UnitedHealth Proposes Medicare, Medicaid Managed-Care Plan to Cut Costs

Oct. 15 (Bloomberg) -- UnitedHealth Group Inc., the biggest U.S. health insurer by sales, said enrolling dual recipients of Medicare and Medicaid into managed-care plans would save as much as $1.62 trillion in the U.S. during 25 years.

Almost 9 million Americans receive coverage from both Medicare, the U.S. health plan for the elderly and disabled, and the Medicaid program for the poor. Minnetonka, Minnesota-based UnitedHealth proposed in a report today to combine benefits of the programs in a single plan to better coordinate patient care.

The proposal is among recommendations the company said would cut public and private U.S. health-care spending by as much as $3.5 trillion during a quarter century. President Barack Obama is promoting the health-care overhaul signed in March as Republicans in Congress vow to repeal it. The Congressional Budget Office estimated that a fully implemented law would save $124 billion in health-care spending by the U.S. government in 10 years.

“For this to work, you would need to really redesign the structure of Medicare and Medicaid,” said Vicki Gottlich, a Washington-based senior policy attorney at the Center for Medicare Advocacy Inc., a nonprofit organization assisting Medicare beneficiaries. “People talked about this 20 years ago and people could never figure out how to do it.”

Photographer: Joe Tabacca/Bloomberg

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Photographer: Joe Tabacca/Bloomberg

The health law didn’t seek to replace the fee-for-service payment systems employed by Medicare and Medicaid, said Simon Stevens, executive vice president of UnitedHealth.

‘Unfinished Business’

“This is unfinished business from the health-reform debate of the last 18 months,” he said yesterday in a telephone interview. Such a change would increase the number of government beneficiaries on UnitedHealth’s rolls, he said, without providing a specific estimate.

The law expanded regulators’ authority to test programs such as those recommended in the report by UnitedHealth, the largest provider of private Medicare and Medicaid health plans, Stevens said. These programs are similar, he said, to those the insurer established for commercial clients, Medicaid plans and Medicare Advantage, which offers additional benefits at different premium costs than the regular government plan.

UnitedHealth had 1.8 million Medicare Advantage customers and 2.9 million people in Medicaid managed care plans in 2009, according to data compiled by Bloomberg.

Seventy percent of Medicaid’s 58 million beneficiaries already receive coverage from a private insurance plan. About 24 percent of the 47 million Medicare participants belong to Advantage plans run by private insurers, the Kaiser Family Foundation, a Menlo Park, California-based health policy research institution, said in separate reports this year.

Pilot Programs

The Centers for Medicare and Medicaid Services has broad authority to approve pilot programs that waive regular rules “as long as the waiver comports with all regulations and the goals of the program,” Mary Kahn, an agency spokeswoman, said yesterday in a telephone interview. Kahn said she couldn’t comment on UnitedHealth’s proposals because the agency hadn’t reviewed them.

The current payment structure creates a “tangled web of responsibilities between Medicaid and Medicare” because each program covers different expenses, medical providers must bill separate programs, and no one is accountable for tracking the care patients receive or how much is spent, UnitedHealth said in its report.

Providing Medicare and Medicaid benefits through a single insurance plan would simplify coordination of care among doctors, hospitals, nursing homes and other providers and would save money by eliminating inefficiencies, the report says.

The so-called dual-eligible beneficiaries tend to be poorer, sicker and costlier to treat than people covered by just one of the programs, the Kaiser foundation said in 2009.

House Minority Leader John Boehner of Ohio and Senate Minority Leader Mitch McConnell of Kentucky are among the Republicans who have promised to repeal and replace the health- care law in the party’s effort to gain seats in Congress in the Nov. 2 midterm elections.

To contact the reporter on this story: Jeffrey Young in Washington at jyoung89@bloomberg.net.

To contact the editor responsible for this story: Adriel Bettelheim at abettelheim@bloomberg.net

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