MA plans taking a hit

Selective provider networks is nothing new. It is evidence of the continuing tradeoffs in the delivery of-and payment for-health services.

It could be weeks or months before the situation between UnitedHealthcare and its recently terminated physicians is sorted out in the appeals process, but the larger issue is how revenue pressure on insurers is playing out in the market.

"The moves that United is making in Rhode Island, as well as in many other states across the country, to remove selected physician groups from its Medicare Advantage network seems to indicate a material change in their contracting strategy,” says Jim Donohue, a leader in ECG's Contracting and Reimbursement practice.

Medicare Advantage plans are taking a hit as the federal government waters down payment and cuts back on star-program bonuses.

“United, like other health plans, likely anticipates further downward pressure on their revenues from the federal government,” Donohue says. “In response, they seem to be transitioning to a smaller provider network, through which they believe they can more effectively manage medical costs and quality measures on which the health plan is evaluated and which impact their financial performance."

Additional profit pressures include medical loss ratio limitations, uncertain risk pools and provider merger activity.