On Wednesday, UnitedHealthcare, the nation’s largest health insurer, announced that it expects the value of its provider contracts tied to quality and cost-efficiency measures to more than double in the next five years. Already topping $20 billion a year, UnitedHealthcare predicts its contract reimbursements to hospitals, physicians and ancillary care providers linked to accountable care will hit $50 billion by 2017.

United says it “is placing much greater emphasis on rewarding care providers for better care and lower costs” and plans to reduce dramatically its basic fee-for-service contracts. The company currently has accountable care relationships with more than 575 hospitals, 1,100 medical groups and 75,000 physicians nationwide.

“We are improving health outcomes for patients at lower costs by moving even more broadly to value-based payment models and integrating those with our care provider network, product and clinical strategies,” says Austin Pittman, president, UnitedHealthcare Networks. “Our unparalleled experience with accountable care models – and there are many – demonstrates that they can work better for everyone in health care, from patients to payers to care providers.”

United says the programs have already reduced emergency-room visits by 17%, and helped slow the increase in medical costs. One of its programs reportedly reduced out-of-network laboratory services by 25%; another shortened the average hospital stay for organ transplant patients by the same amount.

Ruth Benton, CEO of the Denver-based New West Physicians, says “one size certainly doesn’t fit all” and the current pay-for-service model is not the most effective way of getting patients the best care.

“Physicians have increasingly decided that the current fee-for-service model is not sustainable in the long term, but they want payment models that are more customized to meet their specific needs,” Benton says.

UnitedHealthcare currently insures approximately 42 million people; it spent $80.2 billion on medical claims in 2012. Shares of United have gained around 25% for the year.

Bloomberg News Service reporter Alex Nussbaum contributed to this report.

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