by Aetna Inc.
Pursuant to Rule 425 of the Securities Act of 1933
and deemed filed pursuant to Rule 14a-6(b)
of the Securities Exchange Act of 1934
Subject Company: Humana Inc.
Commission File No. for Registration Statement on
Form S-4 filed by Aetna Inc.: 333-206289
The following communication was distributed on Aetna’s external website:
|·||In August 2015, two studies pointed to the benefits of accountable care organizations (ACO). One found that a majority of physician
leaders are now in favor of ACOs, while one government cost study showed the financial benefits of ACOs in Medicare exceeded $400
[Link to: http://www.beckershospitalreview.com/accountable-care-organizations/physician-leaders-quality-service-and-cost-savings-favor-accountable-care-organizations.html]
The following article written by a third party was made available via link provided in the above communication:
Physician leaders, quality service and cost savings favor accountable care organizations
Written by Larry Stewart, President, Tal Physicians, Tal Healthcare | August 28, 2015
Three August 2015 studies have made the Accountable Care Organizations (ACOs) and the Affordable Care Act (ACA) seem very appealing.
One study this month found that a majority of physician leaders are now in favor of ACOs and the ACA. Further compelling data favoring ACOs was presented this week. In one government cost study, financial benefits of ACOs exceeded $400 million; in another quality score increases of 10% attributed to ACOs were achieved at Montefiore Medical Center, a leading tertiary care facility in New York City.
ACOs are a network of hospitals, clinics, physicians, and providers held to quality and cost of care standards for a set patient population, and work by giving providers bonuses for meeting targets in both cost savings and quality. They were created as a direct result of the ACA, and contract with government-based or private insurers to serve large populations. In certain cases, this means doctors are rewarded for keeping patients healthy rather than earning from repeated treatment.
As contentious as the ACA has been in the media and the political arena, ACOs are showing bottom-line results on a national scale and in a particular market as well. In 2014 Montefiore Medical Center generated a 3.6 percent gross savings and increased its overall quality score over one year by 10 percent, to 86.2. The data comes from an ACO affiliated with Montefiore that treats more than 28,000 people.
A nationwide government study makes the larger effects of the ACA seem as promising as the Montefiore Medical Center study does. According to the study, ACOs: "...generated more than $411 million in total savings in 2014, which includes all ACO savings and losses. At the same time, 97 ACOs qualified for shared savings payments of more than $422 million by meeting quality standards and their savings threshold."
Successes local to New York City and across America suggest wider adoption of ACO principles is ahead, along with even further increases in need for providers to take on formal leadership roles. Because physician leaders require both business and clinical knowledge beyond the scope of a pure executive or pure physician alone, search firms with comprehensive experience across the spectrum of healthcare and support services are at an advantage due to ACOs.
There are arguments against them, however. The same recent nationwide study of ACOs also shows that savings are achieved by less than half of ACO early adopters. Nevertheless, the results from the August 2015 study show that ACOs with more experience tend to perform better over time, explaining the overall
success found in the study and making the future of problematic ACOs more promising than is initially apparent.
The benefits of ACOs are winning favor with the physician leaders even as these organizations increase demand for doctors like them. A recent survey has found that a significant majority of America's physician leaders see ACOs as beneficial to healthcare from both a finance and quality perspective. Two responses in are of particular note: "69 percent of respondents agreed or strongly agreed that physicians should be held accountable for costs of care in addition to quality of care. 57 percent of respondents agreed or strongly agreed that accountable care organizations (ACOs) will be a permanent model for risk-sharing with payers in years ahead."
Many major players in national health insurance have taken note of ACOs before these studies and are acting to implement them more widely. ACOs only affect a small percentage of private healthcare plans, but their effects on private healthcare are broadening. Aetna, Anthem, Cigna, and UnitedHealth Group along with almost all Blue Cross and Blue Shield plans are all ramping up billions in funding to ACOs and other organizations based on ACO principles.
As far back as 2012, The Atlantic argued that changes from the ACA and ACOs would result in a great demand for clinicians who lead, including physician and nurse executives. This demand is affecting both physician and executive search, and leading to an incentive for firms to embrace the convergence of and synergy between recruiting both healthcare and leadership roles.
Physician leaders are rising in value. It is increasingly clear that, because of ACOs, they are increasingly important to the bottom line and quality of the healthcare system as a whole. As a consequence, demand for search firms who integrate knowledge of both physicians and executives seems to be increasing. Healthcare search firms serve a crucial role in the quality and cost driven system arising after the ACA.
To many, including noted author and journalist Steven Brill, the United States seems to have a "broken healthcare system", one that Mr. Brill describes in his landmark work America's Bitter Pill. ACOs are doing more than making this bitter pill of healthcare easier to swallow; they are making it more efficient and effective when patients need it, according to August 2015 findings. Not everything happening in healthcare is leaving a bad aftertaste.
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This website does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. In connection with the proposed transaction between Aetna Inc. (“Aetna”) and Humana Inc. (“Humana”), Aetna has filed with the Securities and Exchange Commission (the “SEC”) a registration statement on Form S-4, including Amendment No. 1 thereto, containing a joint proxy statement of Aetna and Humana that also constitutes a prospectus of Aetna. The registration statement was declared effective by the SEC on August 28, 2015, and Aetna and Humana commenced mailing the definitive joint proxy statement/prospectus to shareholders of Aetna and stockholders of Humana on or about September 1, 2015. INVESTORS AND SECURITY HOLDERS OF AETNA AND HUMANA ARE URGED TO READ THE DEFINITIVE JOINT PROXY STATEMENT/PROSPECTUS AND OTHER DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain free copies of the registration statement and the definitive joint proxy statement/prospectus and other documents filed with the SEC by Aetna or Humana through the website maintained by the SEC at http://www.sec.gov. Copies of the documents filed with the SEC by Aetna are available free of charge on Aetna’s internet website at http://www.Aetna.com or by contacting Aetna’s Investor Relations Department at 860-273-2402. Copies of the documents filed with the SEC by Humana are available free of charge on Humana’s internet website at http://www.Humana.com or by contacting Humana’s Investor Relations Department at 502-580-3622.
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Statements in this website regarding Aetna that are forward-looking, including Aetna’s projections as to the anticipated benefits of the pending transaction to Aetna, increased membership as a result of the pending transaction, the impact of the pending transaction on Aetna’s businesses and share of revenues from Government business, the methods Aetna will use to finance the cash portion of the transaction, the impact of the transaction on Aetna’s revenue and operating earnings per share, the synergies from the pending transaction, and the closing date for the pending transaction, are based on management’s estimates, assumptions and projections, and are subject to significant uncertainties and other factors, many of which are beyond Aetna’s control. In particular, projected financial information for the combined businesses of Aetna and Humana is based on management’s estimates, assumptions and projections and has not been prepared in conformance with the applicable accounting requirements of Regulation S-X relating to pro forma financial information, and the required pro forma adjustments have not been applied and are not reflected therein. None of this information should be considered in isolation from, or as a substitute for, the historical financial statements of Aetna or Humana. Important risk factors could cause actual future results and other future events to differ materially from those currently estimated by management, including, but not limited to: the timing to consummate the proposed acquisition; the risk that a condition to closing of the proposed acquisition may not be satisfied; the risk that a regulatory approval that may be required for the proposed acquisition is delayed, is not obtained or is obtained subject to conditions that are not anticipated; Aetna’s ability to achieve the synergies and value creation contemplated by the proposed acquisition; Aetna’s ability to promptly and effectively integrate Humana’s businesses; the diversion of management time on acquisition-related issues; unanticipated increases in medical costs (including increased intensity or medical utilization as a result of flu or otherwise; changes in membership mix to higher cost or lower-premium products or membership-adverse selection; medical cost increases resulting from unfavorable changes in contracting or re-contracting with providers (including as a result of provider consolidation and/or integration); and increased pharmacy costs (including in Aetna’s health insurance exchange products)); the profitability of Aetna’s public health insurance exchange products, where membership is higher than Aetna projected and may have more adverse health status and/or higher medical benefit utilization than Aetna projected; uncertainty related to Aetna’s accruals for health care reform’s reinsurance, risk adjustment and risk corridor programs (“3R’s”); the implementation of health care reform legislation, including collection of health care reform fees, assessments and taxes through increased premiums; adverse legislative, regulatory and/or judicial changes to or interpretations of existing health care reform legislation and/or regulations (including those relating to minimum MLR rebates); the implementation of health insurance exchanges; Aetna’s ability to offset Medicare Advantage and PDP rate pressures; and changes in Aetna’s future cash requirements, capital requirements, results of operations, financial condition and/or cash flows. Health care reform will continue to significantly impact Aetna’s business operations and financial results, including Aetna’s pricing and medical benefit ratios. Key components of the legislation will continue to be phased in through 2018, and Aetna will be required to dedicate material resources and incur material expenses during 2015 to implement health care reform.
Certain significant parts of the legislation, including aspects of public health insurance exchanges, Medicaid expansion, reinsurance, risk corridor and risk adjustment and the implementation of Medicare Advantage and Part D minimum medical loss ratios (“MLRs”), require further guidance and clarification at the federal level and/or in the form of regulations and actions by state legislatures to implement the law. In addition, pending efforts in the U.S. Congress to amend or restrict funding for various aspects of health care reform, and litigation challenging aspects of the law continue to create additional uncertainty about the ultimate impact of health care reform. As a result, many of the impacts of health care reform will not be known for the next several years. Other important risk factors include: adverse changes in health care reform and/or other federal or state government policies or regulations as a result of health care reform or otherwise (including legislative, judicial or regulatory measures that would affect Aetna’s business model, restrict funding for or amend various aspects of health care reform, limit Aetna’s ability to price for the risk it assumes and/or reflect reasonable costs or profits in its pricing, such as mandated minimum medical benefit ratios, or eliminate or reduce ERISA pre-emption of state laws (increasing Aetna’s potential litigation exposure)); adverse and less predictable economic conditions in the U.S. and abroad (including unanticipated levels of, or increases in the rate of, unemployment); reputational or financial issues arising from Aetna’s social media activities, data security breaches, other cybersecurity risks or other causes; Aetna’s ability to diversify Aetna’s sources of revenue and earnings (including by creating a consumer business and expanding Aetna’s foreign operations), transform Aetna’s business model, develop new products and optimize Aetna’s business platforms; the success of Aetna’s Healthagen® (including Accountable Care Solutions and health information technology) initiatives; adverse changes in size, product or geographic mix or medical cost experience of membership; managing executive succession and key talent retention, recruitment and development; failure to achieve and/or delays in achieving desired rate increases and/or profitable membership growth due to regulatory review or other regulatory restrictions, the difficult economy and/or significant competition, especially in key geographic areas where membership is concentrated, including successful protests of business awarded to Aetna; failure to adequately implement health care reform; the outcome of various litigation and regulatory matters, including audits, challenges to Aetna’s minimum MLR rebate methodology and/or reports, guaranty fund assessments, intellectual property litigation and litigation concerning, and ongoing reviews by various regulatory authorities of, certain of Aetna’s payment practices with respect to out-of-network providers and/or life insurance policies; Aetna’s ability to integrate, simplify, and enhance Aetna’s existing products, processes and information technology systems and platforms to keep pace with changing customer and regulatory needs; Aetna’s ability to successfully integrate Aetna’s businesses (including Humana, Coventry, bswift LLC and other businesses Aetna may acquire in the future) and implement multiple strategic and operational initiatives simultaneously; Aetna’s ability to manage health care and other benefit costs; adverse program, pricing, funding or audit actions by federal or state government payors, including as a result of sequestration and/or curtailment or elimination of the Centers for Medicare & Medicaid Services’ star rating bonus payments; Aetna’s ability to reduce administrative expenses while maintaining targeted levels of service and operating performance; failure by a service provider to meet its obligations to us; Aetna’s ability to develop and maintain relationships (including collaborative risk-sharing agreements) with providers while taking actions to reduce medical costs and/or expand the services Aetna offers; Aetna’s ability to demonstrate that Aetna’s products and processes lead to access to quality affordable care by Aetna’s members; Aetna’s ability to maintain Aetna’s relationships with third-party brokers, consultants and agents who sell Aetna’s products; increases in medical costs or Group Insurance claims resulting from any epidemics, acts of terrorism or other extreme events; changes in medical cost estimates due to the necessary extensive judgment that is used in the medical cost estimation process, the considerable variability inherent in such estimates, and the sensitivity of such estimates to changes in medical claims payment patterns and changes in medical cost trends; a downgrade in Aetna’s financial ratings; and adverse impacts from any failure to raise the U.S. Federal government’s debt ceiling or any sustained U.S. Federal government shut down. For more discussion of important risk factors that may materially affect Aetna, please see the risk factors contained in Aetna’s 2014 Annual Report on Form 10-K (“Aetna’s 2014 Annual Report”) on file with the Securities and Exchange Commission (“SEC”). You should also read Aetna’s 2014 Annual Report and Aetna’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2015, on file with the SEC, for a discussion of Aetna’s historical results of operations and financial condition. Except as specifically noted, information on, or accessible from, any website to which this website contains a hyperlink is not incorporated by reference into this website and does not constitute a part of this website.
No assurances can be given that any of the events anticipated by the forward-looking statements will transpire or occur, or if any of them do occur, what impact they will have on the results of operations, financial condition or cash flows of Aetna or Humana. Neither Aetna nor Humana assumes any duty to update or revise forward-looking statements, whether as a result of new information, future events or otherwise, as of any future date.