Out-of-Pocket Costs, Surprise Billing Loom as UHC, MEDNAX Split

Surprise billing occurrences can become more likely when providers and payers are locked in a contract dispute, like UnitedHealthcare’s (UHC’s) dispute with MEDNAX that is set to end contracts with 11 provider organizations across four states.

On February 20, MEDNAX, a medical staffing firm that specializes in anesthesiology, neonatology, obstetrics, and radiology, announced in its fourth quarter earnings call that UHC was axing its contracts.

These contracts are located across Arkansas, Georgia, North Carolina, and South Carolina, UHC confirmed separately in an emailed statement to Health Payer Intelligence. UHC cited high network rates as their reason for cutting off the provider network.

“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,” a UnitedHealthcare spokesperson told Health Payer Intelligence.

For MEDNAX, the termination could have a significant fiscal impact. These 11 UHC contracts represented two percent of the provider’s consolidated annual revenue from 2019. Shares immediately started to dive when the news broke, dropping 4 percentage points the morning after MEDNAX’s earnings call.

MEDNAX expressed surprise at the payer’s decision. In its statement, MEDNAX called the action “unprecedented.” 

“We are disappointed that United would take such action to unilaterally terminate our affiliated practices from its networks, across multiple states and affecting access by its members to many critical healthcare services,”  Roger Medel, MD,  MEDNAX chief executive officer, said in a press release.

“It has always been our practice to minimize exposure to out-of-network bills for our patients, and to negotiate in good faith with our commercial payers to achieve that goal," he added. “It is our hope that we can achieve an outcome in this matter that is acceptable to all parties, including the patients receiving critical healthcare services.”

In an emailed statement to Health Payer Intelligence, MEDNAX insisted that its conversations with UHC were one-sided.

“The UnitedHealthcare statements are highly misleading. MEDNAX has engaged in numerous discussions with United regarding this matter, including as recently as February 13, 2020, and at United’s offices in Atlanta on January 21.  At no time were these discussions presented to MEDNAX as negotiations. Rather, United reinforced its unacceptable payment terms on a ‘take it or leave it’ basis,” MEDNAX told Health Payer Intelligence.

The provider group added that it had requested a 60-day extension multiple times for the sake of patients’ out-of-network costs, which UHC denied.

The provider continues to hope for a resolution that is “acceptable to both parties.”

UHC indicated that it had been negotiating the proposal with the provider group since November for the Georgia, North Carolina, and South Carolina contracts. UHC had also proposed a new contract for the account in Arkansas. But the payer said that it did not receive any counterproposals before it nixed all MEDNAX contracts in mid-February.

According to a UnitedHealthcare spokesperson, the payer’s proposed reimbursement rates were consistent with the local rates but MEDNAX’s demands were too high. The spokesperson said that MEDNAX’s proposals came in at 60 percent above the going rate of similar healthcare services in these areas, which would result in higher healthcare spending for consumers.

The contracts are set to terminate at various times starting on March 1, 2020, however the payer and provider differed on the timeframe for termination. 

MEDNAX said all of the contracts will terminate by September 1, 2020.

UHC stated that the anesthesiology North Carolina contracts would be terminated in March. Contracts with maternal-natal and obstetrics practices in Arkansas and Georgia would end May 1, 2020 along with a North Carolina maternal-natal and obstetrics practices on June 15, 2020. 

In contrast to MEDNAX's statement, however, anesthesiology and obstetrics groups in Georgia and South Carolina would be excluded from UHC’s network at scattered times in August, November, and December in 2020.

All in all, the payer would be losing 11 provider organizations.

The major payer expressed confidence that its consumers would be able to access in-network anesthesiology, neonatology, and obstetrics care without MEDNAX.

However, it is not uncommon for payers and providers to go through some posturing before negotiating a contractual compromise.

In a previous contract dispute with Boca Raton Regional Hospital, the parties were unable to resolve their differences and parted ways, leaving thousands of patients scrambling to dodge surprise medical bills. Local outlets reported that some patients notified the press that the termination resulted in heavy out-of-pocket healthcare spending for them. 

Fortunately for these patients, UHC and Boca Raton Regional Hospital were able to return to the table and hammer out a new contract. Starting in December 2019, Boca Raton Regional Hospital began accepting UHC insurance again.

The situation may be particularly heated since policymakers are simultaneously working to find legislative solutions for surprise billing. 

Just last week, the House Committee on Education and Labor advanced their Ban Surprise Billing Act. And in December 2019, the Senate attempted a resolution with their Lower Health Care Costs Act of 2019.

However, no legislation has made it far enough to completely eliminate the potential for out-of-pocket healthcare spending and surprise billing that UHC members in Arkansas, Georgia, North Carolina, and South Carolina could soon face.