Hospitals Say New UHC Policy on Lab Network Is Anticompetitive

American Hospital Association asks CMS and FTC to review UnitedHealthcare’s new lab-network policy

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IT’S NOT OFTEN THAT HOSPITAL ASSOCIATIONS WILL DIRECTLY OPPOSE the changes that health insurers want to make in how they pay for clinical laboratory tests. But that is now happening with UnitedHealthcare’s new lab test payment policy that directly reduces what many hospital labs are paid for outreach laboratory test claims. 

In February, the American Hospital Association (AHA) sent letters to the Federal Trade Commission (FTC) and the Centers for Medicare and Medicaid Services (CMS). It asked officials at each agency to challenge a new lab network policy from UnitedHealthcare (UHC). 

Calling UHC’s new Designated Diagnostic Provider (DDP) program anticompetitive, the hospital group said that when the program becomes effective on July 1, it will confuse patients about which clinical labs are included for coverage as “in network” labs, and thus could result in surprise medical bills. 

UHC’s DDP program is confusing because it proposes to eliminate coverage for diagnostic tests at all freestanding and hospital labs—including those that are in its network—unless the labs go through the process to be designated as a DDP, the letter said. UHC may expand this policy to other types of diagnostic services, according to a published report. 

On Feb. 4, the AHA called on CMS’ acting administrator Elizabeth Richter to take immediate action to prevent harm to beneficiaries in the Children’s Health Insurance Program and in health plans purchased from the federal Health Insurance Marketplace, Medicaid managed care, and Medicare Advantage. 

The AHA wrote that UHC’s program could eliminate coverage for diagnostic tests at most freestanding and hospital labs while UHC continues to list these labs as being in-network. “This policy would result in substantial confusion among patients about which providers are covered by their health plan, and, as a result, also likely increase the incidence of surprise medical bills that will not be prevented by recent changes in federal law,” the letter said. 

‘Anti-Competitive Conduct’ 

The AHA made similar arguments in a letter the same day to the FTC’s Acting Chairwoman Rebecca Slaughter. In the letter, the hospital group said the DDP is a form of anticompetitive conduct that is “a bait-and-switch coverage policy.” Under the DDP program, UHC would eliminate coverage for diagnostic tests at all freestanding and hospital labs, including those in the health plan’s network, unless the facilities are established as a DDP, the letter said. 

In its earlier coverage of UHC’s new policy, The Dark Report noted that UHC appeared to be using the new policy as a way to prevent hospital labs from using inpatient lab test prices when they submit outreach lab test claims to UHC. (See TDR, “New UnitedHealthcare Policy For Hospital Reference Tests,” Mar. 9, 2020.)

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