Protecting patients from harm is what physicians are all about. As the physician’s powerful ally in patient care, the AMA works proactively to ensure patients maintain access to affordable, high-quality care from physicians in every type of practice setting. A key element of that work is taking every step possible to protect the financial viability of the care physicians provide in a health care marketplace that emphasizes patient choice in a free-market environment.
The lawsuit we filed Oct. 24 (PDF) against MultiPlan Inc. is just one example of this proactive approach. Along with the Illinois State Medical Society (ISMS), we filed this action in federal court in Chicago, seeking injunctive relief against a multilateral price-fixing conspiracy with the nation’s largest insurance companies. We believe this unlawful scheme, in place for almost a decade, harms physicians by denying fair payment for out-of-network health care services, and harms patients by greatly limiting free-market competition that may lead to lower costs and improved care.
The AMA and ISMS believe MultiPlan operates as a cartel to depress payments for out-of-network care, with the largest players in the health insurance industry acting as co-conspirators to stifle competition in the market for out-of-network contractual arrangements with those insurers. Rather than setting their own rates for out-of-network reimbursement, most of the nation’s commercial payors—including all 15 of the country’s largest—outsource this function to MultiPlan. By doing so, these insurers all but eliminate competition between themselves for out-of-network provider services.
Our lawsuit argues that this arrangement, which constitutes price-fixing and thus a violation of the Sherman Anti-Trust Act, has generated immense profits for both MultiPlan and the commercial health insurance companies that use its services, while forcing physicians to accept lower and lower payment amounts for out-of-network services—payments that in many cases do not come close to covering the cost of delivering that care to patients.
As a result, many medical practices have stopped offering certain services or, especially in the case of smaller practices, closed their doors for good.
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Squeezed by payers
Maintaining financial viability is an everyday consideration for small private practices like my own, a six-physician otolaryngology practice in Louisville, Kentucky. Independent physicians are punished by our broken Medicare payment system that has seen doctor payment plummet by almost 30% in the last two decades, with an additional 2.8% cut to take effect on Jan. 1.
And we are also squeezed by insurers as well. One such insurance company that dominates the private payer market in our market recently offered us a contract renewal with payments based on 80% of the Medicare reimbursement rate—and surgical rates below what they paid us seven years earlier.
My partners and I did everything we could to negotiate with that payor, but the results were fruitless. This is the same dilemma facing private practices across the country: sign the contract and continue our downward financial spiral or decline to renew and risk harming our patients by further reducing access to care for an in-demand specialty.
MultiPlan’s pricing scheme harms patients as well as providers. The cost of health insurance keeps going up, while the payors, their investors, and their executives profit from money that should have rightfully been paid to doctors providing necessary medical care to subscribers.
Patients have every right to complain about the dysfunction that plagues our nation’s health care system, not only through rising costs but also inadequate provider networks, routine denials of needed care and other headaches.
Our lawsuit emphasizes the fact that while many in our health system are striving for improvement and better outcomes, MultiPlan is profiting from price fixing. Sadly, the MultiPlan cartel 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.
The AMA works each day to both protect patients and physicians’ practices and be our unified voice against powerful interests that put profits before patients. I’m eager for this lawsuit to advance to ensure the viability of physician practices as well as fair and reasonable payment for the care we provide to our patients.
