(Bloomberg) — UnitedHealth Group Inc. says it will more than double payments to physicians tied to quality and cost efficiency within five years, in the latest sign of transformation in the American medical system.
UnitedHealth, the biggest U.S. insurer, says it expects to spend about $50 billion under accountable-care contracts by 2017, compared with $20 billion now. The programs already have slowed the increase in medical costs and reduced emergency-room visits by 17%, according to the Minnetonka, Minnesota-based carrier.
Insurance companies and the federal government are experimenting with accountable care to shift from fee-for-service payments that pay providers for each individual procedure. The Obama administration credited pilot programs included in the Affordable Care Act for cutting the rise in health care spending in half over the past three years.
UnitedHealth is “moving even more broadly to value-based payment models and integrating those with our care-provider network,” says Austin Pittman, president of UnitedHealthcare Networks. “Our unparalleled experience with accountable care models — and there are many — demonstrates that they can work better for everyone in health care.”
The company insured about 42 million people as of March 30. It spent $80.2 billion on medical claims last year, according to a Jan. 17 earnings statement.
Under accountable-care deals, doctors, hospitals and other care providers can earn higher payments if they meet goals based on cost and patient health or lose money if they miss the marks. Smaller insurers including Aetna Inc. and Cigna Corp. also have pushed the new payment plans, with Cigna Chief Executive Officer David Cordani saying he hoped to increase the members in such arrangements 10-fold by 2014.
The efforts haven’t always worked. Last month, the U.S. Centers for Medicare and Medicaid Services said nine health systems, almost a third of the participants, were considering an exit from one pilot program started under the health-care law.
UnitedHealth says it has seen benefits. One program reduced the use of out-of-network laboratory services by 25%. Another shortened the average hospital stay for organ-transplant patients by a quarter, according to today’s statement. The insurer said it shaved as much as 4.5 percentage points off the rise in medical costs under accountable-care programs.
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