Payer Contracts and Labs’ Access to Patients

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ONE OF THE MOST SIGNIFICANT TRENDS IN RECENT YEARS is the exclusion of community lab companies and local pathology groups from a growing number of health insurer networks. In simplest terms, if a community lab is denied network provider status by the major payers in its region, it loses access to the patients it needs to maintain clinical excellence and financial stability.

Given the importance of patient access to the entire profession of laboratory medicine (not to mention patients and the often short-sighted and short-term actions of health insurers), this issue of THE DARK REPORT offers you news about current developments in managed care contracting in the states of Pennsylvania and Florida. It provides you with context and understanding that you can use to better position your laboratory during negotiations to renew managed care contracts.

One truth of the decade of the 2000s was that the managed care contracting strategies used by the two national laboratories did relatively little to improve their overall market share in most cities and towns. Physicians continued to refer specimens to local labs, even if they were not in network. Payers typically reimbursed out-of-network labs.

That is no longer true. On one hand, the two national labs have demonstrated a willingness to pursue a managed care contract by offering that payer extra-low pricing in return for excluding their national competitor (and as many community labs as possible) from that payer’s provider network.

On the other hand, health insurers are now more aggressive at pushing out of their networks those hospital labs that still use inpatient pricing for out- reach test claims. Additionally, more payers are now willing to accept a national lab’s deeply-discounted pricing in exchange for excluding competing labs from their networks.

All of these elements can be found in the stories and analyses we present to you in this issue of THE DARK REPORT. You should use them as you work with your lab’s executive team to develop more effective managed care contracting strategies for your lab organization. In many respects, the clock is ticking on the financial viability of the nation’s community labs. Many observers believe that, as the nation’s two largest laboratories continue to squeeze their lab competitors, the end game may well be a national duopoly in clinical lab testing.

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