Ambulatory Surgical Center (ASC)

Definition: A health care facility that provides outpatient surgical services without requiring an overnight hospital stay. Ambulatory Surgical Centers (ASC) often focus on elective and lower-risk procedures.

 

Relevance to this project: Through Optum, UnitedHealth Group has acquired a large number of ASCs, giving it control over more aspects of patient care and referrals. This allows UnitedHealth the opportunity to steer patients to its own facilities, which may reduce costs for the company while potentially limiting patient choice.

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Medical Loss Ratio (MLR)

Definition: The percentage of an insurance company’s revenue that must be spent on patient care and quality improvement rather than administrative costs and profits. Under the Affordable Care Act, insurers offering large group plans must spend at least 85% of premiums on care, while individual and small-group plans must spend at least 80%.

 

Relevance to this project: The MLR provision in the ACA may have incentivized insurers to buy physician practices, pharmacy benefit managers and other health care delivery operations to reduce or eliminate any rebates they might otherwise be required to send to customers because the provision does not apply to health care delivery.  

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Medicare Advantage (MA)

Definition: A type of private health insurance plan that provides Medicare benefits. These plans are offered by private insurers, such as UnitedHealthcare, that receive taxpayer-funded payments from the government to manage Medicare enrollees’ health care.

 

Relevance to this project: UnitedHealthcare is the largest provider of Medicare Advantage plans in the U.S. Research has shown that health insurers profit from overbilling Medicare through often complex risk adjustment maneuvers while also restricting patient care through prior authorization and limited provider networks.

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Pharmacy Benefit Managers (PBMs)

Definition: Middlemen in the prescription drug supply chain that negotiate drug prices and manage pharmacy benefits for insurance plans. PBMs determine which drugs are covered, how much patients pay, and how much pharmacies are reimbursed.

 

Relevance to this project: UnitedHealth Group owns OptumRx, one of the largest PBMs in the country, giving significant power over drug pricing, formulary decisions, and pharmacy reimbursements. Government and media investigations have shown that this setup allows the company to steer profits within its own ecosystem while increasing costs for consumers and independent pharmacies.

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Vertical Integration

Definition: A business strategy in which a company expands its operations into multiple stages of a supply chain, reducing reliance on third-party providers and increasing control over pricing and service delivery.

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Relevance to this project: UnitedHealth Group has engaged in vertical integration, adding thousands of health care entities, including physician groups, ASCs, pharmacies and data analytics firms under its Optum division. This consolidation allows the company to dominate the industry, controlling not just insurance but also care delivery, billing and pharmacy services — often leading to potential conflicts of interest and anti-competitive practices.