Texas Tech University Health Sciences Center
The Shift to a Value-Based Approach in Health Insurance

The Shift to a Value-Based Approach in Health Insurance

ceo_minute Today’s column is about UnitedHealth insurance shifting more and more of its payments away from a fee-for-service payment system to a value-based approach. This departure is a significant change in health care as UnitedHealth is considered a bellwether for the industry due to its size.

As a Texas Tech University Health Sciences Center employee, you are probably familiar with UnitedHealth Care as your health insurance carrier. The State of Texas plan is self-insured using UnitedHealth Care as the third-party administrator for HealthSelect, the program managed by the Texas Employees Group Benefits Program, and that program, in turn, is under the Employees Retirement Systems of Texas.

Fee-for-service simply means a provider is paid for each service performed. Critics of this approach, and there are many, have multiple reasons why the fee-for-service approach is a bad way to go about health care billing. They say this approach is one of the main reasons for the high level of health care spending and its rate of increase. Furthermore, they argue that fee-for-service rewards quantity over quality and encourages wasteful use of expensive resources and services.

Value-based payments are an alternative to fee-for-service reimbursement. Value-based payments are often tied to health outcomes and quality metrics and include approaches such as:
  • Bundled payments – where fixed amounts are paid to providers for a bundle of services or all the care a patient is expected to need during a period of time
  • Patient-centered medical homes – redesigned primary care practices that focus more on preventive care, patient education, and care coordination between different health care providers
  • Accountable care organizations – groups of health care providers who agree to share responsibility for coordinating lower-cost, higher-quality care for a group of patients

According to an article in Forbes magazine, UnitedHealth insurance executives say they will increase value-based payments to doctors and hospitals by 20 percent this year to “north of $43 billion.”

Texas Tech Physicians is preparing for the gradual shift to value-based payments. We recently agreed to be part of a new program with Amerigroup and Superior which will reward us for meeting certain quality metrics and doing limited prescribed provider training for dealing with a particular cohort of patients. If this move by UnitedHealth insurance is the precursor to change that I think it is, this will position us for what seems to be headed our way.