UnitedHealth Forms ACO to Serve Members in Connecticut

UnitedHealth Care, a unit of UnitedHealth Group Inc. UNH, has formed an Accountable Care Organization (ACO) with Saint Francis HealthCare Partners.

An ACO is a collaboration of health care providers, which voluntarily form alliances to provide coordinated high quality care to patients. ACOs are accountable for the quality, cost and overall care offered to members. Focus on the needs of patients and linking payments to outcomes directs the model to improve the health of individuals and communities and curb rising health care costs.

Through this ACO, UnitedHealth Care intends to serve more than 8500 residents in Connecticut enrolled in its employer-sponsored and Oxford health plans. UnitedHealth will make sure to provide a value-based rather than a fee-for-service approach. Thus the physicians will be awarded based on the quality of service rendered, which will ensure the quality of services provided to patients. The metrics to measure quality will be – increased preventive care, reduced patient hospital admissions and readmissions along with better management of patients with chronic conditions such as diabetes.

UnitedHealth Care’s employer-sponsored and Oxford health plans’ members who currently receive care from participating providers will automatically receive benefits under this ACO. Notably, UnitedHealth Care already has a significant presence in Connecticut. Through a care provider network of more than 43 hospitals and 14,500 physicians statewide, it serves more than 500,000 Connecticut residents.

UnitedHealth Care is significantly expanding its use of accountable care contracts over the next five years across its employer-sponsored, Medicare and Medicaid businesses, working with care providers to transition from fee-for-service contracts to payment models that reward value over volume and improve the health outcome of patients.

The ACO wave is sweeping across the health insurance industry as these provide insurers with a way to reduce medical cost. Under health reform, insurers have lost flexibility in ways that they can cope with rising medical expenses. They can no longer rely on many of their traditional medical underwriting strategies, such as exclusion of pre-existing conditions. The most effective approach for insurers now is to rely exclusively on cost control mechanisms to manage members’ medical expenses. An ACO helps insurers like Cigna to accomplish these objectives.

Presently, more than $43 billion of UnitedHealth’s reimbursements to hospitals, physicians and ancillary care are tied to its accountable care initiatives. By the end of 2018, UnitedHealth Care’s reimbursement for accountable care contracts are expected to total $65 billion. The company has 750 ACO arrangements in place which provide service to as many as 13 million people.

Other health insurers like Aetna Inc. AET, Cigna Corp. CI and Humana Inc. HUM are also aggressively forming ACOs. Going forward, we expect such patient-centered collaborations to grow rapidly.

UnitedHealth a carries Zacks Rank #1 (Strong Buy).

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