NEW YORK (360Dx) – UnitedHealthcare and Aetna announced new laboratory contracts that will effectively end exclusive national laboratory provider relationships the insurers had with leading national laboratory providers.
UnitedHealthcare announced Thursday evening that it will enter into a long-term strategic partnership with Quest Diagnostics beginning Jan. 1, 2019. The insurer will also renew its long-term strategic partnership with Laboratory Corporation of America at the start of the new year, although the contract with Quest means that LabCorp will no longer be UnitedHealthcare's exclusive national laboratory provider. The new arrangement gives Quest significantly greater access to the more than 48 million members enrolled in UnitedHealthcare plans.
LabCorp announced Friday that effective Jan. 1, 2019 it will become a preferred national laboratory for Aetna, effectively ending Quest's exclusive national preferred status with Aetna. The announcement brings LabCorp in-network with more than 20 million eligible Aetna members. According to a Quest a spokesperson, the company's relationship with Aetna "remains strong and unchanged."
Executives of both lab companies indicated that the new national access to health plans from which they were partially excluded were goals that they had been chasing for some time.
"As you know, since arriving six years ago, I have been working hard with our team to make this day a reality," Quest CEO Steve Rusckowski said during a conference call following the UnitedHealthcare announcements.
Currently, under UnitedHealthcare's existing exclusive national lab relationship with LabCorp, Quest has only been in network with UnitedHealthcare in a handful of select markets, and through its AmeriPath anatomic pathology business, according to Rusckowski.
When the UnitedHealthcare contract begins in 2019, Quest will be in network with "90 percent of insured lives nationally," collectively across its payor relationships, Rusckowski said, giving the company the best health plan access it has had in more than a decade.
LabCorp said that it has been in-network with Aetna for several million of the health plan's members, but the company welcomed the opportunity to serve Aetna's broader customer base.
"This expanded agreement is the culmination of our years-long effort to return to a full collaborative relationship with Aetna," said David King, LabCorp chairman and CEO in a statement.
The end of more exclusive payor-lab provider relationships gives health plan members access to many more lab locations, and could potentially increase competition for lab services and lower costs, an Aetna official suggested following the LabCorp announcement.
"Customers are looking for greater convenience and affordability for their healthcare services," Paul McBride, Aetna's head of national provider networks, strategy and experience, said in a statement.
None of the durations of the contracts were disclosed. UnitedHealthcare Vice President of Corporate Communications Daryl Richard said that the new UnitedHealthcare contracts also do not affect any of the insurer's existing relationships with local or regional laboratory providers.
"This will actually expand access to lab services for our members," Richard said in an email.
As part of the transition to the new contracts, LabCorp's exclusive relationship with the insurer set to expire during 2018, though the exact date was not disclosed, will be extended through the end of the year.
The UnitedHealthcare contracts also signal a potential shift in reimbursement model used by the insurer. UnitedHealthcare announced plans to collaborate with both lab companies on value-based programs that would bring "the same aligned incentives and enhanced patient experience to lab services as exist today in accountable care arrangements between UnitedHealthcare and more than 1,100 hospitals and 110,000 physicians."
On the conference call, Rusckowski said the UnitedHealthcare contract "differs substantially from past health plan contracts."
"The agreement will enable UnitedHealthcare to simplify the member experience, reduce cost through value-based programs and incentives, and improve coordination of care for physicians over time through data sharing," Rusckowski said.
He also noted that when UnitedHealthcare members use Quest they can save out-of-pocket costs and save their employers money by avoiding higher cost boutique or hospital labs.
Rusckowski said the value-based approach to lab services would focus on patient outcomes, coordination of care with physicians, and cost.
In announcing the new contracts, UnitedHealthcare acknowledged that the insurer and LabCorp have already collaborated on value-based initiatives during the course of their relationship over the past few years.
"We appreciate that LabCorp has helped develop a value-based approach to lab services that will focus on improving patient outcomes, better coordinating care with physicians and meaningfully reducing cost," UnitedHealthcare President and Chief Operating Officer Dan Schumacher said in a statement.
UnitedHealthcare's value-based lab payment arrangement could serve as model for future payor-lab company arrangements, according to Lale White, executive chairman and CEO of Xifin.
"It will be most instructive to see how UHC plans to implement a value based program with the two major labs and to understand the disposition of Beacon, a prior authorization and utilization management system currently owned by LabCorp and developed for UHC," White said in an email, in response to emailed questions. "I anticipate this UHC model will be closely followed by both providers and large payors as they all contemplate designs for value-based reimbursement models for the lab industry, particularly with the current proliferation of benefits management companies like AIM and Avalon."