UnitedHealthcare axes Mednax from its network in 4 states

Florida-based physician services provider Mednax announced Friday that UnitedHealthcare unilaterally cut the company out of its network.

As part of its earnings report, Mednax revealed that the termination will be effective between March 1 and Sept. 1, 2020, varying between the four impacted markets: Arkansas, Georgia, North Carolina and South Carolina. The company said it couldn't immediately estimate the financial impact of the termination, but said that contracts with UHC accounted for about 2% of its $3.5 billion in 2019 revenue.

“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,” said Roger Mendel, M.D., CEO of Mednax, in a statement.

“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," Mendel said.

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UnitedHealthcare said in a statement to FierceHealthcare that it issued a proposal to Mednax in November that would set reimbursement rates at similar levels to what it pays to other physician companies in Georgia, North Carolina and South Carolina, to which there was no counter-proposal. UHC also proposed a renewal for their network agreement in Arkansas, which Mednax also did not counter.

“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 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.”

The groups that would be out-of-network for employer plan and individual market members are all located in those four states, UnitedHealthcare said.

News of the spat comes as surprise billing remains a hot button issue in the industry. Termination of the network agreement puts UnitedHealthcare members treated by Mednax docs in those regions at risk for such a bill.

Sabrina Corlette, director of the Center on Health Insurance Reforms at Georgetown University, noted in a tweet Friday that UnitedHealthcare is obligated to maintain network adequacy that includes Mednax's focus areas of neonatology and obstetrics. However, not all states are good at holding insurers to those requirements, Corlette said.

This isn't UHC's only dispute with such firms of late. The nation's largest insurer also engaged in heated discussions with physician staffing companies Envision and TeamHealth over reimbursement rates.

Mednax's stocks tumbled after the news broke, with prices dropping 12.1% by noon Friday.