Labs Wary of BeaconLBS, Express Major Concerns

Lab execs say they worry about having a lab competitor’s company run United’s network

CEO SUMMARY: Lab executives asked to join UnitedHealth’s new BeaconLBS lab benefit management system soon to launch in Florida have multiple and serious concerns. The primary issue is that BeaconLBS is a subsidiary of LabCorp—their major competitor. These executives understand why a payer wants to implement a prior authorization program for expensive lab tests. But they can also see how they would be at risk for performing tests and not getting paid because of the flaws in this program’s design.

FLORIDA IS ABOUT TO BECOME the testing ground for a new managed care contracting arrangement. News of this development has caused consternation among clinical labs and pathology groups that currently provide lab testing services to patients in the Sunshine State.

As described in the intelligence briefing on pages 3-6, a laboratory benefits management program will be instituted in Florida on October 1, 2014, by UnitedHealthcare (UNH). What makes this program noteworthy is that UNH will hand over two responsibilities to BeaconLBS, a wholly-owned subsidiary of Laboratory Corporation of America.

The first responsibility is to develop a network of labs that meet certain criteria to be on the “laboratory of choice” panel for the lab benefits management program. All of these labs compete against LabCorp in providing testing services to patients in Florida.

The second responsibility is to manage the prior authorization and advance notification requirements when a physician orders any of the tests on the “decision support” list. This program puts BeaconLBS—owned by a national lab company—in charge of handling the lab test authorizations for orders placed by physicians treating UNH patients.

The full description of UnitedHealth’s laboratory benefits management program and the BeaconLBS service can be found on their respective websites. (For UNH: http://tinyurl.com/p633fm8. For BeaconLBS: http://beaconlbs.com.)

Beacon Reps Visited Labs

For some months now, representatives of BeaconLBS have been contacting national and local labs that provide testing to patients in Florida. Their goal was to recruit labs to become part of the laboratory-of-choice panel.

Discussions across the lab industry during past months have reflected general unhappiness with the UNH pilot program involving prior authorization. The major source of this unhappiness is not the concept of pre-authorization for designated tests. Most pathologists and lab administrators understand why payers would want to institute such a function.

Rather, the dissatisfaction is rooted in the recognition that a company owned by a competing laboratory will manage both the lab network and the prior authorization activities of UNH’s pilot lab benefit management program.

THE DARK REPORT has tracked these developments. There are some lab companies on the laboratory of choice panel that are satisfied with their inclusion and their expected role in the program. That is not true for most of the lab organizations that declined to be part of UNH’s laboratory benefits management program.

Their executives consider this to be not only a poorly-designed scheme for lab test pre-authorization, but also to have elements of anticompetitive business behavior. Their comments are presented below. All of the executives interviewed asked not to be named.

One Obvious Concern

The most obvious concern mentioned by lab executives about BeaconLBS is that it is a subsidiary of LabCorp. Additionally, LabCorp is well represented in this network of 13 preferred labs, which BeaconLBS calls ‘laboratories of choice,’ according to the list of labs currently posted on the UNH website. Of those 13 labs, one is LabCorp and four are subsidiaries of LabCorp.

Another concern is that, for a lab to join the BeaconLBS network, it must map its tests to the BeaconLBS test menu. Another requirement to be in the network includes developing new information system links to BeaconLBS, lab executives said.

“Our position is that Beacon is not of any benefit to anyone except Beacon and LabCorp,” declared one executive. “That’s true for the short term and it’s true for the long term. We see Beacon as a mechanism to steer lots of lab testing to LabCorp. It’s as simple as that.”

Another lab executive said, “It’s obviously geared so that LabCorp is the primary lab in the network because of the range of testing that LabCorp has that correlates to the 82 tests on the prior authorization list.

Fears of ‘Test Skimming’

“We believe that some labs will do routine testing and LabCorp will skim the high-cost and esoteric testing,” she continued. “Our lab team here studied the lab test panels established by BeaconLBS. It’s our opinion that these were arranged so that your lab may not have the right kinds of tests in your test panels. Therefore, as a result, some of the most high-priced work will go to LabCorp.”

This executive also made the same comment about the targeted tests being “geared so that LabCorp is the primary lab in the network because of the range of testing that LabCorp does.”

Labs already serving UNH commercial members in Florida find it difficult to see an advantage in joining the BeaconLBS network, noted several lab executives. Executives for labs that already contract with United said they would not sign with Beacon. “Like us, many of our competitors with existing agreements with United are reluctant to sign with Beacon. Why would we?” asked an executive. “There’s no advantage.”

Lab executives agreed there could be benefits for health plans to use benefit management companies but such companies would need to be independent of any laboratory company, they said. Otherwise, the question of bias would color any negotiations and labs would fear that lab work that should go to them would be steered to the lab company that owns the benefit manager.

Labs Required to Pay a Fee

A related concern is that some labs have been told they can become a preferred lab if they pay a management fee to BeaconLBS, said one lab executive. “If you’re a preferred lab, your lab will be listed on the front page of their computerized support tool,” one executive commented. “But if you don’t pay that management fee, your lab would be listed on the second or third page.” [Only one lab mentioned this management fee.]

The cost of complying with the requirements of BeaconLBS was seen as a deterrent by most executives willing to discuss the program. “We have to map our test menu to the Beacon system and our staff says doing that could take several weeks,” one executive said. “In addition, we need to program our billing systems so that we can bill in accordance with the logic that BeaconLBS is using.”

“All this preparation means that we would need to spend a lot of administrative time and incur costs labs don’t usually incur just to get started,” he added. “If you do all that and then BeaconLBS steers most of the lab test volume away from you, what good is it?”

Design of UnitedHealth and BeaconLBS Program Is Likely to Confuse Both Physicians and Patients

MUCH NEW GROUND WILL BE BROKEN as UnitedHealthcare moves forward with what may be the nation’s first serious attempt by a major health insurer to mandate that physicians use a decision support system when ordering certain laboratory tests.

In conversations with lab executives who were presented with details of the pilot program and read the contracts of UnitedHealth’s laboratory benefits management program, they see numerous hurdles and the potential for plenty of patient unhappiness that could bedevil implementation of the program when it begins on October 1.

Several Hurdles Identified

Hurdles mentioned were the elaborate system that labs must follow when ordering most of the more than 80 tests on the decision support list.

Labs must process test orders and results electronically. In addition, labs need to meet certain quality criteria, including CLIA certification and CAP accreditation. That was not considered difficult, but what did raise eyebrows was the requirement of a secondary review and a sub-specialist review for certain complex pathology tests.

If a lab does not follow all of these steps, it will not get paid. The most difficult of these provisions is the secondary and sub-specialist reviews for certain complex tests, lab executives said. Another issue centered on decision support.

“The decision support—as it is designed—does not mirror the reality of the ordering process for physicians in a practice,” observed a pathologist. “What happens in most practices is that about 30% of the ordering is done on a script which the physician fills out and hands to the patient. The patient takes the script to the lab.

“We asked the Beacon rep what happens if a patient shows up at a patient service center with a test script that hasn’t gone through the decision support system,” continued the pathologists. “The answer was that it would be the lab’s responsibility to decide whether to run the test or not. If your lab does the test and payment is denied, as a member of the lab network panel, you are basically agreeing to eat the cost without reimbursement. You might not get paid even on appeal.”

“Most physicians don’t know what it means when they’re told to use BeaconLBS,” stated a lab administrator. “So, we asked what happens when a doctor is not personally placing the order? No one could answer that question satisfactorily.

“We all know that often it is a nurse or office staff who actually orders the test,” he said. “It’s unrealistic to expect a doctor to sit at the computer and click through the lab requisition to ensure that the clinical documentation required by BeaconLBS is in place. We expect that the decision support procedures that physicians must follow will create confusion.”

 

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