The nation’s largest private health insurer is launching a plan to move away from the traditional fee-for-service system that many analysts say bears much of the blame for excessive medical spending.
Under traditional fee-for-service plans, compensation for providers of medical care is based on individual services. The Concord Coalition and other advocates of health care reform have long argued that this creates powerful incentives to provide excessive and sometimes even harmful treatments rather than focusing on medical outcomes. And rising medical costs, coupled with an aging population, are a critical factor in the long-term structural deficits in the federal budget.
UnitedHealth Group Inc. is introducing a plan that could tie some of the compensation for providers to goals such as avoiding hospital re-admissions and ensuring that patients receive certain screenings, according a Feb. 9 story in The Wall Street Journal. In some cases, failure to meet certain standards could result in lower payments.
UnitedHealth began sending information about the changes to employers in late January. While the new plan appears to be particularly extensive, it comes as other insurance providers are also changing their reimbursement policies to focus on quality standards as well as promote more primary care. This is momentum in the right direction.