AMA files lawsuit alleging price-fixing by MultiPlan
According to the AMA, this has undercut fair payment for out-of-network healthcare services and eliminated market competition.
Photo: Blanchi Costela/Getty Images
The American Medical Association and the Illinois State Medical Society (ISMS) filed a lawsuit last week against MultiPlan claiming the data analytics agency is at the center of an alleged price-fixing conspiracy with commercial health insurance companies.
According to the AMA, this has undercut fair payment for out-of-network health care services and eliminated market competition, resulting in harm to patients and physicians.
Filed in the Northern District of Illinois, the lawsuit seeks to hold MultiPlan accountable for its role in an unlawful multilateral price-fixing scheme that has allegedly operated since about 2015. The suit claims it has forced physicians to accept increasingly low payment amounts for out-of-network services, which often do not cover their operating costs.
The lawsuit claims that this conspiracy has forced many medical practices, particularly smaller ones, to shut their doors, cease offering certain services or seek other employment arrangements, leaving patients with fewer medical practice options.
MultiPlan said by statement: "MultiPlan plays an important role in our healthcare system by helping lower out-of-pocket costs, reducing or eliminating medical bills for millions of patients, and helping generate millions of dollars in healthcare cost savings. This is another copycat lawsuit of dozens filed by the same plaintiffs' counsel, all of which are before the same judge handling the multidistrict litigation in the Northern District of Illinois. We have consistently stated that these lawsuits are without merit and would ultimately increase prices for patients and employers. We were pleased to see that the Superior Court of California recently granted MultiPlan's motion to dismiss against the Verity Health System Liquidating Trust, in a case raising similar antitrust claims, and similarly intend to vigorously defend against these meritless claims in the multidistrict litigation."
WHAT'S THE IMPACT
In reviewing information published by the Office of the New York State Comptroller in April 2020, the AMA said that, depending on the service provided, payments based on MultiPlan's repricing methodology were 1.5 to 49 times lower than payments for the same services based on the traditional method of calculating out-of-network payment rates for physicians.
ISMS said in a statement that it supported the AMA's efforts.
"This activity has resulted in below market reimbursement rates paid to physicians for out-of-network healthcare services," said ISMS President Dr. Piyush I. Vyas. "The lack of transparency on how these fees are calculated along with the payment structure needs to be fixed. This will ensure patients can afford the healthcare they deserve, and that physicians and other healthcare professionals are compensated appropriately for the important care they provide."
According to the AMA, MultiPlan has a direct economic stake in suppressing out-of-network payment rates below fair levels. For each claim it re-prices, MultiPlan receives a fee from the insurer based on a percentage of the difference between the initial claim amount and what the insurer pays.
In other words, AMA said, MultiPlan gets paid more as physicians get paid less. The revenues generated by MultiPlan from its repricing services have increased from $23 million in 2012 to $564 million in 2020 and $709 million in 2021, according to the group.
"Through our lawsuit, the AMA and ISMS seek injunctive reform for the out-of-network payment systems used by virtually all commercial health insurers by ending their dependence on the MultiPlan scheme," said AMA President Dr. Bruce A. Scott.
THE LARGER TREND
In May, Sen. Amy Klobuchar, D-Minn., sent a letter to the Attorney General's office and to the Federal Trade Commission asking for an investigation into the use of algorithm pricing tools by health insurers. Klobuchar specifically cited MultiPlan in her letter.
The firm sells data to help insurance companies determine how much they should pay providers for out-of-network medical care, and how much of that cost is passed on to patients, Klobuchar said in the letter, citing a New York Times report.
"While it is common for patients to pay different rates for out-of-network care, I am concerned that – rather than competing for business from employers by reducing these costs to employees – algorithmic tools are processing data gathered across numerous competitors to subvert competition among insurance companies," Klobuchar wrote to the AG and FTC. "The result is that – instead of competing with each other – insurance companies are pushing additional hidden costs on to employees and patients."
Klobuchar said MultiPlan is a central hub that gathers out-of-network payment data across the industry and uses algorithmic tools to process this data to recommend artificially low payments to physicians, potentially at the expense of employees or patients.
"MultiPlan reportedly collects fees commensurate with how little its insurance-company clients pay to doctors," said Klobuchar. "In other words, the more money MultiPlan forces patients to pay for out-of-network care, the more money it makes."
Jeff Lagasse is editor of Healthcare Finance News.
Email: jlagasse@himss.org
Healthcare Finance News is a HIMSS Media publication.
