By Cyril Tuohy
Health insurer UnitedHealthcare is planning to more than double the value of its contracts with accountable care organizations (ACOs) over the next five years across its employer-sponsored Medicare and Medicaid health benefit businesses, the company has announced.
By 2017, the insurer expects the number of reimbursements to hospitals, doctors and other specialists belonging to accountable care networks to reach $50 billion, more than double the $20 billion in reimbursements currently paid to providers under contracts linked to quality and cost-based results.
“We are improving health outcomes for patients at lower costs by moving even more broadly to value-based payment models and integrating those with our care provider network, product and clinical strategies,” Austin Pittman, president of UnitedHealthcare Networks, said in a news release.
The move represents a major endorsement by one of the nation’s largest health insurers toward a value-based health care model in which health providers like hospitals, doctors and ancillary service providers are reimbursed for services designed to improve outcomes.
Older, fee-for-service, volume-based models are considered outdated. Under such a model, hospitals and doctors had to generate more fees to pay for rising costs. Generating more fees means performing more services, regardless of the true benefit to the patient, all while costs continue to rise.
The government, through the Patient Protection and Affordable Care Act, also has mandated the health care system provide better care for individuals and groups at a lower cost.
In response, hospitals, doctors groups and specialists have joined ACOs in an attempt to deliver better quality, coordinate care across different populations and lower the volume of health care consumption.
“Physicians have increasingly decided that the current fee-for-service model is not sustainable in the long term, but they want payment models that are more customized to meet their specific needs,” Ruth Benton, chief executive officer of New West Physicians, said in a statement.
Dozens of ACOs have cropped up around the country over the past several years, and an estimated 25 million to 31 million Americans receive health care through ACOs, according to a report published last year by consultant Oliver Wyman. That still represents less than 10 percent of the U.S. population of 315 million.
The shift to accountable care represents “a massive opportunity,” according to the report, and UnitedHealthcare’s decision to double contract volume over the next five years is a signal that a major health insurer is ready to back the trend.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].
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