Private Payors and Quality of Care Initiatives

By Mike Segal

Following Anthem Blue Cross & Blue Shield of Connecticut’s decision to increase the fees paid to primary care doctors and Aetna’s recent announcement to reward doctors who coordinate care in Connecticut and New Jersey, UnitedHealth Group recently announced that it intends to replace its current fee-for-service payment model.  UnitedHealth Group, the nation’s largest health insurer, intends to compensate hospitals and physicians for reaching certain quality goals.  Currently, only 1%-2% of UnitedHealth Group’s 26 million commercially insured members are covered by its value-based payment contracts.  UnitedHealth Group plans to change this statistic at a staggering rate.

By the year 2015, UnitedHealth Group intends to apply value-based payment contracts to up to 50%-70% of its commercially insured members.  It plans to use several approaches for these types of contracts, including compensating providers in part through a bonus mechanism for meeting quality metrics or withholding pay increases if the quality metrics are not met. Eventually, this contract model will include most high-volume hospitals and medical groups.  Hospitals will be measured by their readmission rates, mortality rates for certain conditions, hospital-acquired infection rates, and patient satisfaction; physicians measures may include inpatient admissions, emergency department visits, and preventive screenings.

On the low side, UnitedHealth Group says this initiative could cost $0.46 cents per insured per month and save it $1.35 per member per month by 2015.  More aggressive estimates anticipate the numbers to be closer to $3.27 per member per month and save UnitedHealth Group $7.80 per member per month by 2015.

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