Dive Brief:
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.
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.
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.
Overall, more than two dozen lawsuits have been filed against MultiPlan over the alleged conspiracy, including by Florida-based system AdventHealth, Louisiana-based system Allegiance Health Management and Community Health Systems, one of the largest hospital operators in the country. Those lawsuits were centralized this summer in the same Illinois federal court handling the AMA’s litigation.
Another lawsuit filed in California by the liquidating trust for health system Verity Health was dismissed in August after a judge determined reimbursement rates are not prices that can be fixed.
A spokesperson for MultiPlan called the AMA’s litigation a “copycat” of other suits.
“We have consistently stated that these lawsuits are without merit and would ultimately increase prices for patients and employers,” the spokesperson said in an emailed statement.
It’s not the AMA’s first time squaring up against the alleged MultiPlan cartel in the courts. In 2022, the physician association joined class action litigation against Cigna for allegedly underpaying providers in its MultiPlan network.
MultiPlan’s stock has taken a hit among the scrutiny, with its value dropping more than 82% since the beginning of this year. The company’s finances are also pressured, with MultiPlan posted a $577 million net loss in the second quarter — mostly due to a large goodwill impairment charge — compared to a net loss of $36.4 million same time last year.
During an August call with investors, CEO Travis Dalton called the results not “consistent, predictable or good enough,” adding that “the overhang of media scrutiny has been an ongoing challenge.”
