Medical Groups Call MultiPlan a “Hub-and-Spoke Cartel”


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Joining other suits, complaint says company engages in price fixing with insurance companies.

The American Medical Association (AMA) and Illinois State Medical Society (ISMS) filed a 127-page complaint in federal court in Chicago last week that refers to the operations of MultiPlan as a “hub-and-spoke cartel” participating in a price-fixing scheme with medical insurance providers (American Medical Association, et al. v. MultiPlan, Inc., No. 1:24-cv-10959, N.D. Ill.).

MultiPlan is a medical data firm based in New York City that provides information to medical insurers to reduce reimbursements.

The AMA and ISMS claim the network between MultiPlan and medical insurance providers is “a naked, horizontal price-fixing conspiracy constituting a per se violation of Section 1 of the Sherman Act.”

It claims MultiPlan has acted as an agent for “nearly all major health insurers in the United States,” including Aetna, Cigna Group, UnitedHealth Group Inc., and Health Care Service Corp.

“MultiPlan has bragged that it contracts with some 700 health insurance companies and payers — including the 15 largest health insurers in the United States — to provide out-of-network claims repricing services.”

The lawsuit suggests MultiPlan “negotiates” with physicians on behalf of insurance clients to force those providers to agree to their rates.

“In over 95% of cases, physicians — having no other practical choice — ‘accept’ the initial offer made by MultiPlan, in some circumstances agreeing as a condition of payment not to balance bill patients for the unpaid portions of claims,” the lawsuit states. “As a result, in virtually all cases, the MultiPlan rate determination is the final rate of payment, not a mere ‘recommendation’ to the insurer.”

The AMA and ISMS suggest MultiPlan’s extreme financial success in recent years is partly due to its price-fixing, as the company generated $23 million in 2012, but brought in $709 million in 2021.

Citing concern about the potential for a monopoly, the AMA and ISMS claimed in the lawsuit that MultiPlan gave insurer United a massive contingent fee discount to remain in the “cartel” and scrap its plans to institute a competing algorithm, Naviguard.

Though MultiPlan has yet to respond to the lawsuit either informally or through the courts, AMA President Dr. Bruce A. Scott said, “Patients today are fed up with a dysfunctional health system — lengthy waits to see physicians, network inadequacy and rising costs. What this lawsuit makes plain is that while many in our health system are striving for improvement, MultiPlan is profiting from price fixing. This is one more example of insurance companies playing by their own rules without regard to patients or the legitimate costs required to care for them.”

Scott claimed MultiPlan does nothing to reduce costs for patients, but instead keeps money that should have “rightfully been paid to doctors providing necessary medical care.”

Several lawsuits pending against MultiPlan

Though MultiPlan has not responded directly to the AMA/ISMS lawsuit, it has faced judicial scrutiny in the past for its business model.

In August, MultiPlan got a win when the Superior Court of California tossed a lawsuit filed by now-defunct Verity Health System of California, which suggested MultiPlan’s business model had put the group out of business.

In the dismissal order, the court ruled that “out of network” reimbursement rates are not a “price” that can be fixed or tampered with in violation of antitrust laws. The court also ruled that the plaintiff had failed to assert any harm caused by violating California’s antitrust laws.

MultiPlan claims recent lawsuits “are without merit and would ultimately increase prices for patients and employers.”

The company also accused The New York Times of failing to “fully explain to readers the important role that companies like MultiPlan play in our health care system by helping lower out-of-pocket costs and reducing or eliminating medical bills for millions of patients.”

Recently, federal court in the Northern District of Illinois ordered the consolidation of several lawsuits pending against MultiPlan in August: Robinson v. MultiPlan from the Northern District of California; Allegiance Health Management v. MultiPlan, Live Well Chiropractic v. Multiplan and Ivy Creek of Tallapoosa v. Multiplan in the Northern District of Illinois; and Adventist Health System Sunbelt Healthcare Corporation v. Multiplan and CHS/Community Health Systems v. Multiplan from the Southern District of New York.

What is price?

If MultiPlan’s success in the Superior Court of California is any indicator, future hearings may center around the definition of “price,” considering the data firm successfully argued that the amount insurance companies choose to reimburse on claims does not constitute “price” under antitrust laws.

Detractors, however, would be quick to point out that MultiPlan’s influence on reimbursement directly affects how much money makes it into the pockets of medical providers, as a recent study from Kaiser Family Foundation found up to 100 million Americans carry medical debt.

A press release from the AMA cited a 2020 study from the Office of the New York State Comptroller, which surmised 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.

AMA and ISMI claim in the most recent lawsuit that MultiPlan’s system of providing uniform billing for out-of-network insurance claims is unfair based on economic differences between different geographical parts of the country.

“This makes no sense absent the existence of a conspiracy,” the lawsuit states. “Because the cost of care in Manhattan, New York, is higher than in Manhattan, Kansas, all legitimate methods of reimbursing out-of-network claims account for the geographic difference between where care is administered.”

The New York Times’ Chris Hamby reported on Aug. 16 that the MultiPlan’s stock fell by more than 70 percent since April in the face of scrutiny from Congress, Wall Street, and the courts. Hamby noted that the company’s general counsel and chief financial officer left the company in April after the Times published the results of its investigation, which revealed MultiPlan and its insurance company clients “often collect larger fees when payments to medical providers are far lower than the amount billed,” sticking patients with unexpectedly high bills for fees not covered by their insurance companies.

Further responding to reporting by the Times, MultiPlan said in a post on its website: “We fundamentally disagree with the depiction of our position in the industry and the services that we provide. MultiPlan plays an incredibly vital role in the entire healthcare ecosystem – including providing value-add services to: 1.4 million contracted providers; more than 100,000 employers and plan sponsors with 60 million plan members; over 700 healthcare payors.”

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