News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel

News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

Hosted by Robert Michel
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UnitedHealth Offers Medicare 15 Ways to Save $540 Billion, While Improving Care Quality

List of recommendations based on UnitedHealth’s extensive database and experience

Every sector of the healthcare industry is offering both Congress and the Center for Medicare & Medicaid Services (CMS) advice on how to reform the system to improve quality of care, while reducing costs. Too often, the search for ways to save money that can be redirected to covering uninsured is a game of taking money from one existing health service and shifting it to another.

Recently UnitedHealth Group (NYSE:UNH) stepped into this debate over how to save money. In important ways, it is better positioned to provide this advice than most other entities. For example, UnitedHealth Group is the nation’s largest insurer in terms of revenue. UNH funds and organizes care for 70 million Americans. It arranges $115 billion in health care services provided by 5,000 hospitals and 650,000 physicians nationwide. Because of this, UNH’s Center for Modernization and Reform has collected more data on clinical services provided and resulting healthcare outcomes than anyone else.

More Doctors Consider Concierge Medicine as Healthcare Reform Looms

Concern about lower reimbursement sparks MD interest in concierge practice model

Fear about the far-reaching consequences of healthcare reform-and the potential for dramatic reductions in physician reimbursement-has triggered a surge in physician participation in concierge medicine.

Concierge medicine, sometimes also called boutique medicine, has been around since 1996. However, with healthcare reform now eminent, more doctors are choosing this option. A New York Times article published in 2005 estimated that 250 doctors with 100,000 patients participated in concierge medicine at that time. Today, approximately 5,000 U.S. primary care doctors operate a concierge practice, according to the Society for Innovative Medical Practice Design, a professional association of concierge physicians.


UnitedHealth Suspends Fines for New Jersey Doctors Who Continue to Use Quest Diagnostics

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.

P.S. Keep Dark Daily alerted to developments in your own community. We welcome your news tips. Your local developments help us develop regional and national patterns that can help your laboratory develop effective strategies and responses to all of these trends. Please forward your news to Robert ( or Sylvia (

LabCorp Ousted from Aetnas National Contract

In the heavyweight championship fight taking place between the two blood brothers, Quest Diagnostics Incorporated  has just won the next round. Earlier today, Laboratory Corporation of America issued a terse press release titled: “LabCorp Notified by Aetna of Contract Termination.”

LabCorp acknowledged that “it will no longer be a contracted laboratory provider for Aetna Inc. (NYSE:AET), effective July 1, 2007.” LabCorp further disclosed that it expects the loss of its contract relationship with Aetna to be the primary reason why it expects earnings per share in 2007 will decline from a projected $0.16 to $0.12 in 2007. That’s a 25% reduction.

This breaking development is not a total surprise. Quest Diagnostics found itself excluded from almost all UnitedHealth contracts last October (United Health Disrupts the National Contract Status Quo Between the Two Blood Brothers) and from New Jersey-based Horizon Blue Cross Blue Shield in January. In both cases, LabCorp had negotiated an exclusive relationship.

Now it’s tit for tat. Quest Diagnostics is likely to announce that it has an exclusive national contract with Aetna, effectively denying LabCorp access to Aetna’s 16 million members. Aetna is one of the five largest health insurance companies in the United States.

Each of these national managed care contracts has implications for clinical laboratory management. That’s because both of the blood brothers want to negotiate a national contract with insurer that include terms designed to exclude regional independent laboratories and hospital laboratory outreach programs. To help lab directors and pathologists stay on top of this emerging trend, this year’s Executive War College on Laboratory and Pathology Management has several sessions devoted exclusively to the latest developments in managed care contracting.

In particular, LabCorp’s new CEO, David P. King, will be discussing how managed care companies are altering their strategies for contracting laboratory testing services. This will be a unique opportunity to hear, first hand, what is likely to unfold in the next 24 months. That’s particularly important, since the developments of the past five months are pointing to a managed care contracting environment which is increasingly excludes independent lab companies and hospital laboratory outreach program in favor of the national laboratories.

Stay tuned to Dark Daily for more updates on both this story and this rapidly unfolding trend. Once LabCorp used its exclusive pact with UnitedHealth to break the managed carecontracting status quo between it and Quest Diagnostics, it set in motion forces which are already propelling the laboratory industry into uncharted territory.

PS: To get the latest news and effective strategies dealing with new trends, join us in Miami on May 10-11, 2007 for the 12th Annual Executive War College. You can access the full details using the links below. Take action today to reserve your place.

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