AMA sues MultiPlan, insurers, alleging ‘cartel’ to fix physician prices
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Dive Brief:
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Cost management company MultiPlan is facing yet another lawsuit for allegedly conspiring to underpay providers — this time, from the largest physician association in the United States.
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The American Medical Association’s complaint, filed Thursday in an Illinois district court, accuses MultiPlan of colluding with major health insurers to set artificially low reimbursement rates for out-of-network care, forcing providers to accept payments that often don’t cover their operating costs.
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The litigation, which asks the judge for an injunction requiring MultiPlan to halt the illegal practices, is the latest in a long string of suits against the company. Congress is also scrutinizing MultiPlan, which denies the allegations.
Dive Insight:
The 127-page complaint accuses MultiPlan of working with the nation’s largest health insurers, including UnitedHealth and Cigna, to create a multifaceted conspiracy that stifled competition for out-of-network services and caused provider reimbursement to flatline.
At issue is MultiPlan’s business model. Instead of determining their own out-of-network rates, insurers can outsource that function to MultiPlan, which promises to save them money on those claims. In many cases, MultiPlan uses an algorithm-based tool to recommend a payment level — and receives a portion of the difference between the recommendation and the original out-of-network bill, giving the company a financial incentive to recommend lower rates.
The majority of U.S. insurers, including the 15 largest in the country, use MultiPlan to determine out-of-network payments.
The arrangement is a “smokescreen for traditional price-fixing,” the AMA’s suit argues. According to the complaint, MultiPlan’s algorithms are based on arbitrarily low data and include rate caps from its insurer members, artificially depressing rates.
Payments based on MultiPlan’s repricing system can be 1.5 to 49 times lower than payments calculated using a traditional method, according to a 2020 investigation by the Office of the New York State Comptroller cited in the AMA’s suit.
“These dynamics have forced many practices, particularly smaller ones, to shut their doors, cease offering certain services, or join massive hospital conglomerates, leaving patients with fewer and fewer healthcare options,” the AMA’s suit argues.