When major health insurers buy doctor practices, they often say it will improve coordination and patient care. New research from policy experts at the Brown University School of Public Health’s Center for Advancing Health Policy through Research (CAHPR), however, suggests that may not be true.
A new working paper from the CAHPR team examines what happens when major health insurers purchase doctor offices and bring physicians under their corporate umbrella. The analysis focuses on UnitedHealth, the nation’s largest health insurer, and finds that when it acquires physician practices, Medicare Advantage payments tied to those practices increase sharply, totaling roughly $250 million more per year.
Along with the dollar ramp-up, the researchers found little evidence that patient care improved after the acquisitions, meaning patients treated by the newly purchased practices were no less likely to be hospitalized or visit the emergency room, two common measures of health care quality. The mix of patients treated by the doctors also remained largely the same.
What did change was how patients’ health conditions were recorded, said researchers from the CAHPR team. After UnitedHealth acquired the practices, doctors began listing more medical conditions for their patients, which made patients appear sicker on paper, even though there is no evidence they were seeing sicker patients. In Medicare Advantage, the private alternative to traditional Medicare, this is a tactic known as “upcoding” and it’s used to collect higher payments from the federal government because insurers are paid more for patients who are documented as having more serious or numerous health problems.
“It’s primarily known as a way of gaming the system,” said Brown University public health researcher Christopher Whaley. “The main point of this gaming is that it substantially increases payment to insurers — in this case, UnitedHealthcare — even though the patient's true conditions remain the same.”
Medicare Advantage now covers more than half of all Medicare beneficiaries and the rapidly growing program now costs taxpayers over $450 billion annually. Researchers and government watchdogs have long raised concerns about the billions of taxpayer dollars that are being spent because of coding practices and have sought ways to curb excessive payments.
“The rise of insurers, particularly UnitedHealth, acquiring physician practices is one of the most notable recent trends in health care consolidation,” said Jeffrey Marr, assistant professor of health services, policy and practice at Brown. “This practice has resulted in scrutiny from regulators, including the Department of Justice and Congress. Yet very little empirical evidence exists to help policymakers understand whether these deals ultimately benefit patients.”
For the working paper, the research team — which also included lead research scientist Xiaoxi Zhao — pulled detailed Medicare billing records from 2016 to 2022 and built their own database of physician practices that UnitedHealth acquired through its Optum subsidiary. Because many deals are structured through complex corporate arrangements, the team reviewed federal securities filings and state regulatory documents to identify when practices changed hands, then linked those records to Medicare claims.
The team tracked more than 200 doctor practices bought by UnitedHealth and compared them with similar practices that were not bought. In total, the study followed about 4,500 primary care providers and more than 500,000 Medicare patients.
The team estimates that in 2022 alone, the acquisitions were associated with roughly $265 million in additional Medicare Advantage payments, and that the majority of that increase flowed to insurers other than UnitedHealth, because the newly acquired practices continued to treat large numbers of patients enrolled in competing Medicare Advantage plans.