NCPA - National Center for Policy Analysis

New Way to Pay Doctors

February 10, 2012

Efforts to change how Americans pay for health care are gathering momentum on a national scale as UnitedHealth Group Inc., the largest U.S. health insurer, becomes the latest carrier to say it is overhauling its fees for medical providers, says the Wall Street Journal.

  • UnitedHealth, like other insurers, is targeting the traditional system that pays hospitals and doctors for each service provided, rewarding them for more care but not necessarily better care.
  • Under the new plan the carrier is rolling out, part of medical providers' compensation could be tied to goals such as avoiding hospital readmissions and ensuring patients get recommended screenings.
  • UnitedHealth has been trying such efforts on a more limited scale, but now the company says it plans to roll out new contracts nationwide that could include financial rewards for care the company considers high-quality and efficient, and in some cases potentially withhold expected increases if certain standards aren't met.
  • UnitedHealth says it expects the new efforts to save at least twice as much money as they cost.

UnitedHealth's push comes as other carriers, including WellPoint Inc. and Aetna Inc., are announcing similar moves.

Driving the shift is the growing belief among industry and policy experts that the current health care payment system, with its fees for each service, is flawed.  In addition to the worry that it encourages volume but not quality, health care experts believe oversight of patients is often fragmented -- no one tracks people to ensure they get proper preventive care, or coordinates to avoid duplication.

Among the measures that might be tied to pay are, for hospitals, rates of readmissions, use of radiology services, mortality rates for certain conditions and hospital-acquired infection rates, as well as patients' satisfaction.  For doctors, the goals might involve their rates of inpatient admissions and emergency-room use, the total cost of patients' care, and quality measures such as the share of patients getting recommended screenings.

Source: Anna Wilde Mathews, "New Way to Pay Doctors," Wall Street Journal, February 9, 2012.

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