Test Utilization Targeted by UnitedHealth, LabCorp

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CEO SUMMARY: Many independent laboratories serving patients in Florida are unhappy about the decision by UnitedHealth (UNH) to initiate a pilot program that calls for LabCorp’s BeaconLBS subsidiary to handle prior authorization for certain lab tests. UNH’s laboratory benefit management program will commence on October 1, 2014. Just 13 laboratories are currently listed as network labs on the UNH website and five of those 13 labs are owned by LabCorp.

INDEPENDENT LABS ACROSS THE UNITED STATES should watch a unique managed care contracting strategy that will be unfolding in Florida over the next 60 days. If successful, this strategy has the potential to disadvantage local labs in their attempts to retain provider status with health insurers and access to patients in their communities.

Clinical laboratories and pathology groups in Florida will be first to feel the sting of a new scheme that is nominally about managing the utilization of laboratory tests. It involves UnitedHealthcare (UNH) and Laboratory Corporation of America’s BeaconLBS subsidiary.

UNH’s Laboratory Benefit Management Program commences on October 1, 2014. On its website, UNH says “The pilot launch is for our fully insured commercial members in Florida, excluding Neighborhood Health Partnership members.” In Florida, UNH is the second largest insurer with 544,000 enrollees and a 14% market share. Blue Cross Blue Shield of Florida has 1 million lives and a 30% market share.

Earlier this year, officials from UNH and from BeaconLBS contacted laboratories serving patients in Florida to inform them about the program and encourage them to become a contracted laboratory provider. Similar to BeaconLBS’s efforts in past years, this latest recruiting program failed to win over many lab executives from competing labs.

The proof of this meager response can be seen in the fact that, just weeks away from the official launch of the UNH laboratory benefit management program, only 13 laboratories are listed on the UNH website as “Laboratories of Choice.” Moreover, LabCorp and its wholly-owned lab divisions make up five of those 13 labs. Three labs on the panel are toxicology labs, a fourth is a dermatopathology lab, and three are anatomic pathology laboratories. Outside of LabCorp, there are just two local clinical laboratories in the “Laboratories of Choice” network at this time.

Who Will Get Test Orders?

On the surface, this assessment of UNH’s 13-lab panel for the benefit management program would indicate that LabCorp is well-positioned to get a large share of the tests that are ordered by physicians serving UNH patients throughout Florida. At least that’s what many executives from other lab companies in Florida believe will be the outcome from UNH’s pilot program that has the stated goal of controlling lab test utilization through prior authorization or advanced notification. (See reactions from lab managers in Florida here.)

Pathologists and lab managers interested in learning more about the details of the UnitedHealth/BeaconLBS program can visit UnitedHealthcare’s website. (URL is: https://tinyurl.com/p633fm8.) Information distributed by UNH and BeaconLBS explains that, starting on October 1, each time a physician wants to order one of 82 lab tests currently on the “Decision Support List,” he or she will be required to order using UNH’s electronic ordering system.

Utilization Review Process

After passing through the utilization review process, the physician will “print the Outcome Summary and place it with the specimen or give to the member, as it is required by laboratories before they proceed with testing,” notes UNH on its website.

UNH further states that, when any lab submits a claim for any test on the decision support list, there must be a prior authorization requested. An “outcome summary” will be issued with a notification number and UNH says that “If notification was not received, the claim will be denied as a laboratory liability.”

In their descriptions about the goals and value of the laboratory benefit management program, both UnitedHealth and LabCorp’s BeaconLBS paint a rosy picture. In a letter to physicians, UnitedHealth wrote that it is “to help improve quality of care and manage appropriate utilization for outpatient laboratory services.”

LabCorp says that BeaconLBS will: 1) deliver decision support tools that guide the selection of a lab provider and the lab test; 2) give physicians access to a high-quality lab-of-choice network; and 3) work from a clinical and administrative rules engine that supports the claim adjudication process.

Not the Original Vision

It is important for pathologists and lab managers to understand that this pilot program about to be implemented by UnitedHealth is not what LabCorp executives envisioned when they created BeaconLBS in early 2011. At that time, LabCorp believed that it could assemble a network of laboratories on the provider side, then sell that extended laboratory network to multiple health insurers.

This would be the proverbial win-win. LabCorp executives believed that labs would want to participate in the BeaconLBS network in order to become a network provider for multiple health insurers under one agreement. Similarly, numerous health insurers would find it attractive to sign one agreement and gain access to a network of laboratories.

However, the strategy has not worked out that way for BeaconLBS. During the first three years, despite constant wooing by representatives of BeaconLBS, it is believed that no significant laboratory organizations committed to be part of the BeaconLBS network. That being the case, reps from BeaconLBS were having difficulty selling managed care companies to enter into agreements with BeaconLBS.

Lab executives in Florida have told THE DARK REPORT that, in order to serve UNH members in Florida, labs need to register with the BeaconLBS program. By registering, those labs become part of the BeaconLBS network and must match their tests to the tests that BeaconLBS will cover.

The requirements for participating in BeaconLBS are onerous and difficult to complete, the lab executives said. What’s more, simply registering to participate does not guarantee that a lab will be a laboratory of choice.

The letter from UHC said to labs, “Please follow the steps below to prepare for the laboratory benefit management program: By May 31, 2014, register with BeaconLBS and consider participation as a laboratory of choice. As part of the registration process, you will provide quality criteria, map test information, and prepare to submit your laboratory test identifier on claims.”

Extra Payment Required

Becoming a “laboratory of choice,” would require an extra payment, one lab executive told THE DARK REPORT. The payment is based on the test volume a lab would generate.

Any lab that does not become a laboratory of choice would be difficult to find on the UNH web site. However, any laboratory chosen to be a laboratory of choice would be listed on UNH’s and BeaconLBS’ websites, the executives said.

For a physician seeking to choose a laboratory that is not a lab of choice, he or she would need to click beyond the front page to find his or her laboratory from a list of labs that are not on the ‘Laboratory of Choice’ list, the lab executives said.

Getting Paid By UNH

Another interesting insight was offered by an anonymous poster on the Pathology Blawg website. The poster wrote that: “The information from UnitedHealth indicates physicians do not need to register with BeaconLBS if they order electronically from LabCorp. It also indicates that the advance notification requirement must be completed within 10 days of the specimen collection date, otherwise the lab won’t be paid for their services. So if a physician orders from LabCorp but fails to complete the advance notification requirement, will UnitedHealth withhold payment from LabCorp?”

If the answer is that UNH would pay LabCorp in such a situation—but not pay a laboratory of choice—that would seem to raise interesting questions about anticompetitive business practices.

Physicians Face Financial and Other Sanctions Should They Not Use Decision Order Support

UNITEDHEALTH SENDS A CLEAR MESSAGE to physicians about the need to follow prior authorization and advanced notification requirements when ordering tests on the “Decision Support List.” Here is language from the UNH website.

PHYSICIANS:

If you do not use physician decision support to order decision support tests within 90 days after the laboratory benefit management program effective date, you may be subject to one or more of the following administrative actions:

  • A decreased fee schedule
  • Termination of your agreement with us

If your practice performs and bills for laboratory tests that are not Clinical Laboratory Improvement Amendments (CLIA)-waived, you must also register as a laboratory. UnitedHealth or BeaconLBS may contact you if you:

  • Order tests from a non-network provider.
  • Order decision support tests from a network provider who isn’t authorized to perform the test.
  • Order decision support tests using an ordering system that is not integrated with physician decision support.

PATIENTS:

You will be financially responsible if the service performed is not covered or does not meet UnitedHealth Medical Policy.

INCLUDED ON THE UNITEDHEALTH LIST of “laboratories of choice” for Florida and participating in LabCorp’s BeaconLBS are the following 13 lab organizations:

  • Laboratory Corporation of America
  •  Dianon Pathology, LabCorp Specialty Testing Group
  •  Integrated Genetics, LabCorp Specialty Testing Group
  •  Integrated Oncology, LabCorp Specialty Testing Group
  •  MEDTOX Laboratories, LabCorp Specialty  Testing  Group
  • Broward Health
  • Clarient Diagnostic Services, Inc., GE Healthcare
  • Dominion Diagnostics, LLC
  • Granite Diagnostic Laboratories
  • Gulf Coast Dermatopathology Laboratory
  • Ketchum, Wood & Burgert Pathology Associates
  • Millennium Laboratories, LLC
  • The Meditrend Group, Inc.

 

Is BeaconLBS a Way for LabCorp to Be Paid?

WILL LABCORP MAKE MONEY with BeaconLBS? In the company’s second quarter conference call with Wall Street analysts last week, David P. King, Chairman and CEO of LabCorp, touted his company’s pilot program with UnitedHealth in Florida.

BeaconLBS Lab Benefit Solutions offers physicians, “the assistance they need to select the appropriate tests for their patients,” declared King. Also, “payers need help in managing the utilization of expensive diagnostic testing,” he added. Therefore, the BeaconLBS decision support tool, “helps our clients choose the right test at the right time and helps payers thoughtfully address concerns about both unit cost and trend.”

The BeaconLBS division of LabCorp was formed in 2011, he said. It operates as a laboratory benefit management company, similar in nature to pharmacy benefit managers. Instead of managing the pharmacy benefit, however, BeaconLBS serves as a gatekeeper for physicians ordering laboratory tests.

LabCorp expects to benefit from the UnitedHealth/BeaconLBS relationship by getting paid for more tests. King told analysts that “…the idea behind BeaconLBS is just to let the physicians know at the point of service, [whether] the testing is not going to be covered or is not going to be paid for; and to let the labs know at the point of service that testing is not going to be covered or paid for.”

King further stated that, “So, we actually have a tool that will allow payers to implement these policies in an appropriate way at the front end as opposed to the lab performing the service and then simply getting a denial and not being paid at the back end.”

“…We remain very much committed to resolving MoPath, either consensually with the payers and, if not, then by explaining to the physician community that we can’t continue to do significant amounts of high-value testing that we’re not going to be paid for,” said King.

 

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