Payer/provider relationships

A Medicare Advantage network dispute between Optum and Humana in Washington state is pushing seniors into rival Medicare plans — including those owned by Optum’s corporate parent UnitedHealth — in what antitrust experts say could be one of the first high-profile instances of a provider making a network determination to harm a competitor of its insurance parent company.

In November, Washington seniors in Humana MA plans began receiving notices that Optum would no longer be in-network effective Jan. 1, 2026. The impending split has thrown certain markets in the Evergreen State into disarray.

Humana members found out their Optum doctors would be going out of network just before Medicare open enrollment for 2026, kicking off a cascade of coverage changes in areas where Optum has an outsized presence.

“It’s been disruptive,” said Marni Mills, a Medicare sales agent located in Mukilteo, Washington.

Mills said her affected Humana clients have all switched to the only other MA plan covering Optum that she sells: UnitedHealthcare.

“My goal as a broker is to keep my clients with their doctors. So we’re switching plans from Humana to whatever carrier is necessary in order for patients to stay with their doctors — that’s the most important thing,” Mills said.

Clashes between insurers and providers over contract terms are intensifying, and often leave patients caught in the middle. But this dispute, between two giants in the healthcare sector, highlights larger concerns about anticompetitive ripple effects from growing consolidation between health insurers and providers — and how they may be chipping away at payment integrity in the popular MA program covering 35 million seniors.

“Because [Optum] is the largest employer of providers, they pretty much often can do whatever they want. They can say to Humana, ‘Oh, not going to pay us what we want? Okay, bye.’ And that just drives people into the UnitedHealthcare product, which benefits the overall company,” Danielle Roberts, a Medicare insurance agent and founder of national brokerage Boomer Benefits, said.

Healthcare companies argue that owning both insurer and provider businesses results in better care coordination and operational efficiencies, lowering costs while improving health outcomes.

But the overlap between UnitedHealthcare and Optum is a key worry of federal regulators, who have recently taken greater notice of the sprawling conglomerates created after years of largely unchecked vertical integration. One major concern in mergers between providers and insurers is foreclosure — when a company is able to block competitors’ access to a healthcare market by exclusively dealing with its own businesses.

That looks a lot like what’s playing out in Washington, some experts said.

“This is something that has been a conceptual concern, and hasn’t necessarily been borne out, or we haven’t had good data about this being borne out,” said Chris Whaley, an associate professor of health services, policy and practice at Brown University’s School of Public Health.

But “this could be a case where the conceptual concern is actually affecting how patients are getting care,” Whaley said. “I think this is a top order concern for the Medicare program as well as for antitrust regulators.”

Optum and Humana at loggerheads

Notices to Medicare seniors sharing that Optum would no longer be in-network with Humana in 2026 sparked concern for many in Washington.

Sixty-three of Optum’s some 1,600 primary and specialty care clinics are in the state. Meanwhile, Humana is Washington’s second-largest MA payer after UnitedHealthcare, covering almost 120,000 seniors, according to CMS data.

Humana confirmed the contract dispute with Healthcare Dive, though the company stressed that discussions are ongoing and could still result in a deal.

“We are engaged in good-faith discussions and have put forward proposals that would place Optum at rates that are fair, reasonable and market-based,” Mark Taylor, Humana’s director of corporate communications, said over email. “Medicare beneficiaries deserve choice and a fair, competitive market. We are committed to advocating for these values.”

Optum did not fully respond to an emailed list of questions for this story. However, a spokesperson for the provider said Optum changed its relationships with MA carriers for 2026 as part of its commitment to “delivering affordable, high-quality care.”

It’s the latest in a flurry of recent contract disagreements between health insurers and providers, as providers seek higher rates, citing the rising costs of doing business, and insurers try to keep a handle on escalating spend.

Disputes involving MA plans are particularly intensifying, according to data from FTI Consulting. This year saw 46 contract disputes in the first three quarters alone, an acceleration from earlier in the decade that providers say stems from their refusal to accept below-market rates or onerous terms like oppressive prior authorizations.

But a few things differentiate this contract disagreement from others that have trickled into the public eye.

For one, Optum is owned by UnitedHealth, a colossus in the healthcare space with more than $400 billion in annual revenue. UnitedHealth provides health insurance to more than 50 million Americans through UnitedHealthcare and medical services in 20 states through Optum, its massive health services division.

Optum’s care delivery unit, Optum Health, is the largest physician enterprise in the U.S., with roughly 90,000 doctors. About 10% are directly employed, which gives the company uncommonly powerful leverage to negotiate higher rates in contract negotiations with insurers, experts say.

But the dispute is mostly atypical because of how Optum turning its back on Humana could benefit Optum’s sister company, UnitedHealthcare.

“You almost do a bit of a double take,” said Brown University’s Whaley. “You have an insurer having a network and contract dispute with a large group of providers through Optum. But then that same group of providers is owned by a competing insurer. The potential concern is that these contract decisions are not just based on payment for the services themselves, but potentially influenced by competition for MA members.”

The Optum spokesperson refuted that its network decisions are influenced by other considerations beyond its provider business. 

“Optum’s relationships with any insurance plan are determined solely by Optum and local clinical operations based on how to best serve area patients and allow physicians to focus on what they are licensed and trained to do,” the spokesperson said. “We will continue supporting our Washington patients through this transition so they can maintain continuity of care by either choosing a different health plan or different provider.”

At the state level, it’s too early to say whether the Optum-Humana spat spurred a large number of Humana members to switch to other plans, including UnitedHealthcare. Open enrollment for 2026 Medicare plans ended Dec. 7, and it will be months until insurers start reporting enrollment figures.

But in breakups between payers and providers, patients — especially seniors — almost always side with their providers, according to Medicare agents.

Roberts with Boomer Benefits estimated that just 2 in 10 seniors would stay with their insurer if their physicians were set to go out of network. The remaining 8 would switch insurers instead.

“If you have somebody with a lot of health conditions, which are more prevalent the older you get, those people are a lot less likely to want to leave their doctor behind,” Roberts said. In this case, “if [Humana members] want to keep those doctors, they’re going to be driven mostly to UnitedHealthcare plans,” she said.

Humana said it would not comment on possible membership movement. But the insurer plans to cover Optum care at in-network rates for affected MA members through the beginning of April, according to a notice of the network change reviewed by Healthcare Dive.

The notice says the temporary coverage period is to minimize disruptions to care, but it could also be a sign that Humana is thinking about member retention.

Seniors already on MA will have another opportunity to switch their coverage during a separate open enrollment period, which runs from Jan. 1 through March 31. Theoretically, if a Humana member changed plans during open enrollment this fall to keep Optum in network — and Optum and Humana reach a contract agreement before March 31 — that member could then switch back to Humana, without any disruption to their access to Optum.

Still, if any enrollment changes stick, they could further entrench UnitedHealthcare’s dominance in Washington’s Medicare market. The insurer covers more than one-third of the state’s MA enrollees, according to a report from the American Medical Association last year.

But it’s more important to look at the impact on local markets where Optum is a major provider, according to multiple antitrust experts.

For example, Medicare brokers serving Spokane County — where Optum has no clinics — are aware of the network spat, but it doesn’t come up in their conversations with clients, according to Charles Fletcher, a broker in the county.

“I know it’s an issue, but the Optum stuff hasn’t impacted me,” Fletcher said.

But notably, the county where Optum has the most dominant control of primary care in the entire U.S. is in Washington. If you drive five hours west from Spokane, you’ll come across a region where the Humana-Optum split seems to be turning the Medicare market upside down.

‘Optum is around here everywhere’

Tucked beside the Puget Sound in western Washington, Snohomish County lies under a near-constant sheet of clouds from the Pacific Ocean’s marine layer, blanketing its lush evergreen forests, rocky saltwater beaches and rolling hills of farmland.

Snohomish is the third most populous county in Washington state, with about 840,000 residents and growing. It’s an attractive option for people moving to the Pacific Northwest, with its natural beauty and small-town charm paired with easy access to Seattle a short drive to the south.

Snohomish also looked attractive to Optum. In the late 2010s, the provider entered the county through a quick one-two punch of acquisitions — the Everett Clinic through its larger buy of DaVita Medical Group in 2017, and the Polyclinic through a standalone acquisition in 2018.

Optum emerged from the deals as a force to be reckoned with.

By 2023, Optum controlled almost 45% of Snohomish’s primary care market, according to a first-of-its-kind study of insurer provider ownership published this summer. In comparison, Optum holds about 2.7% of the primary care market nationwide.

And of Optum’s primary, specialty and walk-in clinics in Washington state, 38 — more than half — are in Snohomish alone.

The company’s dominance in Snohomish means it’s difficult for residents in the area to find other physicians — and creates a significant incentive for those facing the loss of in-network access to switch plans, experts say.

Notices from Optum and Humana sharing the network change with affected patients caused significant hullabaloo. Over November and early December, Medicare brokers were inundated with calls from worried seniors faced with shopping for a new MA plan. Some held informational meetings for seniors to come, ask questions and learn about alternate options, according to two seniors who attended such events.

They learned there was only one real alternative for commercial shoppers looking for comprehensive primary care. One broker, who asked to remain anonymous for fear of tainting business relationships, changed their voicemail message in the days leading up to the end of open enrollment, sharing that option for seniors who weren’t able to reach them on the phone.

“I am so sorry that Optum has left Humana but we will get it all figured out. I write UnitedHealthcare plans as well, so we can get you transferred over to a couple plans that look fairly similar,” the broker said in the message heard by Healthcare Dive on Dec. 5.

Sandy Koffron, a 74-year-old living in rural Snohomish town Stanwood, switched from Humana to UnitedHealthcare to retain access to Optum in 2026.

It was a difficult decision, she said. Koffron and her husband Louis, 79, have been Humana MA members for seven years, and love the coverage. Humana covered their bills when Koffron went to the emergency room. It covered their bills when she needed gallbladder surgery. It covered their bills when Louis fought a bout of sepsis, a dangerous immune response that can follow an infection.

But if Koffron hadn’t signed up for UnitedHealthcare, she and her husband would have to become patients at the closest non-Optum doctor’s office, a 20-mile drive away in Mount Vernon. It’s a daunting prospect, and one that frightened her when she received notice of the coverage change.

“It has been very stressful. I don’t want to get a new doctor. And Optum is convenient for us,” Koffron said. “Truthfully, Optum is around here everywhere.”

UnitedHealth’s tightening grip

UnitedHealthcare is similarly dominant in Snohomish’s Medicare market, suggesting that resources may have been targeted into that particular county to give the companies’ parent, UnitedHealth, immense sway, experts say.

UnitedHealthcare controlled almost 49% of Snohomish’s MA market following the MA open enrollment period this April, according to an analysis of Medicare data by Healthcare Dive.

The runner-up? Humana, which holds 25% — roughly half of UnitedHealthcare’s share, and a percentage that could shrink if Humana loses members to UnitedHealthcare next year.

UnitedHealthcare has held the largest share of Snohomish’s MA market for at least the past decade. In 2016 — the year before Optum’s proposed acquisitions of the Everett Clinic and the Polyclinic were announced — UnitedHealthcare controlled almost 36%.

UnitedHealthcare’s extensive presence in Snohomish may have made the county an attractive area to also invest in Optum, said Loren Adler, the associate director of the Brookings Institution’s Center on Health Policy.

It’s a “clear potential win” for UnitedHealth, he said. “If United can steal a bigger and bigger market share, then they can hike up premiums and take bigger profits there.”

UnitedHealth did not respond to questions about its growth strategy and market control in Snohomish.

But insurers tend to pursue vertical consolidation in areas where Medicare seniors are also prevalent, according to a study Adler authored this summer. Buying up doctor’s offices in those locations provides an opportunity to also expand their profits in MA, Adler explained.

In the privatized Medicare program, the government pays private health insurance companies a fixed rate per enrollee. The goal is to incentivize insurers to better manage care and control costs, hopefully saving Medicare money while improving members’ health.

But that payment structure also introduces significant opportunities for gaming. MA adjusts payments to plans higher or lower based on an enrollees’ health status. As a result, insurers are incentivized to exaggerate how sick their members are to garner higher payments, a practice called upcoding.

Exaggerating gets easier when you employ the doctor examining your members, experts say. Research has found that upcoding increases with vertical integration: Provider ownership is associated with risk scores that are 16% higher than in traditional Medicare, compared to an average of 6% among all other MA plans, according to a study published in 2020.

Vertical integration also allows insurers to sidestep rules meant to prevent them from restricting members’ medical care in order to profit.

In MA, plans must spend at least 85% of their members’ premiums on medical costs, reflected in a metric called the medical loss ratio, or MLR. But by steering patients toward owned providers, an insurer can essentially pay itself for providing the service — enabling the company to keep a greater share of members’ premiums by translating them into revenue in another division.

The insurer can then report those premiums were spent on patient care, driving its MLR into acceptable bounds even though those premiums remained in-house.

UnitedHealth did not respond to questions regarding its vertical integration strategy, including whether it’s driven by the potential to game Medicare payment systems and spending requirements.

But “this vertical integration enables regulatory evasion,” said Hayden Rooke-Ley, a senior healthcare fellow at the American Economic Liberties Project who studies consolidation between insurers and providers.

“We’ve seen how central risk adjustment is to United’s playbook. That, and other potential regulatory constraints like MLR requirements, can be gamed when you see this kind of integration,” Rooke-Ley said.

‘We cannot do anything’

Snohomish is a concerning vignette of what can happen in highly concentrated markets when an insurer and a provider disagree on rates, but the provider’s parent company wins whether it stays in or leaves that insurer’s network, according to antitrust experts.

Tim Smolen, a manager in the Consumer Protection Division of Washington’s Office of the Insurance Commissioner, said his agency is aware of pernicious effects from vertical consolidation in the state but doesn’t have the same tools to address it as federal regulators.

“We’re very concerned about this kind of integration and the way that the plans are using this leverage that they have,” Smolen said. “But in terms of our statutory authority, we cannot do anything to regulate their behavior.”

UnitedHealth is currently facing criminal and civil investigations by the Department of Justice over concerns that the company is profiteering from its control over the healthcare industry, including through the relationship between UnitedHealthcare and Optum.

Regulatory scrutiny has added onto a sea of recent troubles for UnitedHealth, including a tsunami of medical costs shrinking the profitability of its health insurance division. The MA market is currently undergoing a contraction as major payers scale back offerings, rework plan designs and take other steps to improve margins.

UnitedHealthcare expects to lose roughly 1 million MA members next year as a result, Tim Noel, the insurer’s CEO, said on a third quarter earnings call in October.

As such, it’s interesting timing for a move that, inadvertently or not, looks set to bump the payer’s membership, even minimally. There’s also the chance that Optum could lose revenue if a contract agreement isn’t reached and patients who remain with Humana stop going to its clinics in the Pacific Northwest.

But UnitedHealth wouldn’t be doing this if it thought it would lead to lower profits, experts said.

“Most practices can’t operate with just one insurer’s patients. But the risk of foreclosure here is higher the more dominant of a position they have. So it’s logical that you’re going to see this in areas like Snohomish County,” Brookings’ Adler said.

It’s unclear whether similar dynamics are playing out in other counties where Optum has a sizable presence, such as Contra Costa County, California, where Optum controls more than 40% of the primary care market; or Clark County, Nevada, where Optum controls almost 36%.

Optum was close to going out of network with Humana MA plans for 2026 in Texas as well, but the two companies reached terms before the contract’s expiration at the end of December, according to broker sources, which Humana confirmed.

Optum and Humana may still be able to reach such an agreement in Washington, even if negotiations bleed into 2026. But even if they do, the contract dispute has already forced Snohomish seniors — torn between loyalty to their physicians and a desire to stay with the Medicare carrier they trust — to make difficult decisions.

Koffron, the senior in Stanwood, was saddened but not surprised when her broker told her that Optum and UnitedHealthcare are owned by the same company.

“At that point you’re thinking ‘Okay, it’s not about us any more,’” Koffron said. “I always felt like Humana was about us. They did the best for us — they paid the bills.”

Though Koffron finds comfort in knowing she’ll be able to keep her doctors next year since she switched to UnitedHealthcare, she’s worried about dealing with a new insurance company. In particular, Koffron’s husband needs his blood checked every two months due to his artificial heart valve. She doesn’t know whether that’ll be covered by their new UnitedHealthcare plan. But leaving Optum wasn’t an option.

“When you get older you don’t like change,” Koffron said. “But I made the decision that I had to change. I didn’t feel like I had a choice.”

Prices rose 11% at ambulatory surgery centers after they were bought by Optum, probably because the newly acquired providers were able to negotiate higher prices with insurers, according to a new study highlighting how vertical consolidation drives up healthcare spending.

That increase translates to $10.1 million more in annual spending for just seven common procedures in the two dozen ASC markets analyzed. Extrapolating that estimate to all ASC services suggests the full financial impact could exceed $67 million each year, the study published in Health Affairs found.

That’s a concern, given those costs are being charged to insurers competing with Optum’s sister company UnitedHealthcare, according to the research. In addition, the costs are generally passed along to consumers through higher premiums and out-of-pocket spending.

There’s a harsh spotlight on market concentration in healthcare, as lawmakers — including traditionally pro-business Republicans — become more critical of massive conglomerates in the space amid skyrocketing healthcare prices.

UnitedHealth, Optum’s parent company, has been catching a lot of the flak.

UnitedHealth operates both Optum, the largest employer of physicians in the U.S. with nearly 90,000 owned or affiliated physicians, and UnitedHealthcare, the largest private insurer in the nation. 

UnitedHealth isn’t the only vertically integrated healthcare company — CVS, Elevance and Humana all own provider assets, for example — but it’s certainly the biggest, posting almost $450 billion in revenue last year. As such, UnitedHealth has faced significant scrutiny from lawmakers and antitrust regulators about the overlap between its businesses and how they may be leveraging their market power to inflate UnitedHealth’s profits.

For the new study, researchers with Cornell University wanted to find out whether Optum’s ASC acquisitions affected the prices it charged to competing insurers. Optum has aggressively expanded its network of surgery centers, including through its 2017 acquisition of Surgical Care Affiliates, one the largest ASC operators in the U.S. at the time.

Researchers analyzed commercial claims for 24 ASCs from 2015 to 2018, before and after they were acquired by Optum, and compared those to a control group. 

They found a price growth of $239.24 after Optum bought the ASCs — an 11% increase over the pre-acquisition average. The price difference began to emerge two quarters after Optum bought the ASCs, and stayed stable after, according to the study.

Procedures performed by doctors employed by Optum and independent practitioners both experienced a large increase in facility fees after the ASC was acquired. But the brunt of the higher prices was driven by inflated professional fees, researchers found.

In addition, price increases were concentrated in markets where Optum had a stronger market share, including of other ASCs or physician practices.

Those findings suggest that the price increases stemmed from the newly acquired ASCs’ stronger negotiating power, given they became part of Optum’s large integrated network of physicians and facilities, researchers said.

The study builds on other research suggesting UnitedHealth’s vertical integration may be increasing spending. One study published in November found UnitedHealthcare pays Optum doctors more than other unaffiliated physicians.

However, the problem is not unique to UnitedHealth, or to insurer ownership alone.

The studies dovetail with broader concerns about vertical integration, which has accelerated as more doctors are pushed out of private practice and into the arms of health insurers, hospitals and private equity companies.

Research suggests vertical integration has anticompetitive ripple effects including price inflation and patient steering.

The Cornell research found some evidence that Optum doctor’s offices refer more patients to affiliated ASCs if they’re acquired in markets where Optum had a heavy presence. That allows Optum to capture more revenue that might otherwise have gone to a competitor. It also reduces spending for insurers, including UnitedHealthcare, by shifting more care from expensive hospital outpatient departments to cheaper ASCs.

Yet overall, Optum’s acquisitions of ASCs had little impact on physician referral patterns, the study found. Instead, Optum appears to acquire physician practices that already refer more patients to ASCs than outpatient departments.

UnitedHealth did not respond to a request for comment for this story.

Still, “our findings suggest that policy makers and antitrust agencies should look beyond traditional horizontal concentration metrics because vertical integration can raise prices for competing insurers and, ultimately, consumers,” researchers wrote in the study.

Historically, it’s been difficult for antitrust agencies to stop vertical deals. But in 2023, the Biden administration changed the guidelines for reviewing corporate mergers, giving the Federal Trade Commission and the Department of Justice sharper teeth in going after vertical deals, including insurer acquisitions of medical practices. The Trump administration has kept the guidelines in place.

Moreover, Congress appears open to breaking up vertically integrated monoliths, as the public clamors for lawmakers to improve healthcare affordability. Still, such actions would face significant hurdles.

Sponsored content

By CSG Payments

Ask any health system CFO what feels “off” in the payer–provider relationship and they usually don’t start with clinical quality or even denials. They start with money movement.

Claims get approved, but funds and remits still crawl through a maze of virtual cards, paper checks, and PDFs before anyone can confidently post them. That gap between “approved” and “actually in the general ledger” is where trust erodes. Every mystery deposit, every explanation of benefits that doesn’t quite reconcile, every extra keystroke your revenue cycle team must make signals that payers and providers aren’t really running on the same rail.

Underneath, it’s the same story you hear in every hallway conversation: hundreds of tiny manual steps that slow posting, drain staff time, and make it harder for both sides to operate from a shared source of truth. Automating insurance payments with Straight Through Processing (STP) offers a way to reduce that noise—without asking already overloaded healthcare teams to rewire how they work.

The cost of a disconnected payer–provider relationship

Today’s reimbursement workflows often span virtual cards, ACH, paper checks, and PDFs that must be matched and posted by hand. For providers, that means:

• Slower cash flow, as teams wait on mail, batch cycles, or manual posting before seeing the real financial picture.
• Operational strain, with back office staff keying in remits, chasing exceptions, and reconciling payer data with internal systems.
• Processes that crack under pressure, especially when patient volumes spike or staffing is tight.

For payers, the same fragmentation makes it harder to prove reliability and transparency. If it takes multiple calls to answer basic questions—“Where is this payment?” or “Which claims does this batch cover?”—the relationship feels more transactional than strategic.

And strategy is important because, when the relationship is purely transactional, every interaction is about fixing a problem in the last file—not building confidence in the next one. Over time, that erodes trust, makes it harder to collaborate on bigger improvements, and turns what should be a strategic partnership into a series of one-off firefights neither side has time for.

How STP strengthens payer–provider partnerships

A smoother reimbursement experience is possible. STP applies an automation “overlay” to reimbursement, from adjudication through funding and posting. With STP:

• Once a claim is approved, funds are typically disbursed as soon as the next day, eliminating delays tied to checks and batch cycles.
• Claim‑level data travels with each payment, replacing stacks of EOBs with structured information revenue cycle teams can search and post quickly.
• Automation removes manual work instead of adding new workflows, so clinical and back office staff keep using familiar systems while tedious steps fall away.

The experience starts to feel less like chasing individual transactions and more like running on a shared, reliable rail between payer and provider.

In practice, this translates to less administrative friction, with fewer escalations. Manual matching of paper or PDF remits turns every exception into a phone call, email, or ticket. When claim level details travel with payments, more issues are resolved in-platform and fewer ever reach payer or provider support.

In turn, automated funding brings providers more predictable cash flow. They gain peace of mind with clearer cash flow forecasts and fewer end-of-month surprises, with less time spent on workarounds when volume spikes.

“By reducing the time lag between service delivery and revenue collection, healthcare providers can see improved cash flow and reduce time spent chasing overdue payments, ultimately boosting their overall financial efficiency,” says Saurabh Joshi, president of CSG Payments.

Finally, a single rail brings shared visibility. Consolidating payments and remittance data on a modern platform gives both payers and providers a shared view into what was paid, when, and for which claims. This reduces “mystery deposits,” speeds posting, and creates space for more strategic conversations about throughput, denial trends, and payment mix.

Designing a better payer–provider payment experience

Payers and providers alike already know that patients are looking for simple, transparent, intuitive experiences. The same principles should follow for the internal payment experience between payers and providers.

Payer and provider employees are busier than ever, so fast and simple experiences go a long way. For one, onboarding and self-service should be fast and intuitive – no complex underwriting just to receive electronic payments. They also need a system that runs in the background, plugging into existing tools instead of needing to learn a new portal. Simultaneously, employees should be empowered with the confidence that every dollar can be traced back to the right claim without detective work.

When payers and providers align around those principles and use STP to automate the last manual miles of reimbursement, they do more than move money faster. They reduce operational risk, free up clinical and revenue cycle capacity, and rebuild trust in a relationship that exists to support better patient care.

“The benefits of payment modernization go far and beyond speed: A modernized payments system offers enhanced security and compliance, better integration with electronic health record systems, and improved patient satisfaction in addition to financial efficiency,” Joshi adds.

When patients experience faster, smoother, more accurate payments, they’re more likely to trust their health plan and health system alike.

To see how CSG Payments and Optum Financial are helping providers and payers retire virtual card statements, gain claim-level visibility, and accelerate reimbursements with CSG Payments STP, visit forte.net/Optum.

More claims denials are being overturned upon appeal, according to a new study, amid widespread public animus against the insurance industry for what many view as overly aggressive restrictions on care.

In the state of New York, the percentage of denials that were overturned after patients or their physicians appealed increased from 38% in 2019 to almost 53% in 2025, the study published in JAMA found.

The rate at which analyzed claims were overturned varied significantly by type of claim and other factors, and denials could be due to a number of reasons, including human error, outdated clinical criteria or inappropriate behavior on the part of payers. Still, rising overturn rates suggest that insurers’ coverage review systems might not be working as intended, and policymakers should consider getting involved, study authors said.

Insurers are currently under a harsh spotlight for business practices that can prevent patients from getting care or saddle them with the bill for services. Though insurers argue these processes are a necessary evil to curb inappropriate spending, they can also contribute to administrative burnout for providers and worse outcomes or rising medical debt for patients.

Payers say they’ve taken steps to pare back restrictive care reviews. But providers report that claims denials are increasing, corresponding with growing insurer uptake of algorithmic tools and artificial intelligence to review claims en masse.

Data is sparse on specific insurers’ denial rates. But a number of studies document high denials in specific programs — findings that are especially concerning in light of how many of those denials are overturned upon appeal, suggesting that care should have been approved in the first place.

In the privatized Medicare Advantage program, for example, few beneficiaries actually appeal coverage denials. But for those who do, more than 80% of those denials are eventually overturned, according to health research firm KFF.

For the new study, researchers with Brown University, the University of Texas at San Antonio and the University of Chicago wanted to get a more comprehensive picture of the success of appeals across multiple insurance programs. They analyzed about 51,000 cases from the state of New York, and found rising levels of appeals — and decisions overturned upon appeals — over the study period.

Overturn rates varied heavily by type of treatment, patient diagnosis, insurance company and other factors. For example, more than 78% of denials for home healthcare were overturned upon appeal, while more than 50% of denials for prescription drugs or dental procedures were overturned upon appeal, the study found.

Rates of claims denials overturned upon appeal also differed by insurer, ranging from about 36% for Metroplus Health Plan to 85% for Centers Plan for Healthy Living. Major for-profit insurers like Elevance’s Anthem subsidiary, UnitedHealthcare and CVS’ Aetna all had overturn percentages of about 40% to 50%.

The study didn’t delve into the underlying drivers of the different overturn rates. Researchers also stressed that the study had significant limitations, such as being specific to New York and not including data on all denials in the state. 

However, “increasing case volumes and overturn percentages signal that upstream oversight may not be functioning as intended,” researchers wrote, urging patients and clinicians to “consider pursuing external appeals giving the high overturn percentage.”

For years, Congress has considered reforms to limit insurer practices that critics say are driving inappropriate denials, such as prior authorizations in Medicare. However, the changes have failed to make it into legislation, including those in a health package included in the government funding deal earlier this year.

Still, interest in cracking down on some of major insurance companies’ less-popular business practices has persisted on the Hill.

Insurers are working to standardize how they vet requests for medical treatments and services, the latest in a series of commitments from the industry to pare back paperwork and make it easier for patients to get care.

Major insurers led by industry groups AHIP and the Blue Cross Blue Shield Association announced they will align electronic data submission requirements for medical services commonly subject to prior authorization, such as orthopedic surgeries, CT scans and MRIs, beginning on Jan. 1, 2027.

Prior authorizations will be standardized across commercial plans, Medicare and Medicaid, and additional services will be added over time, the insurance lobbies said.

Insurers say that prior authorization, which requires patients and their physicians to request coverage for a service before it’s provided, is an important tool for making sure that their members receive proper and cost-effective care.

Anecdotal reports from physicians suggest that payers have increased prior authorizations as they struggle to control ever-rising healthcare costs — even as insurers argue they’re paring back the unpopular preapprovals, in light of perennial complaints over the process.

Calls for prior authorization reform have caught the attention of the second Trump administration amid a growing animus against health insurers in Washington.

Last summer, the HHS secured a pledge from insurers to voluntarily streamline cumbersome prior authorizations — with the threat that regulators would do it for them if insurers didn’t comply.

The commitment includes the creation of a framework to standardize submissions for electronic prior authorizations.

Insurers say that prior authorization can be tricky because doctors often file physical paperwork that doesn’t always include all the needed information to review a patient’s medical plan. As a result, care can be delayed, if payers have to chase down providers to fill in the blanks, or denied altogether.

Standardizing electronic prior authorizations should help make the process faster and easier, AHIP said in its Friday release on the commitment.

Major insurers also touted their own progress towards aligning data submission requirements.

UnitedHealthcare, the largest private insurer in the U.S., said in a release that more than 50% of its prior authorization volumes are immediately able to be standardized, and that figure should exceed 70% by the end of this year. 

Employer-sponsored insurance giant Cigna also expects to have more than 70% of its prior authorization volume standardized by the end of 2026.

Meanwhile, Aetna, the health insurance arm of retail pharmacy giant CVS, announced it had already standardized 88% of its prior authorization volume.

Insurers are also cutting some prior authorizations entirely as part of the larger pledge. Major insurers have reduced preapprovals by 11% so far, AHIP and the BCBSA said earlier this month.

Insurers covering more than 250 million U.S. patients are participating in the commitment.

“This is a meaningful step forward toward giving patients faster answers, more certainty, and fewer unnecessary delays in care. I applaud these efforts from a collection of the largest health plans across most market segments as momentum builds,” CMS Administrator Dr. Mehmet Oz posted on X.

Still, the commitment has some notable gaps. For one, it’s entirely voluntary, giving payers wiggle room when it comes to compliance. Many of the pledges are not tied to specific targets, including how many prior authorizations insurers will cut.

And hospitals and doctors say they’ve been burned before by insurers promising prior authorization reform.

For example, major payer and provider groups agreed on the need to improve prior authorizations in 2018. But eight years later, getting treatment approval is still a huge problem for providers.

In addition, efforts to winnow burdensome prior authorizations haven’t included prescription drugs, which make up a significant portion of requests. Though, the Trump administration is working to address that, proposing new deadlines to turn around prior authorizations decisions for drugs and standardizing the processes earlier this month.

“Unconscionable.” “Criminal.” “Just plain wrong.”

Those are some of the words that members of Congress used to describe health insurance companies during two hearings on in January 2026 — hearings that often turned contentious as lawmakers pilloried the CEOs of some of the largest U.S. payers for profiting at the the expense of average Americans.

The chief executives of UnitedHealth, CVS, Cigna, Elevance and Ascendiun were barraged with questions and criticism about care denials, market concentration and their multi-million dollar pay packages at a time when millions of Americans are losing health insurance.

“You have put profits above patients. And you have put profits above those who care for patients,” said Rep. Greg Murphy, R-N.C., during the hearing in front of the House Ways and Means Committee. “You have squarely abused your position of authority to deliver healthcare to patients in this country.”

Payer executives — Stephen Hemsley, the CEO of UnitedHealth; David Joyner, the CEO of CVS; David Cordani, the CEO of Cigna; and Gail Boudreaux, the CEO of Elevance — admitted that they could be doing more to improve affordability and access.

However, the CEOs attempted to deflect blame, arguing that other actors in the healthcare system, especially hospitals and drug companies, are responsible for higher costs.

The notable outlier was Paul Markovich, the chief executive of Ascendiun, the nonprofit parent company of the largest California Blues plan.

Health insurers are focused on profits just as much as everyone else, Markovich said in his prepared testimony.

“Our healthcare system is bankrupting and failing us,” Markovich said, adding that participants in the system — including health plans — have put profits ahead of patients or remained complacent about the complexity they’ve created.

“I’ve come to the conclusion that the system will not fix itself. The healthcare system needs some tough love and clear direction and the American government is in the best position to provide both,” he said.

‘The patient gets screwed’

The insurance CEOs found few allies over their marathon day of testimony, in front of the Energy and Commerce’s health subcommittee in the morning and the full Ways and Means committee in the afternoon.

Executives agreed that healthcare is confusing and inefficient, and that prices are too high. But they’ve already fixed or are working on some of consumers’ biggest gripes, like onerous prior authorization policies, and overall just aren’t to blame for higher costs, they said.

“The cost of healthcare insurance fundamentally reflects the cost of healthcare itself. It is more an effect than a cause,” Hemsley said in prepared testimony. “If insurance costs are going up even as we compete aggressively against other companies, it signals rising costs of health services, drugs and rising volumes of care activity.”

Premiums do reflect the cost of care, which has increased significantly due to America’s older and sicker population, heavy provider consolidation, the entrance of high-cost drugs into the market and other factors.

Still, the CEOs’ arguments that they keep costs low by negotiating with providers and drugmakers largely fell on deaf ears.

“There is not one single American that I have met that believes health insurers are effective at lowering costs,” said Ways and Means Chairman Jason Smith, R-Mo. 

Lawmakers on both sides of the aisle were particularly concerned about rampant vertical integration. For-profit insurance giants are not just insurers — the companies also own physician groups, pharmacies, pharmacy benefit managers and other subsidiaries that give them outsized control over multiple markets of the U.S. healthcare system.

That control may be driving higher spending. For example, data shows that doctors and pharmacies affiliated with a plan are often paid higher rates than unaffiliated providers.

UnitedHealth and CVS, which both manage vertically integrated healthcare empires, received the brunt of flak for consolidation. In one testy exchange, Rep. Alexandria Ocasio-Cortez, D-N.Y., cited a CVS investor conference in which the company touted how one consumer could get health insurance, medical care, prescriptions filled and even their drug manufactured all from CVS subsidiaries.

Joyner denied this amounted to market concentration. “I suggest it’s a model that works really well for the consumer,” the CEO said during the Energy and Commerce hearing.

“Yeah, I think it works very well for CVS,” Ocasio-Cortez replied. “The health insurance gets a cut, the pharmacy benefits manager gets a cut, the drug manufacturer gets a cut. And the patient gets screwed.”

Executives also attempted to defend their care review practices, arguing that stories of improper care delays and denials are unfortunate outliers and that they approve the lion’s share of claims.

But that doesn’t square with research, lawmakers said. Data on industry-wide denials is sparse and often contested by insurers. But 19% of in-network claims were denied in the Affordable Care Act marketplaces in 2023, according to one recent study from the KFF, and providers say denials are increasing.

High denial rates are especially concerning given other research finding that the large majority of denials are overturned if they’re appealed.

“This looks like your business model. It looks like you bet on wearing patients down and them not appealing and then they either decide to just eat the cost or they die before they get the care they need,” said Rep. Kim Schrier, D-Wash., during the Energy and Commerce hearing.

Lawmakers also attacked the CEOs for their pay packages, questioning the ethics of taking in millions of dollars in annual compensation when American families are struggling to afford healthcare.

The executives were also asked about negotiations with clients, the transparency of their plans and steps they’re taking to improve medical access in rural areas.

Largely, the insurance CEOs remained calm under fire during the questioning, though their measured responses were occasionally at odds with lawmaker intensity.

Hemsley was even criticized after thanking multiple representatives for their questions, when Rep. Buddy Carter, R-Ga., asked Hemsley whether he’s ever had to explain to a patient why their care was denied.

“Don’t thank me for the question,” Carter said emphatically during the Energy and Commerce hearing. “I practiced pharmacy for 40 years. I’m the one who had to look the patient in the eye. I’m the one who had to tell them that. On your behalf. It’s not fun.”

Hemsley’s deferential tone also rankled other members.

“The way you’re talking about this — it’s not sympathetic. It’s not compassionate. ‘I appreciate the topic.’ These are people’s lives,” said Rep. Nanette Diaz Barragán, D-Calif.

Sparring over health policy

During the hearings, lawmakers targeted their counterparts across the aisle almost as much as the CEOs.

Democrats slammed Republicans for steep healthcare cuts in the GOP’s tax and policy megabill passed last summer, and said it wasn’t too late for Congress to extend higher subsidies for ACA plans that expired at the end of 2025.

Meanwhile, Republicans aired concerns about fraud and waste in the exchanges set up by the ACA, and argued much of the country’s affordability crisis is due to the 2010 law.

At times, members of Congress used the executives as proxies, asking them to raise their hands if they agreed with one political point or another.

The CEOs generally avoided supporting specific reforms, instead saying they back general themes of price transparency, tackling fraud and reducing complexity in the healthcare industry.

Congress faces intense public pressure to improve healthcare affordability after the expiration of more generous subsidies for ACA plans. Some 20 million Americans in the exchanges will see their monthly premiums double on average for coverage this year as a result. About 4 million are expected to drop coverage entirely.

However, though price hikes in the ACA exchanges are particularly acute this year, 2026 is not an outlier.

The nation’s health spending reached $5.3 trillion in 2024, up more than 7% from the year prior and outpacing growth in the overall economy — an unsustainable situation, according to economists and health policy experts.

Facing rising costs, lawmakers have turned their focus to insurers — including Republicans. It’s an about-face for the party, which normally defends big businesses and privatized insurance. However, President Donald Trump has said he wants to meet with insurance CEOs to negotiate lower prices, and issued a bare-bones healthcare plan earlier this month that would tweak some of their practices.

Wall Street has been largely unconcerned, despite Congress and the Trump administration’s growing focus on insurers.

The stocks of UnitedHealth, Cigna, Elevance and CVS trended up after the hearings and remained basically flat in post-market trading, suggesting investors are unworried about potential of seismic change from Washington.

UnitedHealthcare is raising its requirements for physicians to get paid for reviewing medical images alongside standard doctor’s appointments, according to a bulletin sent to providers.

UnitedHealthcare’s commercial plans will require doctors like internists to submit a full written interpretation and report of radiology images in order to be reimbursed for their professional services, otherwise the insurer will consider that included in the broader payment for an evaluation and management visit.

A physician group said the reform appeared targeted at reducing potentially improper payments for non-radiologist clinicians. UnitedHealthcare did not respond to a request for comment on the change, but it runs counter to the company’s broader efforts to pare back red tape for physicians amid widespread discontent with health insurers.

When the same provider bills UnitedHealthcare for an E/M service and a global radiology code for the same patient on the same day, they won’t receive separate professional reimbursement for their services unless they attach a copy of the radiology report to their request, according to bulletin sent to providers.

The heightened administration standard comes as as UnitedHealthcare and other major insurers move to strip back red tape that doctors say makes it more difficult for patients to access healthcare and for them to do their jobs. UnitedHealth, UnitedHealthcare’s parent company, has pledged to reduce the number of claims subject to preapproval and streamline other utilization management practices as the $400 billion conglomerate works to improve its relationship with lawmakers, regulators and the public writ large.

UnitedHealthcare did not respond to questions about the reason for the new requirement and whether it would increase administrative burden or lower reimbursement for providers.

Despite being targeted at radiology services, the American College of Radiology, a professional group representing U.S. radiologists, said it seemed unlikely to have a major impact on the specialists. Instead, it appears to apply to internal medicine physicians and other primary care providers that receive radiology reports like chest X-rays and review the images themselves, but may not provide the complex interpretations that would merit a professional reimbursement.

ACR is “reviewing UnitedHealthcare’s new requirement” but “initial review suggests it is directed toward non-radiologist clinicians,” a spokesperson for the group said over email. “Radiologists don’t bill E/M and are unlikely to bill for the professional component of imaging services without a complete report.”

Providers and insurers are increasingly at odds over reimbursement and what doctors view as overly onerous restrictions on care. Physicians are struggling with payment amounts they say fall well below the cost of providing care, especially from federal healthcare programs like Medicare, which outlines rate changes each year that are generally mirrored by commercial insurers.

Disputes between providers and insurers over reimbursement are increasing, as providers argue reimbursement rates have not kept pace with the escalating cost of providing care. Workforce shortages have driven up competition for labor, while inflation and President Donald Trump’s tariff policies are inflating the cost of medical supplies.

Still, payers argue they’re providing a necessary check on ever-rising healthcare costs, and say that some providers are pursuing exorbitant reimbursement increases well above the market reality — including in radiology.

UnitedHealthcare had legal or contract contests with a number of radiology practices over rates last year, including the country’s biggest radiology group Radiology Partners, Scottsdale, Arizona-based Southwest Diagnostic Imaging and Chattanooga-based Tennessee Interventional and Imaging Associates.

The Justice Department is suing OhioHealth for allegedly forcing insurers into anticompetitive contracts and driving up healthcare prices for Ohio patients.

The DOJ filed a lawsuit accusing the regional nonprofit system of leveraging its market power to force insurers to include its providers in their networks. This restricts insurers from offering differently priced plans that include or exclude certain OhioHealth providers, the DOJ alleges.

As a result, OhioHealth charges “significantly higher” for healthcare services than other systems in the Columbus metropolitan area, without a corresponding increase in quality, according to the lawsuit.

OhioHealth is a major health system in Ohio, with 16 hospitals in addition to outpatient facilities, physician groups and other clinics. But the system is especially dominant in the Columbus area, where it is based.

Although it competes with other providers, including Ohio State University Wexner Medical Center and Trinity Health-owned Mount Carmel Health System, OhioHealth controls more than 35% of inpatient acute care hospital beds in the Columbus metropolitan market, the DOJ found.

OhioHealth’s market share is “notably greater” than the system’s next largest competitor, according to credit ratings agency Fitch Ratings.

OhioHealth’s control of the market allows it to negotiate anticompetitive contracts with insurers, the DOJ alleges. Because of OhioHealth’s size, insurers offering plans in the Columbia area have no choice but to include OhioHealth in their networks.

Commercial insurers typically offer a selection of plans priced based on the providers included in a network. Higher priced plans generally correspond to a broader network of providers, but consumers can also choose cheaper plans with more restrictive networks.

By forcing insurers to include all OhioHealth providers, OhioHealth diminishes competition, because the system isn’t incentivized to lower prices or compete with other hospitals on quality to be included in a plan, the DOJ alleged.

That interrupts the “virtuous cycle” of competition among providers, the DOJ said in its suit.

“Competition for healthcare is vital to all Americans,” Omeed Assefi, acting assistant attorney general of the DOJ’s antitrust division, said in a statement. “These restrictions cause many Columbus residents to pay more for lower-quality healthcare.”

OhioHealth has been cooperating with the Justice Department and remains “committed to full compliance with all applicable laws and regulatory requirements,” a spokesperson for the health system said. They declined to comment on the specifics of the case.

Unlike other nonprofit health systems, OhioHealth has recently enjoyed relatively high operating margins. The health system recorded a 10% margin with 548 days of cash on hand in its 2025 fiscal year. Individual nonprofit hospitals had an average margin of 1.1% in 2025, with about 215 days cash on hand, according to Fitch Ratings.

Providers and health insurers submitted almost 1.2 million cases to a federal portal meant to resolve disputes over surprise medical bills in the first half of 2025 — almost 40% more than in the last six months of 2024, according to new data from the CMS.

Arbiters are handling the rising volume while cutting into the existing backlog, processing more than 1.3 million disputes in the first half of the year, the CMS said. That’s up almost 50% from the prior six months.

Still, despite faster closures, the independent dispute resolution process remains dogged by problems. Many submitted disputes are actually ineligible for IDR, and parsing through those is the primary cause of delays, the CMS said. And, the lion’s share of disputes continue to be submitted by a handful of mostly private equity backed-provider groups, raising concerns IDR is being exploited for profit.

When the federal IDR portal opened in April 2022, arbiters were quickly slammed with a tsunami of disputes over contested medical bills. The process — set up by the No Surprises Act to stop health insurers and providers from penalizing patients who inadvertantly receive out-of-network care — has proved successful in shielding consumers from surprise charges, but continues to be bumpy.

Along with the backlog in disputes, IDR has been slammed by both payers and providers, both of which argue it unfairly benefits the other side.

In IDR, both a patient’s provider and their health insurer submit a payment rate they think is fair for any out-of-network medical services rendered. An independent, third-party arbiter picks one of the two offers. The process was set up to be as neutral as possible, but has been forced to start and stop over the past few years to comply with a flurry of lawsuits from provider groups arguing the regulatory specifics underpinning IDR favor insurers.

Insurers, meanwhile, point to the fact that a handful of provider organizations — many backed by private equity companies — are responsible for an outsized share of disputes.

The top 10 initiating parties represented almost 70% of all disputes in the first six months of 2025, according to the latest CMS data file.

The top three initating parties — HaloMD, a middleman that takes on IDR disputes on behalf of providers, along with PE-backed providers Team Health and SCP Health — accounted for approximately 44% of all disputes initiated in the first half of last year, according to the CMS.

Combined with the fact that providers win the large majority of disputes — a whopping 88%, even higher than the 85% in the last six months of 2024 — and are paid three or four times above comparable in-network rates when they win, that’s a big issue for insurers.

Payer groups have raised concerns that the providers are turning to IDR as a business strategy to inflate reimbursement, including by sneaking medical bills that shouldn’t qualify for the process through.

About 20% of disputes submitted in the first six months of 2025 were actually ineligible for IDR, the CMS said. Notably, the percentage of ineligible disputes has been dropping as arbiters get better at processing eligiblity reviews. But they’re still cluttering up the process, regulators say.

Meanwhile, providers point to win rates and high reimbursement amounts to argue that insurers are filing artificially low payment offers.

As the back-and-forth continues, the industry is still waiting for regulators to release a final rule clarifying some IDR operations. In the filing, regulators wrote that the rule would “improve the process for determining the eligibility of disputes and ultimately increase the speed with which certified IDR entities render payment determinations.”

But in the meantime, IDR is inflating spending for the entire U.S. healthcare system. According to research published in Health Affairs last summer, IDR resulted in an estimated $5 billion in additional costs in the first three years of its implementation.

Pennsylvania-based health system Jefferson Health has sued insurer Aetna, claiming a new “downcoding” policy from the CVS-owned insurer regarding inpatient admissions for Medicare Advantage beneficiaries violates federal law.

The lawsuit, filed in federal court, says Aetna’s “level of severity inpatient payment policy” violates Medicare policy by reducing reimbursement for some inpatient hospital stays.

Jefferson, along with co-plaintiff Lehigh Valley Physician Hospital Organization is asking a judge to stop Aetna from implementing the policy. A spokesperson for Aetna told Healthcare Dive its policy complies with federal law and that it disagrees with Jefferson’s allegations.

Aetna says its new policy, which went into effect at the start of the year, is meant to more quickly approve payment for inpatient hospital stays. 

But providers say Aetna has decided to unilaterally pay less for hospital stays than were agreed upon during contract rate negotiations between insurers and providers.

Under the policy, Aetna will approve urgent inpatient hospital admissions for MA beneficiaries who stay between one and four midnights without reviewing the claim for medical necessity, but it will pay hospitals at a lower rate comparable to an observation stay. Aetna will only pay the negotiated inpatient rate if it finds the claim meets internal guidelines. Stays lasting five midnights or more will be paid at the higher rate.

In its lawsuit, Jefferson says the policy violates Medicare’s two-midnight rule, which determines coverage for inpatient and observational stays. It also violates federal policy that requires MA plans to cover all medically necessary services that traditional Medicare covers, according to the lawsuit.

“Aetna is able to tell its Medicare Advantage members (and CMS) that it is ‘covering’ the inpatient admission, while simultaneously paying the Hospitals for the equivalent of outpatient observation care,” the lawsuit says.

In one case, Jefferson said Aetna classified a 72-year-old stroke patient admitted to hospital as “low severity,” and therefore subject to a lower payment rate, even after being intubated in the ICU and suffering from renal failure. Aetna eventually classified the case as “high severity” after the hospital stay extended past five days and Jefferson followed up with the insurer and presented more clinical information, according to the nonprofit.

The inpatient policy also violates Jefferson and Aetna’s reimbursement contract, the nonprofit health system said, because Jefferson agreed to one payment rate for inpatient services — not a two-tiered system. Aetna can’t change its negotiated rates by issuing policy, the lawsuit says.

An Aetna spokesperson said its policies “comply with all applicable federal law and regulations and with the terms of our provider contracts.”

“Aetna disagrees with the allegations in the lawsuit and will respond in the appropriate forum,” the spokesperson said.

The policy, which was announced in August, faced immediate pushback from providers and trade groups. The policy “appears to circumvent established regulatory standards regarding coverage for Medicare Advantage beneficiaries,” the American Hospital Association said in a September letter it sent to Aetna.

Health insurers are steadily expanding their control over the U.S. primary care market — especially in areas with a lot of seniors eligible for Medicare Advantage plans, according to new research.

In 2023, payer-operated practices accounted for 4.2% of the national Medicare primary care market by service volume, up from 0.8% in 2016, the study published in Health Affairs Scholar found. It’s the first concrete estimate of insurer ownership of physician practices nationwide, and suggests that vertical consolidation is being driven by the potential for profits in nudging MA members to owned clinics, researchers said.

The paper could also intensify the microscope on UnitedHealth as lawmakers and regulators scrutinize the healthcare behemoth’s outsized control over the industry. UnitedHealth-owned Optum was the largest operator of primary care clinics of all the insurers included in the analysis, holding more than 2.7% of market share nationally and more than 35% in several large counties.

Health insurers have been steadily snapping up physician practices despite rising concerns from provider groups, patient advocates and some lawmakers.

Payers say that owning medical offices allows them to better coordinate care for their members, especially in value-based arrangements, improving outcomes and steering patients to lower-cost settings.

But critics are concerned that vertical integration may allow insurers to steer patients toward their own doctors at the expense of other practitioners, disadvantage rival insurers by shutting in-house providers out of their networks and allow other anticompetitive behavior, potentially leading to higher prices and less choice for patients.

Worries about vertical consolidation have snowballed over the last few years as major payers increased M&A to catch up with Optum, which kicked off the vertical integration trend more than one decade ago.

Last spring, then-UnitedHealth CEO Andrew Witty said that Optum has grown to employ “just under 10,000” doctors — roughly 1% of all physicians in the U.S. — and be affiliated with another 80,000.

But UnitedHealth’s peers, including Humana, Elevance and CVS’ Aetna, have also grown their reach though large-scale M&A, quiet acquisitions of standalone practices and organic expansion.

Of the more than 381,000 primary care doctors billing Medicare in 2023, 6.4% worked for a payer-operated practice, according to the new study from researchers with the nonprofit Brookings Institution and Cornell Medical College’s Health Policy Center.

Compared to hospitals, which own more than one-third of all doctor’s offices nationwide, that’s a relatively small share. But it could be a slight underestimate based on how researchers defined ownership, according to Loren Adler, the associate director of the Brookings Institution’s Center on Health Policy and author of the study.

And payers controlling more than 4.2% of the Medicare primary care market is still a “pretty healthy number” that’s “been growing pretty rapidly,” Adler said.

“If it just completely stopped now, it may only be so big of a story, but if it continues expanding as it’s been, I think it becomes a very large story,” he added. “The fact that it’s only 4% — it means the broad, systemwide effects are probably smaller than some people were thinking, at least so far. There’s only so much 4% of the market can do. But that being said, they are big in certain areas.”

Insurer control is significantly more concentrated in certain counties: Overall, more than 15% of the U.S. population lived in counties where payers owned more than 10% of the primary care market in 2023, the study found.

More than 10% lived in counties where Optum alone exceeded that threshold.

And there are pronounced outliers. In 2023, Optum controlled almost 45% of the primary care market in Snohomish County, Washington; more than 40% in Contra Costa County, California; and almost 36% in Clark County, Nevada, according to the research.

Notably, payers were significantly more likely to own primary care practices in areas where MA was more prevalent. Clinics owned by payers also delivered a substantially larger share of primary care services in MA as compared to traditional Medicare, the study found.

That suggests payers may be driven to purchase physician practices because of the chance to expand profits in the privatized Medicare plans, which tends to be more lucrative than other types of insurance, Adler said.

The calculus goes like this.

By increasing members’ access to primary care providers and heading off worse health outcomes (and higher medical costs) down the line, MA insurers can keep a greater share of premiums as profit. MA insurers can also lean on in-house doctors to diagnose their MA members with more conditions to inflate their reimbursement from the federal government, a much-maligned practice called upcoding.

The temptation to increase upcoding could be spurring insurers to expand their medical networks, according to Adler.

“A lot of this seems to be a Medicare Advantage story,” Adler said. “Certainly we already have a fair amount of evidence that vertically integrated payers tend to be able to code their enrollees more intensely and are able to make their enrollees look sicker ... and the way Medicare Advantage pays, you get paid more money the sicker your patients look.”

Rising evidence of upcoding has fueled calls for MA reform, especially as the program grows. MA has swelled to cover 33 million people, more than half of all seniors in Medicare coverage.

The growth has exacerbated concerns about Medicare’s fiscal integrity. Congressional advisory group MedPAC estimates that CMS will pay MA insurers $84 billion more this year than the government would have if those members had been in traditional Medicare. Upcoding was responsible for almost half of those overpayments.

Both the Biden and the Trump administrations have taken action to crack down on upcoding, while bipartisan members of Congress have expressed interest in pursuing legislation to prevent profiteering in the program. Republicans’ sweeping domestic policy bill was seen as a vehicle to potentially pass such reform, but the final version passed into law by President Donald Trump on July 4 included no curbs on bad behavior in MA.

Adler said it’s worthwhile for Congress to limit overpayments in MA, but that the complexity of the issue could continue to hamstring meaningful policymaking from Washington.

”We kind of know what [insurers are] taking advantage of. And to the extent that you can go after that, or even just sort of limit any overpayments, that at least takes away some of the low-hanging fruit here and probably right-sizes or sort of shrinks the desire to compile a ton of practices under an insurer’s umbrella,” Adler said. “There is a chance, given that there are some policies that both parties, most people, actually like. They’re just politically difficult.”