Following a damning investigation from the New York Times, the American Hospital Association is calling for the U.S. Department of Labor to probe into the business practices of MultiPlan, a New York-based data analytics firm.
MultiPlan, a nearly 45-year-old company, provides data analytics tools for more than 700 payers and claims to save them upwards of $22 billion annually. In its investigation, published Sunday, the New York Times reported that the company works with major payers like UnitedHealthcare, Cigna and Aetna to negotiate reduced reimbursements for out-of-network medical providers. This strategy has led to billions of dollars in profit for MultiPlan and its insurer customers, as well as increased costs for patients and employers, according to the report.
The report was based on 50,000 pages of documents and interviews with more than 100 people, including former MultiPlan employees, patients, doctors and medical billing experts.
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When people receive medical treatment from providers outside of their insurance network, payers forward the invoices to MultiPlan for a recommended payment amount. However, both MultiPlan and its payer customers have an incentive to minimize these payments — because their fees go up when reimbursements go down, the investigation explained.
Essentially, their earnings are tied to the disparity between the original bill and the actual payment made by the insurer, motivating them to negotiate considerably lower amounts.
These negotiations are purportedly to combat overbilling, but MultiPlan and its payer partners earn billions of dollars from resulting savings and fees, the investigation found.
The report pointed out that UnitedHealth Group alone rakes in $1 billion per year in fees from employers due to its participation in these out-of-network savings programs. A bit ironically, the fees collected by MultiPlan and insurers frequently surpass the reimbursement for the medical services that were provided, the investigation noted.
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On the other hand, many patients who received care from out-of-network providers end up on the hook for unexpectedly large bills, according to the report. It also highlighted that MultiPlan’s business practices result in increased costs for self-funded employers, as the firm charges them a percentage of the savings as a processing fee.
On Tuesday, the AHA demanded that the Department of Labor take action.
“As a result of these secretive arrangements, America’s employees are forced to pay increasing out-of-pocket amounts — even though they already pay hundreds of dollars each month for employer-funded health insurance. Even more alarming, these harmful business practices are causing patients across the United States to cease or delay necessary treatment for fear of mounting costs,” AHA CEO Richard Pollack wrote a letter to the Labor Department.
The New York Times investigation noted that regulatory bodies “rarely intervene” in payers’ methods for out-of-network reimbursement negotiation. The report pointed out that enforcement primarily falls onto the Labor Department, which “has one investigator for every 8,800 health plans.”
However, in the view of the AHA, MultiPlan’s practices require government oversight, “not just investigative reporting and public outrage,” Pollack wrote.
The organization urged the Labor Department to “immediately” open an investigation to hold companies like MultiPlan and its insurer partners accountable for their “unconscionable practices” and “distorted incentives.”
In a public statement posted this week, MultiPlan said it disagrees with the New York Times’ depiction of its company and the services it provides. The firm said it “always has been focused on bending the cost curve in healthcare with fairness, efficiency and affordability for consumers.”
In the New York Times investigation, spokespeople for UnitedHealthcare and Cigna said that the practices depicted in the report align with industry standards.
MedCity News reached out for additional comments from UnitedHealthcare, Aetna and Cigna — the former two payers responded.
In its statement to MedCity News, an Aetna spokesperson wrote that the company has “comprehensive networks of credentialed participating providers in every specialty who agreed to provide covered services at competitive negotiated rates.”
UnitedHealthcare believes that many of the assertations presented by the New York Times are “factually inaccurate and based on faulty premises,” a spokesperson for the payer wrote.
“The fact is that a small percentage of health care providers — many of whom are backed by private equity — choose to remain outside of insurance networks so they can bill egregious amounts for their services, driving up health care costs for everyone. For example, TeamHealth, a private equity-backed physician group, has avoided establishing a network contract with us so it could set its own egregiously high out-of-network rates — double or even triple the median rate we pay other physicians providing the same services — which increases the cost of care and makes healthcare less affordable for everyone else,” the spokesperson wrote.
In response to these practices, UnitedHealthcare offers employers “solutions that can help them more accurately and effectively manage these unpredictable and unnecessary health care costs,” the spokesperson added.
The AHA’s letter does not mark the first time MultiPlan has ever been on providers’ bad sides.
Last year, AdventHealth — a Florida-based health system with more than 50 hospitals — sued “the MultiPlan Cartel.” The health system alleged that the company’s “collusive agreements to suppress out-of-network reimbursements” has resulted in hundreds of millions of dollars in lost revenue.
AdventHealth’s complaint said that MultiPlan acts like a “mafia enforcer for insurers,” forcing doctors to accept low reimbursements while patients’ insurance costs continue to rise. The case is currently ongoing.
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Editor’s note: This article was updated to include commentary from UnitedHealthcare.
