UnitedHealth Group Inc. plans to push more doctors and hospitals toward contracts that link their pay with quality and cost measures, aiming to more than double the value of such agreements over the next five years.
The move by the operator of the nation's largest insurance company could hasten a shift already underway, as insurers and the federal government move away from paying health care providers for each individual treatment and instead provide financial incentives to get patients healthier at less cost.
"This represents a fundamental architecture shift and a new normal for us," said Dr. Sam Ho, chief clinical officer of United Healthcare, the company's insurance division. "Payments and incentives and compensation to care providers will need to be earned going forward … and not just automatically assumed."
The Minnetonka-based company began working on outcome-based incentives in April 2010, and now offers bonuses for lowering costs and reducing readmissions, as well as bundled payments that cover a range of medical care, such as for cancer treatment or a heart transplant.
About one-fifth of UnitedHealthcare's reimbursement expenditures, or $20 billion, currently are part of such value-based programs. The insurer aims to increase that to $50 billion by 2017 by creating more incentives for more providers and by giving quality and cost measures increasing weight in compensation, Ho said.
Movement away from traditional fee-for-service models has been accelerated in part by the Affordable Care Act, which penalizes hospitals for unnecessary readmissions, and by the Center for Medicaid and Medicare Services (CMS), which created a shared savings program for doctors caring for Medicare patients.
"Private industry has been moving along to some degree on the back of what CMS is doing in Medicare," said Ana Gupte, an analyst with Dowling & Partners in Farmington, Conn. "United making a big push in this area will move the needle because of how big they are in all spaces, not just commercial. They're big in Medicare, they're big in Medicaid."
Other national players, such as WellPoint, Humana, Aetna and Cigna, have pushed away from the traditional fee-for-service model. Efforts are strong in Minnesota as well, where Blue Cross and Blue Shield, Medica and HealthPartners are among the health plans to reach similar deals. Fairview Health, Allina, Park Nicollet and the Mayo Clinic have led national efforts to partner with insurance plans to avoid unnecessary costs and get keep patients healthy.
UnitedHealth currently has value-based contracts with about 575 hospitals, more than 1,000 medical groups and 75,000 physicians around the country. The initiative has shown "promising trends," the company said.
Such programs have increased the use of less-costly generic prescription drugs and led to a 25 percent drop in out-of-network laboratory services, according to the insurer. The survival rate for transplant patients improved and hospital stays dropped an average of 25 percent.
In contracts where health care providers partnered with UnitedHealthcare to manage patient care and share in the savings, emergency room visits dropped by 16 percent and the number of days spent in the hospital decreased 17 percent.