UnitedHealth looks at doctors' pay for medical savings

A new report from UnitedHealth Group Inc. takes aim at the way U.S. doctors get paid, saying the nation could save up to $1 trillion over the next decade in health care costs if it were possible to "unleash the potential of payment reform initiatives."

The report, which comes out Wednesday, analyzes the savings as well as likely pitfalls to adopting a number of different methods to move away from the current "fee-for-service" approach, which pays doctors based on the number of services they provide.

The federal health care law is forcing some of the changes, while Minnetonka-based UnitedHealth and the bulk of the major hospital systems and health plans in Minnesota have taken the initiative on their own.

Newer "pay-for-performance" models work to find ways to compensate caregivers who emphasize prevention, help patients manage costly chronic diseases and find less costly, yet effective, ways to treat patients.

Under the fee-for-service model, doctors often don't get reimbursed for these kinds of interactions or they don't get paid as well.

"Payment reform is now seen as self-evidently fundamental to U.S. health reform, quality improvement and cost containment," Simon Stevens, UnitedHealth Group's executive vice president, said in the preface to the report.

As the nation's largest health insurance company, UnitedHealth has a big stake in changes to the payment system, which many see as the next wave of reform in health care.

Stevens said the old payment model remains "deeply ingrained" in the health care system, however, and the research aims to get at some of the trade-offs and questions that arise as states, health plans, hospitals and doctors change the existing system.

Just a third of physicians favor expanding pay that offers incentives to keep people healthy and out of hospitals, according to a poll done for United by Harris Interactive as part of the report.

The nationwide poll also found that only 28 percent of doctors believed practices in their area were prepared to assume greater responsibility for managing patient care, and only 12 percent were prepared to assume greater financial risk for that care.

Minnesota is "way ahead of that curve," said Dr. Gary Oftedahl, chief knowledge officer at ICSI, the Institute for Clinical Systems Improvement. The nonprofit was formed in the early 1990s to bring together doctors and insurers to make the system more efficient and affordable.

Oftedahl estimates that three-quarters of the state's providers get 75 percent of their reimbursement by sharing the risk of patient care with health plans -- an arrangement that allows both entities to benefit from cost savings when patients get healthier faster and don't bounce in and out of the doctor's office.

"There's a collaboration not seen in other states, where we are already focused on the health of the population," Oftedahl said. "Our commercial payers are nonprofits. That has significant implications that are beneficial to drive these efforts moving forward."

With health care costs projected to eat up as much as a fifth of the U.S. economy in a decade, UnitedHealth said its research shows that while $1 trillion in savings is possible, a number of payment reform efforts could more likely slow spending by $200 billion to $600 billion in the next 10 years.

The company said it links more than $18 billion of its hospital and physician payments to "pay-for-performance measures," showing a 2:1 return on investment.

The report analyzed other techniques, such as bundling payments and charging a single amount for an entire treatment program and the formation of "accountable care organizations" that give incentives to a team of caregivers for keeping patients healthy.