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(Reuters) - UnitedHealth Group Inc (UNH.N) on Wednesday said it expects its accountable care contracts to double to $50 billion by 2017, reimbursing far more doctors and patients according to how well and how economically medical care is delivered.
The largest U.S. health insurer, whose earnings have been hurt by lower government payments for private Medicare services and prescriptions for older people, said the affordable care contracts will range across its employer-sponsored, Medicare and Medicaid health benefit businesses.
"UnitedHealthcare is placing much greater emphasis on rewarding care providers for better care and lower costs as it dramatically reduces the use of exclusively fee-for-service contracts," the company said in a release.
In fee-for-service contracts, insurers reimburse healthcare providers for individual tests, treatments, medical procedures and prescription medicines.
Existing UnitedHealthcare affordable care programs - now worth more than $20 billion a year - instead reimburse patients according to quality and cost-effectiveness outcomes or by paying for bundles of medical services.
The company said it already has accountable care relationships with more than 575 hospitals, 1,100 medical groups and 75,000 doctors across the country, but expects more care providers to move to accountable care contracts over the next five years.
The planned changes come as the company and its rivals are planning how to cope with changes from the federal Affordable Care Act, which sets profit margins for insurers and outlines mandatory coverage requirements changes. In 2014, UnitedHealth and other insurers will start selling coverage on public health exchanges, with the aim of providing benefits to millions of Americans who are currently uninsured.
Reporting by Ransdell Pierson; Editing by Gerald E. McCormick and Chizu Nomiyama