New Humana Healthcare Research Study Finds Favorable Selection in Medicare Advantage is Substantially Lower Than MedPAC Estimates

Published in Health Affairs Scholar, the study finds that a single methodological refinement reduces favorable selection estimates by 42%-65%, suggesting a smaller impact on MA payments than previous analyses have indicated

LOUISVILLE, Ky.--(BUSINESS WIRE)--A new study from Humana Healthcare Research (HHR), published in Health Affairs Scholar, finds that favorable selection in Medicare Advantage (MA) may be significantly lower than commonly cited estimates suggest. Favorable selection refers to the extent to which MA enrollees incur lower costs than predicted after risk adjustment and is an important factor in MA payment policy debates. The study found that a single methodological refinement substantially reduced favorable selection estimates compared with previous analyses by MedPAC and others.

Key HHR Study Findings

• Favorable selection estimates were 42%-65% lower than the 10%-15% range often cited in policy discussions, including estimates published by MedPAC.
• Using data from the full MA population, the study estimated favorable selection at 4.9%-5.8% from 2020 through 2022.
• The lower estimates were driven by a single methodological refinement: using comprehensive encounter data to evaluate the full MA population directly, rather than relying on extrapolation derived from external studies and a limited subset of enrollees.
• The findings suggest that favorable selection may have a smaller impact on MA payments than commonly cited estimates indicate.
• More broadly, the study shows that comprehensive encounter data and full-population comparisons can produce more grounded estimates and enable extrapolation that is more directly informed by the full MA population.
• It highlights the importance of continued methodological refinement in assessing favorable selection and its potential impact on MA payment policy.

"This study contributes important new evidence to the Medicare Advantage payment conversation,” said Dr. Sanjay Shetty, President of CenterWell, Humana’s health services organization. “The fact that a single methodological refinement produced substantially lower estimates of favorable selection suggests there is still more to learn about how best to measure this complex issue. These findings highlight the value of comprehensive data and the importance of continued research to inform Medicare Advantage payment policy.”

The study was published in Health Affairs Scholar.

About Humana Healthcare Research

Humana Healthcare Research is a team of expert researchers dedicated to transforming healthcare through impactful, data-driven insights. As a subsidiary of Humana, Humana Healthcare Research collaborates with leading academic and industry partners to advance and shape innovation in care delivery and health policy for better outcomes.

About Humana

Humana (NYSE:HUM) is a leading U.S. healthcare company. Through our Humana insurance services and our CenterWell healthcare services, we make it easier for the millions of people we serve to achieve their best health – delivering the care and service they need, when they need it. These efforts are leading to a better quality of life for people with Medicare and Medicaid, families, individuals, military service personnel, and communities at large. Learn more about what we offer at Humana.com and at CenterWell.com.