UnitedHealthCare ("United") is instituting a new policy imposing a “Requirement to Use a Specialty Pharmacy Provider for Certain Medications” (“Specialty Pharmacy Policy”) that is scheduled to take effect on April 1, 2020.

We believe that this new Specialty Pharmacy Policy may constitute an improper material amendment to, and breach of, United’s contracts with hospitals, and it could result in the hospitals’ payments being drastically reduced under their contracts. Hospitals agree to all the rates in the agreement based upon modeling of the utilization of the various types of services they provided to United members under prior agreements. The new Specialty Pharmacy Policy essentially negates the rate provisions for outpatient high cost drugs and is tantamount to a change in the entire rate structure set forth in the agreements.

Moreover, the Specialty Pharmacy Policy could interfere with the provision of care to patients. To comply with the new Policy, hospitals would have to order drugs for a specific United patient, track the shipment of that drug, label the drug for the specific patient, and track and store that drug for the United patient separate from its inventory of drugs for all other patients in a temperature-controlled environment (a practice called “white bagging”). If the patient cancels the appointment, the hospitals are stuck with the drug, which may not be usable for the patient if the appointment is delayed for an extended period of time. The United agreements contain no provisions for compensation to the hospitals for the extra costs associated with white bagging.

A major problem white bagging poses is that, under this process, hospitals assume responsibility for patient care, safety, and timely delivery of the medications. This means that they must verify drug integrity and ensure that risk evaluation and mitigation strategy requirements are met. Most hospitals do not allow white bagging because they cannot assure the pedigree of the drug or proper prior storage, which is required for compliance with accreditation standards.

Finally, the Specialty Pharmacy Policy can also delay the timing and delivery of care. For many patients, particularly cancer patients, the physician may modify the type of cocktail of drugs the patient is to receive up to a few hours before the infusion, depending upon the patient’s laboratory results. Therefore, if the hospitals have to order the drugs from a specialty pharmacy days prior to the infusion, the drugs may not be usable for the patient on the day of the infusion. The infusion would have to be canceled, the drugs have to be reordered, and the same problem can reoccur at the time of the rescheduled appointment.

Some states, such as Texas, have banned white bagging due to the issues listed above. Some hospitals are working with their government relations departments to start conversations with their state representatives about the problems posed with white bagging. Some states, like California, have laws that require health plans to demonstrate that their medical decisions are “unhindered by fiscal and administrative management.” The Specialty Pharmacy Policy appears to be a mechanism by United to save money for outpatient services and has nothing to do with the medical necessity of the services or the well-being of United’s members. On the contrary, the Specialty Pharmacy Policy could impermissibly interfere with hospitals’ delivery of the care and the physicians’ judgment as to the timing and type of drugs the patients require.

We have represented a number of hospitals in objecting to unilateral application of health plan policies. Please contact us if you would like additional information