Optum, other health insurers are gaining more and more control of primary care across the country: study

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Optum, the “health solution and care delivery” subsidiary of UnitedHealth Group, has grown to control payer-operated health care practices that account for 2.71% of the primary care market across the nation.

But accounting for geographic concentration, that percentage reaches at least 35% of primary care practices controlled by the insurance giant in three populous counties. And it appeared the insurers invested in markets where primary care practices might get them an edge in Medicare Advantage (MA) reimbursement.

“The changing landscape of primary care: an analysis of payer-primary care integration,” is a new study that tallies what appear to be the first estimates of the extent of health insurer ownership of physician practices nationally and down to the county level. It was published in Health Affairs Scholar.

They hired how many?

UnitedHealth Group Inc. CEO Andrew Witty holds his hand up to testify under oath before the House of Representatives' Energy & Commerce Committee Oversight & Investigations Subcommittee on May 1, 2024.
_{© House of Representatives Energy & Commerce Committee}

In May 2024, UnitedHealth Group former CEO Andrew Witty caught the ear of the health care sector and lawmakers when he testified in Congress that Optum employs “just under 10,000” physicians — or approximately 1% of the nation’s physician workforce. Another 80,000 are affiliated with the insurer, the study said. The authors noted Humana, Elevance, and Aetna CVS Health also have expanded their ownership of physician practices.

“This trend has garnered widespread media attention, particularly regarding Optum’s rapid expansion and its broader implications for the health care system,” the study said. From Congress to the Department of Justice to patients looking for a doctor, people have asked how the market conditions affect quality of care, costs and competition.

The results

The researchers found 381,463 primary care physicians and other clinicians billing Medicare in 2023, with 6.4% working for a payer-operated practices. Optum was the largest employer, with 4% of primary care physicians and 2.8% of the advanced practice providers.

Those figures all increased from 2016, when the national primary care market was just 0.78% of physicians and other clinicians working for payer-operated practices. Specific to Optum, its share of the primary care market rose from 0.55% in 2016 to 2.71% in 2016.

Zoom in on the counties

Counting all insurers at the county level, insurers operated practices responsible for 7.7% of local primary care in the counties with some insurer presence in the primary care market.

Percentages were much more for Optum’s control of primary care in some spots in 2023, according to the study:

• Snohomish County, Washington — 44.9%
• Contra Costa County, California — 40.1%
• Clark County, Nevada — 35.8%

“Overall, 15.1% of the U.S. population resided in counties where payers controlled more than 10% of the primary care market in 2023, with 10.1% living in counties where Optum alone exceeded this threshold,” the study said.

Good for health care?

As for policies and market conditions, the authors acknowledged vertical integration between health insurers and physicians can have some benefits. Those doctors, other clinicians and payers could enhance care coordination, improve chronic disease management, and explore alternative payment models that shift away from fee-for-service care. Doctors could refer patients to lower-priced ambulatory surgical centers, and payers may have more bargaining power with hospitals and specialists.

Potential problems

At the same time, “increasing consolidation of primary care within payer-operated groups also raises concerns about competition and access,” the study said. Health insurer-owned physician practices may maximize risk adjustment coding to increase government payments to their own MA plans, without improving quality of care.

The insurers could gain market advantages by steering patients to their own services, or making it harder for other insurers to work with their physicians. An overall decrease in competition could lead to more costs and fewer choices for patient seeking care.

“These concerns have attracted growing regulatory scrutiny, with ongoing antitrust investigations into major payer-provider organizations and increasing calls for transparency in how these entities operate,” the study said.

Follow the Medicare Advantage

The researchers found Medicare Advantage penetration “was strongly associated with payer market share.” For 2022, health insurers operated 5.5% of the primary care market in counties where MA penetration was above average, or more than 49%. In counties with below-average MA enrollment, the insurers controlled 1.5% of the primary care market.

The findings suggest payers integrate with primary care in counties with MA market penetration, the study said.

“Although the mechanisms behind this relationship require further exploration, prior research suggests that payer-provider vertical integration in MA increases diagnosis coding intensity, which raises government payments,” the study said.

“Recent evidence also suggests that Optum may pursue such a strategy,” the authors said, citing a report by The Wall Street Journal.

What about the hospitals?

Health insurer control of primary care was lower in counties with highly concentrated hospital markets, the study said. Hospital concentration may constrain payers’ ability to integrate with doctors in those locations.

Data and determinations

The authors used a number of data sources to identify changes from 2016 to 2023, including insurer acquisitions of medical practices. Primary care physicians and other clinicians were defined using the classification system of the Medicare Shared Savings Program (MSSP), with two main criteria:

• They specialized in internal medicine, family practice, general practice, geriatric medicine, or were nurse practitioners (NPs), physician assistants (PAs), or certified clinical nurse specialists.
• At least 70% of total Medicare billings per year must be for primary care services as defined by MSSP.

Market characteristics were compiled with data from the American Hospital Association, Medicare Advantage, the Clarivate Managed Market Surveyor, the Iqvia SK&A Office-Based Physicians Database, and other sources.

The authors acknowledged at least two primary limitations to the study: potentially incomplete data and possible misclassification of some physicians and other clinicians.