New Jersey regulator tells United to justify lab referrals

The health plan's threatened fines to physicians who send patients to out-of-network laboratories comes under scrutiny. But United defends its protocol.

By Bob Cook, AMNews staff. May 14, 2007.

One state regulatory agency is demanding that UnitedHealth Group show why it shouldn't face its wrath for a controversial rule that threatens fines and other sanctions for physicians whose patients are referred to out-of-network laboratories.

The New Jersey Dept. of Banking and Insurance, in an April 10 filing, said United's new lab protocol appeared to be in violation of several state statutes and regulations.

It ordered that United "appear and show cause why it should not be required to pay restitution or take other remedial measures" regarding the effects of its proposed sanctions on physicians. A hearing is expected to be scheduled.

The department's action was based on a request from the Medical Society of New Jersey to review whether United's lab protocols were legal.

On March 1, United instituted a protocol nationwide that would fine a physician $50 each time a patient was referred to an out-of-network lab. In addition, the protocol said physicians could face lower reimbursements or could be dropped by United for repeated offenses.

United developed the protocol after signing a 10-year exclusive deal with Laboratory Corp. of America, the nation's second-largest independent lab network. That left the No. 1 lab network, Quest Diagnostics, out of the network. However, United said more than 1,500 local and regional labs were still part of its network.

The AMA and many state and specialty societies spoke out against United's protocol and its threatened punitive actions, which they saw as undue influence on patient care.