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UnitedHealth Sees Accountable-Care Work Doubling by 2017

July 10 (Bloomberg) -- UnitedHealth Group Inc. said 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, said 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 percent, the Minnetonka, Minnesota-based carrier said in a statement today.

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 its 2010 health-care law 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,” said Austin Pittman, president of UnitedHealthcare Networks, in the statement. “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.

UnitedHealth fell less than 1 percent to $67.69 at the close in New York. The shares have gained 25 percent this year.

10-Fold Jump

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 said it has seen benefits. One program reduced the use of out-of-network laboratory services by 25 percent. 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.

To contact the reporter on this story: Alex Nussbaum in New York at anussbaum1@bloomberg.net

To contact the editor responsible for this story: Reg Gale at rgale5@bloomberg.net

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