Last Friday brought an interesting twist to the question about whether UnitedHealth would follow through and fine doctors $50 for each of their patients who had laboratory tests done at out-of-network laboratories, effective March 1, 2007. The Associated Press published a news story revealing that the New Jersey Department of Banking had requested that UnitedHealth suspend any attempts to fine physicians under this program, pending its investigation in the situation.

The New Jersey Department of Banking said it was “not satisfied with the legality of these protocols” in an article entitled UnitedHealth suspends MD fines in N.J.. The American Medical Association has also expressed concerns about the policy because physicians can’t control where patients choose to get their medical tests. The AMA also noted that this situation is the first time a doctor could be financially punished for a patient’s behavior.

In response to the New Jersey Department of Banking and Insurance’s request, UnitedHealth spokesman Tyler Mason said the suspension was voluntary and will be temporary. He added that the company expects the review to be finished shortly and in a manner favorable to the insurer.

New Jersey regulators are responding to the negative backlash from doctors after UnitedHealth replaced Quest Diagnostics with LabCorp as their preferred laboratory for tests (see United Health Disrupts the National Contract Status Quo Between the Two Blood Brothers) effective January 1, 2007. Although the fine policy has been on file since March 1, there has been no public disclosure of whether or not UnitedHealth has actually exercised their right to fine doctors as of this date.

New Jersey’s action triggers some important new questions. If New Jersey insurance regulators decide that UnitedHealth’s policy of fining physicians in this type of situation is illegal, will this prove helpful to Quest Diagnostic’s in its efforts to hang on to as much UnitedHealth business as possible. Further, if New Jersey insurance regulators determine that such a practice is illegal, would other state insurance commissioners follow this lead and make similar determinations? On the other hand, if UnitedHealth prevails in its legal arguments in New Jersey, will this open the door for other payers to copy UnitedHealth and begin fining physicians whose patients end up getting testing done by out-of-network laboratories?

This newest episode in the three-way contest between UnitedHealth, LabCorp, and Quest Diagnostics demonstrates how the precedents established in this new contractual relationship have the potential to be copied by other national health insurance companies. Unfortunately, many of these types of precedents prove detrimental to the interests in independent lab companies and hospital outreach programs. Stayed tuned for the next chapter in this fast-moving story.

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