Humana Healthcare Research (HHR) has published a new study in Health Affairs Scholar finding that favorable selection in Medicare Advantage (MA) is substantially lower than estimates previously cited by the Medicare Payment Advisory Commission (MedPAC). The research suggests that the impact of favorable selection on MA payments may be smaller than current policy debates indicate, driven by a methodological refinement that utilizes comprehensive encounter data rather than extrapolation from limited subsets.

The study analyzed data from the full MA population between 2020 and 2022. By evaluating this complete dataset directly, HHR estimated favorable selection at 4.9%-5.8%. This figure represents a significant downward revision from the 10%-15% range frequently referenced in policy discussions and earlier MedPAC analyses. The primary driver of this discrepancy was the shift from relying on external studies and limited enrollee subsets to using comprehensive encounter data for direct evaluation.

Key Findings

The core findings of the HHR study are summarized below:

The lower estimates were achieved through a single methodological refinement: the use of comprehensive encounter data to evaluate the full MA population directly. This approach contrasts with prior methods that relied on extrapolation derived from external studies and a limited subset of enrollees. The findings imply that policy assumptions based on higher favorable selection rates may overstate the financial impact on MA payments.

Implications for Payment Policy

Dr. Sanjay Shetty, President of CenterWell, Humana’s health services organization, stated that the study contributes important new evidence to the Medicare Advantage payment conversation. He noted that the substantial reduction in estimates resulting from a single methodological change suggests there is still more to learn about measuring this complex issue. The findings highlight the value of comprehensive data and the importance of continued research to inform MA payment policy.

More broadly, the study demonstrates that full-population comparisons can produce more grounded estimates. This enables extrapolations that are more directly informed by the actual MA population rather than inferred from smaller samples. The research underscores the need for continued methodological refinement in assessing favorable selection to ensure accurate policy formulation.

Kaskela Law LLC is investigating Humana Inc. on behalf of the company’s long-term investors to determine if federal securities laws were violated. The investigation focuses on whether members of Humana’s board of directors breached their fiduciary duties in connection with alleged misconduct involving the company’s core Medicare Advantage business.

A federal securities fraud complaint was recently filed against Humana on behalf of certain investors who purchased shares between July 27, 2022, and October 1, 2024. According to the complaint, Humana and certain senior executive officers issued a series of materially false and misleading statements to investors during this period.

The complaint details that the truth regarding Humana’s increased utilization began to emerge in June 2023. This revelation caused a series of stock price declines in the latter half of 2023 and during fiscal 2024.

Kaskela Law LLC is examining whether the board's actions or inactions contributed to the alleged misleading disclosures. The firm exclusively represents investors in securities fraud, corporate governance, and merger & acquisition litigation on a contingent basis.

Current Humana shareholders who purchased or acquired their HUM shares prior to July 1, 2023, are encouraged to contact Kaskela Law LLC for additional information about the investigation and their legal rights. The firm can be reached by phone at (484) 229 – 0750 or via email at abell@kaskelalaw.com .