UnitedHealth to end contracts with Mednax physicians in 4 states: 8 things to know

UnitedHealth Group plans to end its contracts with Mednax physicians in four states, beginning as early as March, the physician staffing group said Feb. 20. 

Seven things to know:

1. Mednax's anesthesiologists, neonatologists and obstetricians soon will be out of network for UnitedHealth patients in Arkansas, Georgia, North Carolina and South Carolina, a UnitedHealth spokesperson confirmed to Becker's Hospital Review. 

2. The contracts will end at staggered dates throughout the year from March 1 to Dec. 15.

3. Mednax CEO Roger Medel, MD, said during an earnings call that the contract terminations were "unilateral, without warning and 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," Dr. Medel said.

4. UnitedHealth said throughout the last few months it submitted proposals to Mednax that would reduce the amount it reimburses its physicians to a rate that was more consistent with what it pays other providers in the four states. UnitedHealth said Mednax did not respond with counterproposals.

"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," UnitedHealth told Becker's Hospital Review.

5. Mednax told Becker's Hospital Review that UnitedHealth's statements are "highly misleading."

"Mednax has engaged in numerous discussions with United regarding this matter. 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.  It is important to note that Mednax has requested on multiple occasions 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."

6. The feud between the insurance company and medical group, which has more than 3,700 physicians who serve 4,000 healthcare facilities nationwide, may worsen surprise medical billing, as UnitedHealth customers seen by these physicians will be stuck paying the full cost if contract negotiations fail.

7. The contracts UnitedHealth terminated represent about $70 million to $80 million of annual net revenue for Mednax, Stephen Farber, Mednax's CFO, said during the earnings call.

8. Dr. Medel said Mednax is not alone in receiving these termination notices from UnitedHealth. Several other large anesthesia groups have received terminations with demands for a 50 percent rate reduction.

Read the full earnings call transcript here

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