CEO SUMMARY: Once again, the use of deeply-discounted lab test pricing to win exclusive managed care contracts is involved in a court case. However, this latest private lawsuit is different from earlier cases because it seeks to preserve competition in the lab testing and the managed care contracting marketplaces, said an attorney for the four
Managed Care ContractsSkip to articles
Managed care is a health care delivery system organized to manage cost, utilization, and quality. Every healthcare provider must settle on a managed care contract between itself and the payer.
According to Findlaw.com, the contract between a clinical laboratory or other health care professional and a managed care organization (MCO) such as a provider-sponsored network, integrated delivery system, health maintenance organization, or other health care plan, is the fundamental document which frames, defines and governs their relationship. Contractual provisions can affect payment, office organization, practices and procedures, and confidential records as well as clinical decision-making.
Findlaw states, “A good managed care contract, like any other form of business agreement, is clear, consistent, comprehensive, and concise. It will conform to both the intent of the parties, setting out their respective rights and responsibilities, and the requirements of state and federal law.”
For example, Medicaid managed care provides for the delivery of Medicaid health benefits and additional services through contracted arrangements between state Medicaid agencies and managed care organizations (MCOs) that accept a set per member per month (capitation) payment for these services.
Depending on the market share of the health plan and the services offered by the healthcare provider, the negotiability of the contract will vary. Well-established managed care plans that have a large market share typical use form contracts. Newer managed care plans that have little market share and want broad provider participation are generally more willing to negotiate terms.
The Patient Protection and Affordable Care Act and the move toward accountable care has put a much greater emphasis on quality measures than in previous years.
Healthcare providers must prove in contract negotiations how well they manage quality and cost; such proof is usually provided with a comprehensive set of quality measures reported directly from the electronic health record (EHR). This can be straightforward for a single practice using the basic reporting functionality of its EHR, a more complex managed care plan might require features that an EHR vendor doesn’t offer.
CEO SUMMARY: BeaconLBS is a new business created by Laboratory Corporation of America. It says it wants to help health insurance plans manage molecular diagnostics and genetic testing. BeaconLBS is now recruiting other clinical labs to join its network and is meeting with payers to offer its lab test pre-authorization services. What may make BeaconLBS
CEO SUMMARY: Aetna, Inc., sued Laboratory Corporation of America in federal court, seeking injuctive relief for actions taken once LabCorp became an out-of-network laboratory provider for Aetna in July 2007. LabCorp is also accused of a “malicious scheme to continue to receive revenue” from Aetna. However, as an out-of-network laboratory provider, LabCorp has only been
CEO SUMMARY: Although the nation’s two largest laboratory companies have achieved a dominant managed care position, opportunities remain for regional labs to do more business with managed care plans. Two experts provide an update of managed care pricing trends for laboratory testing services. For independent labs and hospital lab outreach programs seeking to expand access
“Health plans are interested in improving outcomes and saving money on complex, expensive cases because that’s where the money is. At the same time, that’s an opportunity for labs to help health plans cut costs while also improving quality. ”
—Kerry Kaplan, President, Healthcare Solutions
CEO Summary: At the most recent Executive War College, Kerry Kaplan, President
CEO SUMMARY: During the past seven months, competition in the Northeast has intensified. Decisions by UnitedHealth and Aetna to exclude a national laboratory from their respective provider panels has forced many physicians to reconsider their choice of laboratory provider—creating an opportunity for independent lab companies that are regional network providers. However, acceptance of contract prices
CEO SUMMARY: Once again, public laboratory companies are pursuing short-term strategies that promise competitive advantage to themselves. But these strategies also carry long term risks that could burden the entire laboratory industry. Contradictions in the current cycle of competition for exclusive managed care contracts are already visible. Ongoing consolidation of payers is another wild card
CEO SUMMARY: For the first time in almost eight years, there are major disruptions to the status quo in managed care contracting for laboratory testing services. As was true in the 1990s, national lab companies are pursuing exclusive national contracts with the nation’s largest health insurers. In the 1990s, a similar competitive battle triggered a
CEO SUMMARY: January 1, 2007 can be considered the start of a new epoch in managed care contracting for lab test services. News of Aetna’s decision to favor Quest Diagnostics Incorporated with a five-year contract as its only national laboratory provider shows the direction this new epoch is apt to take. Eventually it may become
CEO SUMMARY: In the first six weeks since its exclusive national contract with UnitedHealth became effective, Laboratory Corporation of America has made major gains in several key markets. It has also begun to share the details of its three-phase strategic plan to maximize the leverage it gets from its 10-year pact with UnitedHealth.
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