Review of Humana Health Plan of Texas, Inc.'s Modifications to Its 2001 Adjusted Community Rate Proposal Under the Benefits Improvement and Protection Act of 2000

EXECUTIVE SUMMARY:

This is one of a series of reports on Medicare+Choice organizations' use of the additional funding provided by the Benefits Improvement and Protection Act of 2000 (BIPA).  Our objectives were to determine whether Humana (1) supported the $7.8 million of additional capitation payments and used the funds in a manner consistent with BIPA requirements and (2) supported the $6.6 million cost increase that was not related to the BIPA funding increase.  Of the $7.8 million BIPA capitation payment increase in Humana's revised proposal, $2.6 million was properly supported and was used in a manner consistent with BIPA requirements.  However, the remaining $5.2 million was unsupported; therefore, we could not determine whether it was used in a manner consistent with BIPA requirements.  Additionally, of the $6.6 million increase in direct medical care costs that was not related to the BIPA funding increase, $1.3 million was supported.  The remaining $5.3 million was unsupported.   

We recommended that Humana:  (1) work with CMS to determine how much of the $5.2 million BIPA capitation payment increase was used in a manner consistent with BIPA requirements and refund any amount not used in such a manner, (2) work with CMS to determine what remedies are needed to address the $5.3 million of unsupported increases unrelated to the BIPA funding increase, and (3) ensure that estimated costs in future proposals are properly supported.  In response to our report, Humana did not directly address our recommendations but did provide additional documentation.