Humana bases executive pay on member health outcome measures

Amid the industry's shift to performance-based provider payments, one health insurer is taking the trend a step further by tying executive bonuses to members' health outcomes.

Humana describes its new approach in a recent filing with the Securities and Exchange Commission, noting that for 2015 its executive officers' bonuses will be based 80 percent upon meeting earnings objectives and 20 percent upon meeting certain consumer health metrics. This, Humana spokesman Tom Noland tells Insider Louisville, will "incentivize our executives to take actions to improve the health of our members."

To create its consumer health participation performance metric (CHP), Humana chose five health outcomes indicators "on the basis of being applicable to the medical lines of our business and the company's overall business outcomes," the filing says. They include: health risk assessment completion, Humana at Home chronic care program engagement, in-home assessment acceptance, Humana pharmacy usage and participation in the Humana Vitality program.

The insurer says it intentionally set the goals above its 2014 results for each category to reward its leaders only in the event they help the company achieve exemplary performance. The goals also took into account the company's projected new member growth, Noland said.

But given that the organization did not meet its financial performance and customer outcomes goals in 2015, the Humana board of directors' Organization and Compensation Committee decided not to pay the executive officers bonuses under its Executive Management Incentive Compensation Plan, according to the filing.

The SEC filing also shows that in the event Humana CEO Bruce Broussard is let go because of a leadership change tied to the company's pending merger with Aetna, he will be compensated up to $40.2 million.

The CEOs of the country's five largest insurers each took home more than $10 million in total compensation in 2014, FierceHealthPayer has reported.

To learn more:
- here's the SEC filing
- read the Insider Louisville article

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