UnitedHealth Looks to Doctor ‘Fines’ To Rein in Lab Costs

Many physicians are voicing opposition to a new UnitedHealth Group policy that threatens to fine doctors who repeatedly refer patients to out-of-network laboratories for tests, the Wall Street Journal reports.

UnitedHealth in 2006 reached a 10-year deal to make Laboratory Corporation of America Holdings the insurer's national in-network laboratory. "To squeeze as much savings as possible out of the LabCorp deal, UnitedHealth sent a not-so-friendly reminder to doctors to play along," the Journal reports.

The letter states that as of March 1, UnitedHealth will reserve the right to fine physicians $50, cut their fees or eliminate them from the UnitedHealth network if they consistently refer patients to out-of-network labs. The insurer has not yet imposed any financial sanctions.

According to the American Medical Association, the policy marks the first time that physicians face fines for referring patients for out-of-network care or testing. AMA and several state medical societies have requested that UnitedHealth terminate the policy, and the New Jersey Department of Banking and Insurance has said that it might be illegal.

The company has temporarily suspended the policy in New Jersey.

Many physicians argue that the policy disrupts patient care, particularly with regard to certain blood and tissue tests that have different methodologies at different labs.

In addition, many allergists say that LabCorp rival Quest Diagnostics -- which previously had a contract with UnitedHealth -- is the only national commercial lab that provides the leading blood test for allergies.

Some doctors also argue that the policy violates PPO agreements, which give enrollees the choice to go out of network as long as they pay a larger share of the cost.

UnitedHealth says that the policy is intended to prevent beneficiaries from paying out-of-network costs, which can be more than seven times higher than in-network copayments.

UnitedHealth spokesperson Tyler Mason said that contracts between physicians and insurers always have required adherence to referral protocols, and he added that the company plans to apply the penalties "sparingly" after first speaking with doctors (Fuhrmans, Wall Street Journal, 4/10).