'Physicians have increasingly decided that the current fee-for-service model is not sustainable in the long term.'
Health insurer behemoth UnitedHealthcare announced Wednesday that the company will double its number of accountable care contracts over the next five years, representing more than $50 billion of reimbursements by 2017.
To date, UnitedHealthcare has inked contracts with more than 575 hospitals, 1,100 medical groups and 75,000 physicians. Currently, $20 billion of the health insurer’s reimbursements paid to hospitals and other providers are via ACO contracts, which link a portion of the reimbursement to outcomes-based care versus that of traditional fee-for-service.
Austin Pittman, president of UnitedHealthcare Networks, said the announcement signifies big improvements not just for payers and providers but also for patients.
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"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," Pittman said in a company news release.
Despite the industry moving toward more value-based reimbursement models, however, ACOs still typically operate as fee-for-service — but add on shared savings or care management funds to the mix.
In terms of payment models, commercial payers, such as UnitedHealthcare, are less likely to offer upside-only payment structures, according to a recent Premier healthcare alliance report that found more than one-third of ACO arrangements have an upside-only agreement – most of them being Medicare programs.
With an upside-only payment structure, if a provider fails to achieve certain financial goals, they aren’t faced with needing to reimburse money for failing to meet their goals. UnitedHealthcare officials did not offer clarification as to how exactly their ACOs contracts operate when contacted by Healthcare IT News.
Although some providers have shown initial reluctance to embrace new care models such as ACOs, Ruth Benton, chief executive officer of Denver-based New West Physicians, says change is afoot, and more providers are doing so. New West Physicians has recently signed an ACO contract with UnitedHealthcare.
"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," said Benton, on behalf of UnitedHealthcare, in a news release.
The ACO strategy has already demonstrated improved health outcomes, company officials say, citing a 4 to 4.5 percent decrease in medical cost trends; 16 percent reduction in emergency room visits; a 17 percent reduction in inpatient stays and all clinical quality results meeting goals for 95 percent of all measures.
[See also: Bon Secours, Aetna ink big ACO deal.]
The health insurer's "accountable care approach is much more comprehensive than just ACOs," says William Hollman, spokesperson for UnitedHealthcare, in a statement to Healthcare IT News. In addition to doubling ACO contracts by 2017, Hollman pointed to the performance-based programs, which have resulted in a 14 percent reduction in the use of non-Tier 1 prescriptions and a 25 percent reduction in the use of out-of-network laboratory services.
Other value-based projects such as the health insurer’s Centers of Excellence Program, which as Hollman explains, "offer(s) reimbursements that are bundled for specific treatments and/or procedures (e.g., organ transplants) rather than charging for each visit or drug administered during the course of treatment." This program has demonstrated a 25 percent reduction in average length of hospital stays for transplant patients, a 16 percent reduction in transplants due to applying evidence-based care approaches and improved transplant survival rates at Centers of Excellence.