- Religiously affiliated hospital giant AdventHealth is suing cost management firm MultiPlan, alleging the company works with health insurers to systematically underpay for out-of-network medical claims.
- AdventHealth alleges providers have lost at least $19 billion per year as a direct result of MultiPlan’s anticompetitive agreements with major payers, including UnitedHealth, Aetna, Elevance, Centene, Cigna, Humana and a number of Blue Cross Blue Shield insurers.
- MultiPlan called the lawsuit, which was filed last week in the U.S. District Court for the Southern District of New York, meritless in a statement.
It’s not uncommon for insurers to contract with third-party cost management firms like MultiPlan to reprice claims from out-of-network providers. But nonprofit AdventHealth, which operates 50 hospitals across nine states, is arguing MultiPlan is colluding with a network of major payers to keep out-of-network reimbursement for providers at unfairly low levels.
Health insurers pay MultiPlan a fee to rent the company’s provider networks, allowing them to use the payment rates that MultiPlan has negotiated.
Payers also contract with MultiPlan to use its technology to reprice medical claims from out-of-network hospitals and doctors, according to the suit.
AdventHealth is alleging that MultiPlan uses its “repricing algorithms” to deflate out-of-network claim reimbursements, resulting in underpayments for 370,000 claims per day for more than 700 health insurers in 2020.
“‘Reprice’ is a euphemism. What these products really do — and what they are designed to do — is calculate a reimbursement amount for out-of-network healthcare services that is far less than the insurance company would otherwise pay, and far less than the health care provider’s claim for reimbursement,” AdventHealth said in the lawsuit.
MultiPlan takes a cut of the money health insurers withhold from providers under this practice, which incentivizes the company to “recommend the lowest reimbursement price possible,” the lawsuit alleges.
In addition, providers have only days to respond to the claim, and as a condition of accepting it, aren’t allowed to seek reimbursement from any other source, “effectively locking in the harm caused by the collusive underpayment,” AdventHealth argued.
The company is acting like “a mafia enforcer for insurers” because “virtually every commercial healthcare payor has agreed to use its repricing methodology, leaving healthcare providers with no practical option but to accept the ‘repriced’ reimbursement,” according to the suit.
AdventHealth is seeking an order permanently banning MultiPlan from operating the “cartel” moving forward, along with damages for underpayments and lost profits.
MultiPlan told Healthcare Dive in a statement it “believes this lawsuit has no merit and looks forward to disproving these baseless allegations.”
The lawsuit is indicative of the perennial tug of war between providers and insurance companies over pricing, which often leaves patients caught in the middle with high unexpected medical bills.
Insurers say that providers’ billed charges aren’t linked to the actual cost of providing care, an assertion that’s been borne out by pricing data released after the government forced hospitals to reveal negotiated rates with insurers in 2021.
According to a Healthcare Dive analysis of data at the time, the price for a joint replacement at one Sutter-affiliated hospital in San Francisco ranged from a low of $22,865 to a high of $101,571.
Another analysis of almost 2,000 hospitals published last year found reported prices for an ultrasound ranged from $0 to $42,640. Provider reimbursement was significantly lower for government programs like Medicaid and Medicare compared to commercial payers.