What’s the news: Aiming to stop unlawful price-fixing that results in unfair payment rates physicians get from health insurers when they provide out-of-network care to the insurers’ members, the AMA and the Illinois State Medical Society (ISMS) sued MultiPlan Inc. in federal court in late October.
The complaint says the data-analytics company operates as an “unlawful cartel” for health insurance companies.
“This conspiracy—a horizontal, multilateral price-fixing scheme orchestrated by MultiPlan—depresses payments for out-of-network care, including for the AMA’s and ISMS’s members. Through a concerted agreement, the MultiPlan Cartel has effectively eliminated competition in the market for out-of-network treatment services, harming both doctors and patients,” says the lawsuit filed in the U.S. District Court Northern District of Illinois, American Medical Association and Illinois State Medical Society v. MultiPlan Inc.
Instead of setting out-of-network payment rates independently, insurance companies outsource the rate-setting to MultiPlan, which operates as an agent in orchestrating the conspiracy. Roughly 700 of the nation’s 1,100 insurers—including the 15 largest health plans—use MultiPlan instead of independently setting their out-of-network payment rates, the lawsuit says.
That’s “naked price-fixing” and it violates the Sherman Act, a federal antitrust law, says the complaint filed by the AMA and ISMS.
The complaint says that MultiPlan also violates the Sherman Act by:
- Acting as the central hub while insurers are the spokes in a “hub-and spoke” conspiracy, that has “effectively stifled competition in the market for out-of-network treatment services.”
- Acting as an agent, facilitator and conduit to materially aid anticompetitive goals. Health plans delegated virtually all aspects of out-of-network pricing and payment to MultiPlan and MultiPlan helped insurers share confidential information with each other, making it easier for them to artificially suppress out-of-network rates.
- Creating pricing agreements with payors that unreasonably restrain trade.
- Agreeing with insurers to exchange extensive, current, confidential and competitively-sensitive pricing information with one another with the purpose of decreasing payments to providers for out-of-network goods and services.
The lawsuit asks the court to stop MultiPlan from conspiring with insurers.
Find out more about the cases in which the AMA Litigation Center is providing assistance and learn about the Litigation Center’s case-selection criteria.
Why it’s important: MultiPlan has been orchestrating low payments since 2015, with payments set so low they often do not cover physicians’ operating costs. The out-of-network rates also influence what insurers are willing to pay for in-network rates.
The low rates have forced numerous medical practices, especially smaller ones, to close, and it’s forced some other practices to stop offering certain services. That’s harmful to patients who need care and have fewer choices to access care. Patients also don’t see any of the savings that are lining payor, investor and executives’ pockets. MultiPlan’s revenues were $709 million in 2021, up from $564 million in 2020 and $23 million in 2012.
“Patients today are fed up with a dysfunctional health system—lengthy waits to see physicians, network inadequacy, and rising costs,” said AMA President Bruce A. Scott, MD, an otolaryngologist in private practice in Louisville, Kentucky. “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.”
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More than 95% of the time, physicians don’t have a practical choice other than to “accept” the initial offer from MultiPlan, the lawsuit says because “virtually all patients are now covered by insurers who coordinate their behavior through MultiPlan.” A 2020 study from the New York state comptroller’s office found that depending on the service, MultiPlan’s out-of-network payments were 1.5 to 49 times lower that payments for those services than they would have been using traditional methods of calculating payment rates.
ISMS President Piyush I. Vyas, MD, said that “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.”
Learn more: In 2022, the AMA Litigation Center, the Medical Society of New Jersey and the Washington State Medical Association in 2022 joined patients as plaintiffs in a lawsuit alleging that Cigna failed to pay medical claims based on physicians’ contracts with MultiPlan.
A federal judge ruled that patients who filed a proposed-class action lawsuit (PDF) alleging that one of the nation’s largest insurers intentionally underpaid medical claims could move forward with the lawsuit, but the court said the AMA and other physician organizations did not have the standing to sue.
An investigation published by The New York Times in April that was based on interviews with “more than 100 patients, doctors, billing specialists, health plan advisers and former MultiPlan employees,” along with a review of more than 50,000 pages of documents uncovered five key takeaways:
- The less that can be paid to physicians, the bigger the fees can be for insurers and MultiPlan.
- Patients could be on the hook for unpaid bills.
- Some physicians and other health professionals face big pay cuts.
- Employers get charged large and unanticipated fees.
- Private equity is backing both insurers and MultiPlan.
