for-service program. Enrollment in the plans rose 20% year-over-year, to 4.5 million members at the start of 2022, according to the Chartis Group, a consultancy. That compares with a 3% rise in overall Medicare Advantage membership, Chartis said. 

The Centers for Medicare and Medicaid Services pays Medicare Advantage insurers more for caring for dual-eligible consumers, who are some of the nation’s oldest, sickest and most vulnerable patients. By effectively managing these individuals’ care, health insurers believe the group poses the greatest opportunity for profit. 

Humana is the second-largest Medicare Advantage and dual-eligible carrier in the nation, and growth in its plans has outpaced the industry average. Humana’s dual-eligible members rose 24%, to 661,200 individuals at the end of its second quarter. That compares with a 4.5% increase in the company’s 5.1 million total Medicare Advantage members. The insurer controls nearly 15% of the D-SNP market. 

The company’s Medicaid investments helped it capture dual-eligible market share in 2022 from UnitedHealth Group’s UnitedHealthcare, the nation’s largest Medicare Advantage insurer and D-SNP carrier, Chartis Group said. UnitedHealthcare’s dual-eligible market share declined 1.5%, to 38.3% of the dual-eligible market at the start of the year, according to the consultancy. UnitedHealthcare does not break out how many of its 6.9 million Medicare Advantage members are dual-eligible patients. It started the year with 1.6 million enrollees, according to Chartis.

Growing Medicare Advantage enrollment is a key part of Humana’s strategy. The company announced a $1 billion cost-cutting plan in February after increased competition cut into the insurer’s expected Medicare Advantage growth. 

The insurer has since reorganized its business with an eye toward consolidating technology services and shedding non-essential businesses. Humana on Thursday closed the divestiture of its majority stake in Kindred at Home’s hospice and personal care business to private equity firm Clayton, Dubilier & Rice. The new company will be restructured into a standalone business named Gentiva.