As we reported in the February edition of King & Spalding’s Managed Care Advisor, payers are increasingly establishing purported “site of service” policies and guidelines that restrict the circumstances under which members may obtain certain services at hospital outpatient departments (HOPDs). In the latest salvo, UnitedHealthcare has developed a new guideline seeking to redefine medical necessity for patients who need musculoskeletal surgical procedures. While United recently postponed the guideline's implementation, the draft has not been cancelled, so we expect it will be implemented once the payer is operationally capable of doing so. The guideline shows United is trying to chip away at patient choice rights by improperly forcing members to use only ASCs despite the patients’ legitimate justifications, preferences and rights.

The musculoskeletal surgical procedures that would be affected by the new United policy include a wide variety of hospital surgeries in the following categories: ankle, bunion, elbow, hip, knee, hammertoe, shoulder, and wrist. Under United’s guideline, a musculoskeletal surgical procedure performed in a HOPD will be considered medically necessary only when the patient meets specified high-risk clinical criteria and may thus benefit from receiving services in a hospital setting, or when certain barriers exist that prevent the patient from undergoing the procedure at an ASC. The guideline only recognizes three specific barriers that can allow a patient to go somewhere other than an ASC: (a) where there is no “geographically accessible” ASC that has “the necessary equipment for the procedure,” (b) where there is no “geographically accessible” ASC available at which the individual’s physician has privileges, and (c) where “[a]n ASC’s specific guideline regarding the individual’s weight or health conditions that prevents the use of an ASC.”

United’s guideline also is a moving target. The new musculoskeletal guideline provides a list of “applicable codes,” but cautions the list “is provided for reference purposes only and may not be all inclusive.” The guideline also forgoes any standards for when an ASC will be considered “geographically accessible,” making it unclear whether United will consider a patient’s clinical status, age, region, or other factors. This is concerning because United’s refusal to authorize a HOPD procedure based on accessibility criteria could cause patients to delay or forego needed treatment. It is also interesting that United looks to ASCs to self-police their own clinical limitations, rather than deferring to the patients and their treating physician’s judgment about the desired site of service within the options permitted under the member’s health plan coverage. Finally, United’s guideline does not recognize that undergoing a procedure in a HOPD. or an ASC, may be safer in one versus the other depending on a particular patient’s circumstances.

Anthem issued a similar purported surgical guideline in 2018. Under Anthem’s guideline, certain outpatient surgeries performed in HOPDs only will be considered medically necessary when, among other criteria, “[t]he potential changes in the individual’s medical status could require immediate access to specific services of a medical center/hospital setting . . . .” Anthem provides a non-exclusive list of clinical conditions that could meet this standard, creating uncertainty about how the guideline will be applied. In comparison, United’s guideline lists clinical criteria that will establish medical necessity, albeit subjectively and lacking some precision. Anthem also recognizes fewer situations where outpatient surgery at a HOPD will be considered medically necessary due to the inaccessibility of alternative sites.

But both health plans’ Site of Service guidelines ignore the right that patients who purchase coverage have under their health plans and policies to select where to get these types of services. When a person enrolls in an HMO he or she is supposed to have the choice of providers who are in-network. When a person enrolls in a PPO the choice of providers is supposed to be even broader. The definition of medical necessity in these health plans depends on the service being provided, not on the place where that service is being provided. As between two different services the patients and their physicians should choose the one that is medically necessary. As between two places for the same service, however, the decision on which place to choose is precisely what the health plan members have paid to have a right to determine.

It is revealing that United is trying to redefine medical necessity by using a guideline to providers rather than restructuring the health plan policies that it sells to members and their employers. United likely knows the marketplace for its products would respond negatively to a coverage limiting surgery care access based on the surgeries’ location. Some patients want to use a HOPD and some want to use an ASC.

The same logic that underlies the musculoskeletal surgery policy could be used to justify health plans' trying to restrict medical necessity as between two identical HOPDs, solely based on which of those two HOPDs has the best rate. For example, a woman wants to give birth in her preferred HOPD, but the health plan says it is not medically necessary to deliver the child there since a cheaper HOPD is nearby. In this way medical necessity would stop being about the service at all. Members who paid for the option to be able go to either the more or less expensive provider for a service would be forced to go to the cheapest provider.


Hospitals, ASCs and physicians negotiate rates with plans based on certain assumptions about the utilization of services. Site of service policies like United’s new musculoskeletal surgical policy undermine those assumptions by steering patients away from a hospital. Some hospitals protect themselves from these kinds of mid-contract changes by including express protections in their agreements against changes to guidelines that could have a material effect on revenue. Similarly, some states have laws that expressly prohibit these practices. There also are general contracting standards that often can be raised to challenge a health plan's attempt to unilaterally change the terms of the deal or the modeling assumptions that underlie that deal. Plus, in these disputes providers and patients usually are aligned in their interests. This means that negatively-affected providers may be able to work in conjunction with their patients, who have rights under the products purchased to enforce patient choice.

If you are contracted with United and operate in a state(s) where the new musculoskeletal surgical policy is going to be implemented, you may want to consider reviewing your agreement to determine whether it contains protection against this kind of policy change, or other helpful terms.