Skip to main content

UnitedHealthcare Preferred Lab Network Could Be Start of Broader Trend, Suggest Industry Execs

Premium

NEW YORK (360Dx) – While the ultimate impact of UnitedHealthcare's newly launched Preferred Laboratory Network remains to be seen, some clinical lab players are suggesting it could be the first step in a broader trend.

Last week UHC announced the lab companies — AmeriPath/DermPath, a division of Quest Diagnostics; BioReference and its GeneDx business; Invitae; Laboratory Corporation of America; Mayo Clinical Laboratories; and Quest — it had selected as participants in its PLN program, which will go into effect on July 1, 2019.

While UHC customers can still use labs that are not part of the PLN, labs within the PLN will offer lower average costs, the company said, citing as an example pathology services for a biopsy, which will cost around $90 when done by a PLN member versus $150 when done by a lab not in the PLN.

UHC said that labs within the PLN will likely offer customers other benefits like shorter wait times and online scheduling, while physicians can expect better turnaround time, as well as improved access to lab medical directors for consultations on patient care.

The PLN is part of what UHC has termed its Triple Aim Focus, which is targeting improvements in "healthcare affordability, outcomes, and patient experience," said Linda Simmons, vice president, national lab program at UHC.

"Laboratory services is one of those areas that has such a large impact on patient diagnosis and treatment plans that we felt it was very important that we focus the Triple Aim on laboratory services," she said.

The company invited all members of its laboratory network, which consists of around 300 freestanding lab organizations, to apply for inclusion in the PLN. Roughly 90 applied, with the seven firms announced last week making the cut. Labs that were not selected can reapply on an annual basis. PLN participants must submit quarterly data showing that they are in compliance with the network's criteria.

Simmons declined to give detailed information on the criteria by which the participating companies were selected but said that they "minimally included advanced certifications beyond CLIA, online capabilities, and data security requirements."

How the launch of the PLN will affect participating and non-participating labs remains unclear, but on recent earnings calls several clinical lab executives speculated that it could prove impactful long-term, both as it affects their business with UHC's customer network and potentially moves other payors to institute similar programs.

"We've had quite a lot of interest from other national payors about what this means," Quest Chairman and CEO Steve Rusckowski said on that company's Q1 earnings call last week. "We think it's the beginning of a trend that we would like to continue to see in other relationships that we have."

"We think this is a good first step in a trend that will continue," he said. "It's not going to be just UnitedHealthcare, but other payors will follow."

Simmons said that in its evaluation of applicants, UHC had not observed that the PLN requirements favored any particular class of lab, but Quest CFO Mark Guinan suggested on the Q1 call that the program could advantage organizations with the resources needed to meet the PLN criteria.

"We knew the bar was pretty high," he said. "And we certainly have enough sense around the industry that we knew it would be difficult for a lot of people to meet the criteria around service, access, and quality."

Guinan noted that the PLN was different from various preferred provider agreements previously established by payors in that it was not explicitly price-driven.

Typically, he said, these arrangements had designated preferred providers based on whoever was "willing to give [them] the lowest price." Inclusion in the PLN, on the other hand, does not change existing contracted pricing arrangements between UHC and participating labs.

"This is not a price play," Guinan said. "It is about the value you are offering on many parameters."

He added that Quest is "well down the road in conversations with several other national [payors] on similar concepts. So they recognize as well that this is an opportunity to bring better value to their members."

The Quest execs said that it was unclear as of yet what impact inclusion in the PLN would have on test revenues and volumes from UHC.

Rusckowski noted that UHC had yet to spell out the specific incentives for labs within the PLN, while Guinan said the company did not expect to see much impact from the arrangement in 2019 but that it could see benefit in 2020 and beyond.

"Once we hear from United on some of the details we'll be able to comment about exactly what this means and how quickly we think it will become a tailwind and to what extent," he said.

LabCorp Chairman and CEO David King likewise said on the company's Q1 earnings call this week that while inclusion in the PLC is potentially "a significant opportunity" long term, it is not yet clear how it will play out.

"A lot of it is going to depend on how the preferred lab network is tied into benefit design," he said. "What are the out-of-network benefits? What are the benefits for employers of pushing their employees into the preferred lab network?"

"We have not built anything into volumes or guidance that would anticipate a significant impact [in 2019]," he said.

On the flip side of the coin, on NeoGenomics' Q1 call this week, CFO Sharon Virago downplayed the fact that the company was not included in the PLN.

"I don't think it's going to have a big impact on us," she said. "I don't see people turning away from what we bring to the table just to get from contracted — which we are with UnitedHealthcare — to preferred."