New Jersey Suspends UnitedHealth’s Fines for Docs

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THERE’S AN INTERESTING TWIST IN THE ONGOING KERFUFFLE between Quest Diagnostics Incorporated and Laboratory Corporation of America over the UnitedHealth Group business. Last Friday, news spilled out that the New Jersey Department of Banking and Insurance had asked the insurer to suspend its plans to fine doctors who continue to refer UnitedHealth patients to Quest Diagnostics for their laboratory tests.

The department issued a statement to explain that it was “not satisfied with the legality of these protocols.” UnitedHealth spokesperson Tyler Mason acknowledged that his firm would comply with the voluntary suspension, also noting it was temporary and his company expected the department’s review would likely prove favorable to UnitedHealth.

I invite you to read these tea leaves with me. What is the story behind this story? Government regulators generally take these types of actions for one of three reasons. Either, 1) there is a clear and obvious violation of law that cannot be ignored; or, 2) there is great public relations to be gained by “protecting the public interest”; or, 3) influential, powerful interests are pressuring the regulators to act. This latter can include public outcry that reaches an intensity which impels regulators to action.

I believe we can ignore the first two scenarios involving clear violation of the law and acting for public relations value. I’ll bet that some volume of formal complaints filed with the Department of Banking and Insurance created enough pressure for its regulators to publicly request that UnitedHealth suspend its plans to fine physicians $50 anytime they refer a patient outside the laboratory provider network.

This pressure could include not just complaints from physicians and patients, but also pointed requests for action by large employers in New Jersey, as well as state legislators. Also, don’t overlook the fact that Quest Diagnostics employs a large number of people in New Jersey. It has a motive to marshall its supporters to act in ways that can help it deal with its exclusion from UnitedHealth’s national contract. What is true about this latest development is that a large number of physicians and employers are now thinking about the upsides and downsides of exclusionary provider networks versus “any willing provider” arrangements. Wouldn’t it be ironic if one consequence of this UnitedHealth contract is that it triggers a groundswell of support for open provider networks?

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