Inclusa Deal Will Give Humana Greater Foothold in Wisconsin, Medicaid

by Leslie Small

 

Fresh off of touting its organic Medicaid growth during its second-quarter 2022 earnings call, Humana Inc. recently unveiled an acquisition that will help the insurer grow its Medicaid business inorganically as well. The Louisville, Ky.-based company said on Aug. 12 that it will purchase substantially all the assets of Inclusa, which provides long-term services and supports to about 16,600 older adults and adults with disabilities through Wisconsin’s Family Care program.   Acquisition could improve care management, network adequacy  Humana already has a Medicaid presence in Wisconsin, having purchased the insurer iCare there in 2020.  “We think it’s in line with their strategic plan,” S&P analyst James Sung tells AIS Health regarding Humana’s proposed purchase of Inclusa. “They have done a good job growing their Medicaid business — mostly organic,” or not involving mergers or acquisitions. “It’s a difficult market to get into, so the fact that they’ve been growing organically has been pretty impressive.”  One major benefit of a payer deepening its presence within any given state could be to expand its provider network to better serve Medicaid members, says Peter Manoogian, a principal at ZS Associates.  The move could also bolster Humana’s care management capabilities, which is particularly important when serving those dually eligible for Medicare and Medicaid, Manoogian points out. The duals market is attractive for insurers because it serves a high-need, underserved population, thus creating opportunities for better care management and delivery, he adds.   Medicare will likely remain Humana’s core business  “Getting into a pretty deeply entrenched industry in Medicaid is not easy,” Sung tells AIS Health. “Humana’s a little bit smaller than their national peers” in the Medicaid space “so every state referral they get is really important.”    Nevertheless, Sung says he doesn’t expect Humana to get to a point where its Medicaid business rivals the importance or size of its MA portfolio.   With Medicaid, which requires “winning each state contract one by one, it takes a while,” Sung says, adding that MA is also a higher-margin business than Medicaid. “ I think they’re going to continue to grow in Medicaid — they’ve had success — but I think the core book is still MA.”