Pricing Battle Knocks Pediatrix Out of UnitedHealthcare

Pricing Battle Knocks Pediatrix Out of UnitedHealthcare

The Pediatrix Medical Group of Arkansas will be kicked out of UnitedHealthcare’s network starting May 1 if an agreement isn’t reached on prices for medical services.

Pediatrix Medical Group, a subsidiary of Mednax Inc. of Fort Lauderdale, Florida, provides neonatology services in Arkansas at an office in Little Rock. Pediatric patients who have UnitedHealthcare through employer-sponsored or individual plans could then be responsible for the higher out-of-network deductible.

UnitedHealthcare said in a statement to Arkansas Business that it provided a proposal to Mednax in early February to renew its contract, but as of last week, it had not received a counteroffer, marking another battle between providers and payers. Mednax specialties include neonatology, anesthesiology, radiology and other pediatric services.

UnitedHealthcare also said it will terminate its contacts with Mednax in North Carolina, South Carolina and Georgia.

“We want to keep Mednax in our network at rates that reflect fair market prices and that promote an affordable, predictable experience for our members,” UnitedHealthcare said. “For the majority of the services its doctors provide, Mednax’s charges are more than 60% higher than the average cost of the other doctors that provide similar services in these states, which drives up the cost of care for consumers.”

Medmax called United’s statements “highly misleading.”

Mednax said in a statement to Arkansas Business that it has been involved in “numerous discussions with United regarding this matter, including as recently as Feb. 13, and at United’s offices in Atlanta on Jan. 21.

“At no time were these discussions presented to Mednax as negotiations,” Mednax said. “Rather, United reinforced its unacceptable payment terms on a ‘take it or leave it’ basis.”

Mednax said that on several occasions it asked for a 60-day extension to avoid the “out-of-network disruption to patients and allow more time for negotiations, each time United has rejected these requests.”

Roger Medel, the CEO of Mednax, said in a Feb. 20 investor conference call transcribed by Seeking Alpha that “these surprise terminations were not for contracts that were under negotiations. They were unilateral, without warning and unprecedented.”

He said the only option was to accept a 50% cut in the rates Mednax’s providers are paid for their services.

“This is neither an approach nor an outcome, of course, that we will accept,” Medel said. “And I sincerely doubt that our patients or their parents think that the work that we do is worth 50 cents on the dollar.”

He said he hopes that an agreement with United could be reached before the plans are terminated.

“The last thing that a mother needs to hear when her baby is in the NICU is that her insurance company doesn’t cover that care because they kicked the doctors out of network,” Medel said.

The Arkansas Insurance Department said that a carrier has an obligation to make the policyholder aware of the network termination and to allow for continued care in an acute situation. And for the 90-day period after the termination, the out-of-network balance billing protections would not come into play as doctors would be considered “in network” during that time.

United said that if an agreement isn’t reached with Mednax, United’s policyholders will have access to the care they need “through a robust network of anesthesiologists, neonatologists and obstetricians.”

Other Terminations

Medel said that several large anesthesia groups and other physician organizations have also received termination notices from other carriers demanding 50% rate cuts.

High-stakes battles between providers and payers seem to be more common, said Sabrina Corlette, a research professor, founder and co-director of the Center on Health Insurance Reforms at McCourt School of Public Policy at Georgetown University in Washington, D.C.

“The primary factor at play here is that both physician groups and hospital systems have become increasingly consolidated,” she said. “And they’re using that market power to demand really high prices for their services.”

Insurance companies face pressure from their customers to push back on the providers’ requests for such increases.

Still, she said that many of the disagreements are resolved before a provider is terminated from an insurance company’s network. “But my sense is that these big, high-stakes disputes are on the rise,” Corlette said.