This audio is generated automatically. Please let us know if you have any comments.
Dive Summary:
- UnitedHealthcare pays its sister company Optum’s providers 17% more than it pays non-Optum providers, according to a new study that provides new ammunition to critics of vertical integration and of UnitedHealth, the healthcare giant that owns both businesses.
- That percentage increases to 61% in markets where UnitedHealthcare has at least 25% control. the study published in Health Affairs Monday found.
- The results suggest that UnitedHealth is circumventing rules intended to prevent payers from unfairly benefiting from providing insurance, investigators said. UnitedHealth strongly refuted the findings and said UnitedHealthcare pays Optum and other providers similar fees.
Diving information:
Researchers, regulators and policymakers are increasingly concerned about vertical integration, which has accelerated as more doctors are pushed out of private practice and into the arms of health insurers, hospitals and private equity firms.
Health insurers employ fewer doctors than hospitals. But payers’ control over doctors has steadily increased, and with it concerns that insurers are taking advantage of that ownership to avoid government requirements to keep profits in check.
In the new study, researchers from Brown University and the University of California Berkeley analyzed government price transparency data to analyze these practices at UnitedHealth. It’s not the only vertically integrated healthcare company: CVS, Elevation and Humana have supplier assets of their own, for example, but it is undoubtedly the largest, with $400 billion in annual revenue.
optum is one of the largest employers of physicians in the U.S., overseeing more than 90,000 owned and affiliated physicians along with hundreds of medical clinics. Meanwhile, UnitedHealthcare is the nation’s largest private insurer.
The new investigation focused on high-cost, frequent procedures to compare what UnitedHealthcare paid Optum providers in 2024 for its commercial members compared to what other large insurers paid (CVS’s Aetna, Cigna and Blue Cross Blue Shield plans, including Elevance).
Overall, UnitedHealthcare paid Optum and non-Optum providers more than rival insurers: 62% more and 38% more, respectively. The difference between those figures means that UnitedHealthcare’s highest payments to Optum practices compared to other payers reached 17% last year, according to the study.
The findings suggest that UnitedHealth may be gaming its medical loss ratio, an important metric that measures how much insurers pay for patient care, the study authors said.
Under the Affordable Care Act, insurers must share at least 80% of patient care premiums for individual and small group plans, and at least 85% for large group plans. If payers don’t meet that threshold, they must return the difference to their members.
In response, major insurers have created a sleight of hand, experts say.
Here’s how it works: By steering patients toward in-house providers, an insurer can essentially pay itself to provide the service, allowing the company to keep a greater share of members’ premiums by translating them into revenue in another division. That insurer can then report that those premiums were spent on patient care, bringing its MLR to acceptable limits even though those premiums remained in-house.
Interestingly, UnitedHealth payments to optum The number of physicians increased 61% more than other physicians in markets where UnitedHealthcare controlled at least 25% of the market share, according to the study.
The researchers said UnitedHealthcare has a stronger incentive to increase reimbursement to Optum doctors in those markets, since the MLR rule is more likely to limit profits in markets with less competition.
“As UnitedHealth Group (via optum) and other insurers acquire medical practices and grow their pharmacy benefit management and specialty pharmacy businesses, particularly in markets with little insurance competition, it is important to monitor how intercompany The transactions may mask monopoly profits because that would interfere with market entry signals and hamper regulatory enforcement of the medical loss ratio,” the researchers wrote.
Still, the study, which was funded by grants from Arnold Ventures and the Commonwealth Fund, had several limitations. It only analyzed a portion of the prices, so variables that would have led the researchers to find a higher or lower refund may have been omitted.
Additionally, the study only included a small number of UnitedHealthcare-Optum observations compared to other categories. UnitedHealthcare payments to Optum providers represented less than 0.2% of the total sample size. As a result, the researchers acknowledged that the results “may not be generalizable” to payment for other services.
UnitedHealth pointed out those limitations in refuting the research. The company also argued that if UnitedHealthcare actually paid Optum 17% more than other providers, it would not be able to offer competitive, actuarially sound plans.
“UnitedHealthcare pays Optum Health consistently with other providers in the market, which is essential to remaining competitive. The study, funded by groups with known biases, cherry-picks data and is completely wrong,” the company said in a statement to Healthcare Dive.
It’s not the only investigation to find a link between UnitedHealthcare and higher payments to Optum providers. Last November, Stat published research finding that UnitedHealthcare paid 13 of 16 Optum practices analyzed more for common services than other network providers in the same area.
UnitedHealth is currently facing criminal and civil investigations by the Department of Justice over concerns that the company is profiting from its control over the healthcare industry, including through the relationship between UnitedHealthcare and optum.
