UnitedHealthCare’s New Policy Further Narrows Its Lab Network

Clinical laboratories will need to apply for status as a ‘Designated Diagnostic Provider’ (DDP)

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UNITEDHEALTHCARE’S (UHC) RECENT MOVE to designate certain clinical and anatomic pathology laboratories as Designated Diagnostic Providers appears to be yet one more way that the insurer is narrowing its network.

Effective July 1, 2021, and subject to state regulatory approval, UHC launches a new benefit design where outpatient diagnostic laboratory services will be covered for fully-insured commercial plan members only when they are covered by a “Designated Diagnostic Provider” (DDP). If services are performed by providers who are not designated, services may not be covered and patients could be responsible for payment, says UHC.

‘Cost-Cutting Measure’

“My main concern is that this is another way for UHC to limit providers in their network to only those willing to accept the lowest payment,” says Mick Raich, President of Vachette Pathology. “This is just another in a long line of cost-cutting measures by UnitedHealthcare and their shareholders.”

According to UHC, non-designated diagnostic providers will remain in-network with UnitedHealthcare. However, UHC will deny—as non-covered—outpatient diagnostic lab services provided to members who have plans with Designated Diagnostic Provider benefits. This designation will not apply to lab services rendered as part of inpatient admissions, emergency room visits, or outpatient surgery pre-operation testing that is billed as part of a global surgical package. The DDP benefit design only applies to these place-of-service (POS) codes:

• POS code 19 (off-campus hospital), 

• POS code 22 (on-campus hospital), and,

• POS code 81 (independent laboratory [as well as outpatient hospital labs]). 

Services performed in doctors’ offices and ambulatory surgery centers (ASCs) are not subject to the DDP benefit design.

To become a Designated Diagnostic Provider, clinical laboratories need to complete a quality questionnaire and meet certain quality and efficiency requirements. UHC has yet to specify exactly what those requirements are. Currently, there is no hard deadline to complete the required questionnaire. UHC has told advocacy groups that providers who complete it by May 15 have a better chance at being included in current beneficiary plan materials.

Preferred Lab vs. DDP

According to UHC, the Preferred Lab Network is different from Designated Diagnostic Providers. “The Preferred Lab Network is a subset of UHC’s freestanding lab network containing labs that meet higher standards for cost, access, quality, and service and will be part of the Designated Diagnostic Provider benefit designs,” says the insurer in a frequently asked questions document on its website. 

“Designated Diagnostic Providers must meet efficiency and quality requirements established for existing freestanding labs. Freestanding and outpatient hospital laboratories that meet requirements will become Designated Diagnostic Providers,” said UHC.

In other words, labs that are part of the Preferred Lab Network will automatically be considered Designated Diagnostic Providers. UHC says that, prior to July 1, a list of Designated Diagnostic Providers will be accessible to members during their open enrollment process.

Raich believes the latest move by UHC is much like the re-pricing practices insurance companies instituted several years ago and says it is likely other insurers will follow UHC’s lead. 

“It would be highly likely that other health insurers will follow suit, especially once the pandemic is no longer part of the narrative,” he commented, while also noting that UHC may have held back on this announcement because of the important role clinical laboratories are playing in combating the pandemic.

Burdens Labs, Patients

Diana Richard, Director of the Anatomic Pathology Program for XIFIN, says UHC’s DDP policy places a great deal of administrative burden on clinical and anatomic pathology laboratories, especially given that this initiative is still contingent upon regulatory approval.

“It’s counter-intuitive,” she notes. “Labs spent the last year knowing patients were delaying elective surgeries and critical medical care because they had rational concerns about exposure to the novel coronavirus. Providers have managed spikes in COVID-19 testing and treatments while attempting to accommodate their own policies in response to the plethora of economic impacts—such as loss of jobs and healthcare—endured by our patient populations. 

“It has been a year of challenges” added Richard. “More than ever, clinical laboratories remain a critical element in patient care, as well as important contributors to the ongoing success of the healthcare industry.” 

Ultimately, UHC’s new policy governing coverage of clinical laboratory tests places the onus on patients and their ordering providers to know whether the laboratory that processes their specimen is a Designated Diagnostic Provider. 

“It’s inevitably going to be a challenge for patients who have UnitedHealthcare and go to an in-network provider, only to have their claims processed as out-of-network because they were unaware of the DDP status,” predicted Richard. She noted that the American Hospital Association (AHA) opposes the designation. 

The AHA said that UHC’s programs “could eliminate coverage for diagnostic tests at most freestanding and hospital labs while continuing to portray these providers as in-network to health plan enrollees.” (See TDR, “AHA, Hospitals, Say UHC Policy on Lab Network Is Anticompetitive,” March 1, 2021.) 

This could result in more surprise medical bills for patients. Further, Richard notes that it’s concerning that prior to any regulatory approval being issued on UHC’s DDP initiative, UHC has already collected a tremendous amount of data from its providers. 

Advice for Laboratories

Richard advised labs to apply for the DDP designation with UHC. At the same time, if they disagree with the policy, they should make their views known. “Labs need to push back and push back hard,” she said. “Let your hospital system know that patients may be penalized by the consequences of this initiative. The best way to attack this is to come together as a community. Don’t go at it as a single entity, but as a consortium. Reach out to your advocacy groups and state insurance commissioners. Let them know how you feel.”

Contact Mick Raich at 517-486-4262 or mraich@vachettepathology.com; Diana Richard at 843-319-2409 or drichard@xifin.com.

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