UnitedHealth Group, which owns the nation’s largest health insurance provider UnitedHealthcare, has parted ways with physician staffing firm Mednax and cut the company from its in-network providers.
The effective dates of the termination between UnitedHealth Group and Mednax’s affiliated physicians range from March 1 to Sept. 1, 2020, according to Mednax, which announced the news in its fourth quarter earnings results. The staffing firm also stated that UnitedHealthcare gave the company no advance notice of its decision to terminate all contracts across four states, including Arkansas, Georgia, North Carolina and South Carolina.
In total, Mednax, through its affiliated professional corporations, has a network of more than 4,325 physicians in all 50 states and Puerto Rico.
The UnitedHealth contracts represent about 2% of Mednax’s $3.5 billion of revenue in 2019. Mednax’s “affiliated physicians providing anesthesia coverage, neonatology, and high-risk obstetrics in urban and rural areas” are all impacted, the release reads.
The contract termination stems from pricing disputes, with UnitedHealth Group stating it is seeking fair market prices and Mednax charges about 60% more than other firms that provide similar services.
“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," said a UnitedHealthcare spokesperson. "For the majority of the services its doctors provide, Mednax’s charges are more than 60 percent 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.”
Mednax disputes this.
“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, CEO of Mednax, said in the earnings 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 payors to achieve that goal. 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.”
According to Mednax, UnitedHealth Group has said the contracts could only be renewed if Mednax dropped its prices 50%.
“We have been told that the only avenue for negotiation would be to accept a 50% reduction in the rates our practices are paid for their services. This is neither an approach nor an outcome, of course, that we will accept,” Medel said during the company’s quarterly earning call. “And I sincerely doubt that our patients or their parents think that the work that we do is worth $0.50 on the dollar.”
Medel also anecdotally noted other large anesthesia groups and physician organizations have had their contracts unexpectedly terminated, with a significant portion terminated by United. UnitedHealthcare also said it proposed rates to Mednax in November for Georgia, North Carolina and South Carolina, but the staffing firm did not respond with a counter-proposal. Similarly, United offered rates in February 2020 for Arkansas, but Mednax did not respond with a counter-proposal to renew the relationship.
The contract disputes could impact patients with potential surprise medical bills if they are charged for out-of-network services.
“We would be left with no choice but to notify our patients who have United coverage that they will be out of network and billed directly for the services our physicians provide,” Medel said. “This is a terrible and unfair outcome.”
Medel has reached out to the UnitedHealth Group CEO and is awaiting a response, he said during the call.
“We would prefer a sensible solution, but we’ll have to wait and see how things play out,” he said.
Amy joined TriMed Media as a Senior Writer for HealthExec after covering home care for three years. When not writing about all things healthcare, she fulfills her lifelong dream of becoming a pirate by sailing in regattas and enjoying rum. Fun fact: she sailed 333 miles across Lake Michigan in the Chicago Yacht Club "Race to Mackinac."