UnitedHealth’s Optum to Offer Lab Test Management

New laboratory benefits management program may expand health plans’ use of prior authorization

CEO SUMMARY: UnitedHealth Group subsidiary Optum announced a new laboratory benefits management program aimed at improving utilization of genetic/molecular clinical laboratory testing. The goal is to save health plans money while bringing genetic test validity data prominently into medical decision-making. Health plans buying this service from Optum can use its prior authorization features to manage genetic tests.

PRIOR AUTHORIZATION REQUIREMENTS INSTITUTED BY HEALTH PLANS—particularly for expensive genetic tests—are considered to be cumbersome, time consuming, and unpopular by physicians and clinical laboratories alike. 

Thus, last week’s announcement by the nation’s largest health insurer concerning a new clinical laboratory test utilization service may turn out to be a watershed event with unwelcome consequences for many genetic testing companies. 

In a press release issued on June 22, Optum, owned by UnitedHealth Group, Inc., declared that it is now launching “a comprehensive laboratory benefit management solution designed to help health plans reduce unnecessary lab testing and ensure their members receive appropriate, high-quality tests.”

Essentially, Optum is taking the laboratory benefit management program it developed in collaboration with its sister division UnitedHealthcare, and will now offer it to any health plan in the United States wanting to improve utilization of expensive genetic tests, along with other clinical laboratory tests. 

Genetic testing companies can expect Optum’s laboratory benefit management program to have extra teeth, for a significant reason. Optum is working with Palmetto GBA, the Medicare Administrator Contractor (MAC) that oversees the MolDX Program, and Avalon Healthcare Solutions of Tampa. 

The Dark Report is the only lab news source to alert its clients that the Optum laboratory benefit management program is partnering with these organizations. On its website, Optum states, “An absence of clinical efficacy data is making inappropriate utilization worse. This often leads to unnecessary interventions and costs. To address this, Optum is collaborating with Avalon Healthcare Solutions, a leader in laboratory benefit management. Optum also has an exclusive partnership with Palmetto GBA, the administrator of the MolDX Program, which identifies and establishes Medicare coverage and reimbursement for molecular diagnostic tests on behalf of the Centers for Medicare and Medicaid Services (CMS).” 

Optum’s Two Collaborators

Optum’s relationships with Palmetto GBA and Avalon Healthcare Solutions are significant as they pertain to a laboratory benefit management program. Palmetto developed and manages the Medicare MolDX program. One of the early investors in Avalon is BlueCross BlueShield of South Carolina (BCBSSC), which has contracts with Avalon for laboratory benefit management services dating back to 2015. 

Those lab executives that deal daily with prior-authorization requirements will recognize that UnitedHealth has created a winning trifecta in its development of a genetic test prior-authorization program:

  • Optum supports the nation’s largest health insurer in its lab test utilization efforts. 
  • Palmetto GBA administers Medicare’s biggest program involving the coverage and reimbursement for molecular and genetic tests.
  • Avalon Healthcare Solutions has a seven-year track record in managing lab test utilization with BCBSSC.

Prior Authorization at UHC 

Optum’s campaign to market a genetic test prior-authorization program to other health plans is probably based on its experience with UnitedHealthcare’s existing prior-authorization program, instituted in the fall of 2017. At inception, there was a specific list of genetic tests that required prior authorization. More tests have been added over the years. 

Coincidentally, Anthem, the nation’s second largest health insurance company, instituted its own prior authorization in the summer of 2017. Thus, within the same year, the two largest health insurers in this country implemented prior-authorization programs in an effort to better manage the skyrocketing number of genetic test claims. (See TDR, “Anthem Launches Program to Manage Genetic Tests,” June, 26, 2017.)

As reported over the past decade by The Dark Report, one consequence of the explosion in genetic testing is that the Medicare program and private payers found themselves overwhelmed with claims for novel lab assays. 

It is an accepted fact that many of the genetic testing companies performing these new lab tests did not have sufficient documentation of analytic validity, clinical validity, and clinical utility of their assays. Therefore, health insurers found themselves reimbursing for sizeable volumes of genetic test claims—tests that might actually have little or no clinical value in patient care. 

Genetic Test Claim Tsunami

How big a problem is the multi-year tsunami of genetic test claims for Medicare and private payers? One database of genetic tests maintained by Concert Genetics of Nashville, Tenn., catalogs more than 166,000 genetic tests offered by hundreds of companies in the United States. For comparison, around the year 2000, a complete lab test catalog offered by major national reference lab companies ARUP Laboratories and Mayo Clinic Laboratories listed not more than 2,000 diagnostic assays. 

Seen from this perspective, growth over the past decade in the number of different genetic tests has been exponential. Payers were unprepared for the sheer volume of genetic test claims, often billed with between 10 and 40 Current Procedural Terminology (CPT) codes. 

However, there is an unrecognized factor that is frustrating payers. The huge number of novel genetic tests and the mushrooming number of claims for these tests are easy to understand. 

What gets much less attention is a remarkable fact: genetic testing companies are submitting huge volumes of genetic test claims that include multiple CPT codes. Concert Genetics has reported that the average genetic test claim involves 6.9 CPT codes! It also reports that the denial rate of these claims (full or partial denials) is 30% or more.

Claims Administration Costs

The reason prior authorization programs will appeal to most health plans is another statistic reported by Concert Genetics. It says there are avoidable administrative costs of $125 for every genetic test claim. Multiply that number by tens of thousands of genetic test claims, and the financial benefit to tighter management of these claims becomes significant. 

Each of these factors motivates health plans to find better ways to manage genetic test utilization. To that end, Optum said it will achieve those goals by using clinical diagnostic data to guide physicians and patients to genetic and molecular tests that have high clinical validity.

“The offering will help health plans align lab testing with clinical, evidence-based guidelines and automate large parts of lab benefit administration,” Optum stated.

Properly-Validated Tests

“We have the opportunity to accelerate the adoption of precision medicine if we track tests on a per-test, per-lab level and sort the ones that have been properly validated from those that have not,” the Optum spokesperson noted. “That doesn’t happen today, but the Optum lab benefit management solution will do that and push the field toward better clinical utility study designs, help payers and providers determine utility, and establish more transparent quality thresholds for laboratories.”

If there is an elephant in the room when the topic of prior authorization of genetic tests is discussed, it is fraud associated with genetic test claims. Experts like pathologist Bruce Quinn, MD, PhD, of Bruce Quinn Associates LLC, have analyzed Medicare claims data for genetic tests and have identified tens of millions of dollars paid annually for certain genetic test CPT codes, such as 81408 (rare long genes, $2,000), that went from few claims in 2017 to $283,634,684 in payments in 2019! 

This intelligence briefing summarizes why clinical laboratory managers and pathologists will want to pay close attention to the market acceptance of the Optum laboratory benefit management program by other payers. Because of Optum’s collaborators, this offering may speed payers’ adoption of prior authorization programs across the U.S. 

Prior Authorization for Genetic Testing 


In 2017, UnitedHealthcare and Anthem grew concerned with both the number of novel genetic tests and the ever-increasing number of tests being ordered by physicians. Within months of each other, both insurers established policies calling for prior authorization for these tests. (See TDR, “Two Largest Payers Start Lab Test Pre-Authorization,” Aug. 28, 2017.)

Beacon Laboratory Benefit Solutions, a lab services management company, worked with UnitedHealthcare to manage the prior-authorization system. UnitedHealthcare earlier had instituted a prior-authorization program in Florida that also involved BeaconLBS, a division of Labcorp.

Meanwhile, Anthem’s AIM Specialty Health division managed that company’s prior authorization program.

At the time, both BeaconLBS and Anthem’s prior authorization efforts received criticism for being too cumbersome for physicians and for not integrating well with electronic health record systems.



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