As UnitedHealth Group shifts medical provider contracts away from fee-for-service medicine, the insurer’s warning to Envision Healthcare shows how serious the insurer is about moving providers to value-based models and the willingness to play hardball to achieve its goals.
UnitedHealth sent a letter to more than 250 hospitals warning it may drop Envision from its network effective Jan. 1, 2019 if the insurer and the provider of emergency room services cannot come to an agreement on payment rates. Emergency room costs, in particular, are costly to insurers and employers and could become a flashpoint for future contract battles between payers and providers.
“You know better than most how Envision’s rates are driving up the cost of health care for the people we all serve,” Dan Rosenthal, president of UnitedHealthcare networks wrote hospitals last week.
In his letter, UnitedHealthcare cited a study published by the National Bureau of Economic Research that shows “ER physicians are paid on average 297% of what Medicare allows.”
“In comparison, Envision demands to be paid nearly 600% of Medicare, two times this amount for ER physician services,” UnitedHealth’s letter to hospitals said. “We have offered Envision competitive rates for all of their hospital-based services, similar to what other ER and hospital-based physicians are paid in each market, and given them the opportunity to earn additional reimbursement based on the value they bring to our customers.”
Insurers like UnitedHealth have been aggressively trying to build relationships with less expensive medical care providers like urgent care facilities and retail clinics in hopes patients will turn to them before seeking care in the emergency room. These contracts measure outcomes and reward providers who meet quality measures.
The Envision contract dispute could be a sign of more such battles ahead as medical care providers fight against the move to value-based models that emphasize population health and getting medical care in the right place and in the right amount and at the right time.
Insurers like Aetna, Cigna, Humana, UnitedHealth Group and Blue Cross and Blue Shield plans are increasingly paying a larger share of their reimbursements to value-based care models. UnitedHealth Group earlier this year said it’s paying nearly 60% of its reimbursements – or $64 billion – via value-based care models that are rapidly replacing fee-for-service medicine in the U.S.
Meanwhile, the biennial survey published last week from the Physicians Foundation shows 47% of physicians have some of their compensation tied to value-based payments.
The increasing amount of pay tied to value-based metrics is a significant jump from 42% of physicians in 2016 who answered “yes” to a question asking if any of their compensation is tied to “value-based metrics such as patient satisfaction, electronic health record (HER) use, cost control, readmission rates, etc.”
Still, doctors aren’t convinced value-based care models are the answer, which could lead to future battles with insurers over contracts. The Physicians Foundation survey indicates. The Physicians Foundation survey showed value-based payments account for just 14% of their total income and more than half of doctors aren’t likely to improve quality of care or reduce costs. The survey didn’t cite specific reasons why the doctors aren’t sold on value-based metrics.