UnitedHealth-Walmart partnership heats up U.S. Medicare provider competition

Whenever a health insurer partners with retail giant Walmart, it has the ability to shake up the market. For 2023 Medicare Advantage open enrollment, the United States’ largest retailer will begin a 10-year partnership with the nation’s largest insurer.

UnitedHealth Group and Walmart Health will launch a value-based arrangement at 15 U.S. locations in Florida and Georgia, with Optum supplementing the work of Walmart Health providers.

Medicare Advantage allows private insurer plans to offer coverage to Medicare beneficiaries, which has proven highly popular with plans covering nearly half of the Medicare population and likely to overtake traditional Medicare soon. The plans are profitable and continue to draw new Medicare enrollees, leading all top payers to make investments in retaining and attracting enrollees.

UnitedHealth has been enormously successful in this market, continuing to grow while staying ahead of its top competitors. That the pairing of Walmart and UnitedHealth could be game-changing for Medicare Advantage is an understatement.

The partnership dovetails with Walmart Health’s plans for 15 new Florida clinics across the Jacksonville, Orlando and Tampa markets by the end of 2023. Walmart is also moving into clinical trials, like its top pharmacy rivals (Walmart news release, Oct. 11, 2022).

In Georgia, the partnership will include a joint venture health maintenance organization (HMO) plan, UnitedHealthcare Medicare Advantage Walmart Flex, for 2023. Insurers that incentivize using Walmart facilities in Medicare Advantage and prescription drug plans (PDPs) have seen success; Humana has a long-running standalone Part D plan with Walmart pharmacies as preferred network locations.

Expansion opportunities for 2024 are relatively obvious, since the partners could expand to the three states with Walmart Health locations (Arkansas, Illinois, Texas).

Walmart’s footprint gives UnitedHealth an edge in the race to scale up

Teaming with Walmart allows UnitedHealth to keep its leading position in the Medicare Advantage segment, where it holds the top market share with 7.9 million covered lives, ahead of No. 2 Humana by more than 2.5 million lives, per ClarivateTM enrollment data as of January 2022. UnitedHealth has long shown savvy in its partnerships, including cobranded MA plans with the the American Association of Retired Persons (AARP), allowing its reach of millions of the organization’s members.

Since purchasing insurer Aetna, CVS Health has increasingly leveraged its national network of retail pharmacies, converting more than 1,500 retail locations into HealthHubs, where plan members can receive more comprehensive care than at a standard retail clinic. While not attached to a health plan, Walgreens purchased VillageMD and plans to add primary-care locations onto several hundred retail pharmacies in major markets.

Most large for-profits have followed UnitedHealth’s model of establishing an Optum-like health services subsidiary, covering employed providers, pharmacy services and home health, among others. Under its CenterWell subsidiary Humana planned to operate 240-260 senior-only primary-care clinics by the end of 2022 while entering new markets such as Dallas-Fort Worth, Phoenix, Louisville, Nashville and Charlotte.

Cigna has made similar moves with its Evernorth subsidiary. While Cigna only operates a vertically integrated medical group in one market, Phoenix, the Cigna Medical Group rebranded as the Evernorth Care Group in September 2022, a sign the group practice could expand locations and open the practice to other health plans.

Commercial plans play catch-up in an increasingly crowded marketplace

As value-based care has become the future, most for-profit Medicare Advantage plans have steered into provider employment, doing what integrated providers like Kaiser and regional IDNs with Medicare Advantage plans have done for decades. Payers get better control and drug adherence over members that use employed providers.

Five-star plans have long skewed towards provider-owned plans due to the strength of their integration.  While national for-profit plans have made some inroads on the Centers for Medicare & Medicaid Services’ (CMS) five-star ratings, they remain dominated by vertically integrated plans, from Sharp Health (San Diego) to Intermountain Healthcare’s SelectHealth (Utah) to Wisconsin’s Dean Health Plan (CMS 2023 Star Ratings Fact Sheet, Oct. 6, 2022).

For regional plans not vertically integrated with providers, the opportunity of employed providers could improve their footing, especially among regional Blue Cross Blue Shield plans, which often struggle to translate their strong brands and commercial enrollment into Medicare Advantage growth. Blue Cross Blue Shield of North Carolina remains its state’s dominant insurer, but falls to fourth in Medicare Advantage market share, Clarivate Managed Market Surveyor data show. Its visibility has improved through the addition of health centers in Boone, Charlotte and Raleigh, where members can seek health consultations.

Not all will continue their independence. Kelsey-Seybold Clinic, an advanced multispecialty practice in Houston and operator of a vertically integrated, five-star Medicare Advantage plan, KelseyCare, was acquired by Optum in early 2022. Kelsey-Seybold is unlikely to be the last as provider ownership stays squarely in the crosshairs of major Medicare Advantage players.

Either way, competition over employed providers among Medicare Advantage plans has only begun to heat up and UnitedHealth remains the plan to beat.

To learn more about how Clarivate helps life science companies navigate the fast-changing U.S. payer marketplace, please visit us here.

Clarivate Associate Healthcare Research & Data Analysts Anubhav Sharma and Prashanth Jain contributed to this report.


Table 1. Insurers seek scale through partnerships and acquisitions

Insurer Employed provider initiatives Year effective MA national enrollment
UnitedHealth Group Partnership with Optum supporting MA members Walmart Health at select Florida and Georgia stores; Walmart-oriented plan options available in Georgia 2023 7.9M
UnitedHealth Group Optum has purchased Houston-based Kelsey-Seybold Clinic, which has a vertically integrated, 5-star Medicare Advantage plan, for an undisclosed sum 2022
Humana Operating 240-260 Centerwell senior primary-care clinics by the end of 2022; new markets include Dallas-Ft. Worth, Phoenix, Louisville, Nashville and Charlotte 2022 5.1M
Cigna Cigna Medical Group in Arizona rebranded as Evernorth Care Group to align with Cigna’s health services business. Evernorth has become an minority owner in Walgreens-owned primary-care provider VillageMD following VillageMD’s purchase of urgent-care provider Summit Health 2022 0.6M
CVS/Aetna CVS retail pharmacies converted into Health Hubs, with 1,500 Hubs nationwide 2020 3.1M

Sources: Clarivate, company news releases