In a recent push for transparency, lawmakers are scrutinizing health insurance practices that may be inflating costs for patients and employers. At the center of this scrutiny is MultiPlan, a data analytics firm accused of collaborating with insurance companies to lower claim payments, often leaving patients with significant medical bills.
On Tuesday, Representatives Bobby Scott of Virginia and Mark DeSaulnier of California, both leading figures on a House committee that oversees employer-based insurance, issued a letter to the Labor Department. Their inquiry follows a New York Times investigation that highlighted how MultiPlan’s business model benefits insurers and the firm at the expense of patients and employers.
According to the investigation, MultiPlan’s involvement can lead to lower payments to medical providers, which in turn allows the firm and insurers to collect higher fees. The burden, however, often falls on patients, who may face hefty bills, while employers might end up paying more in fees than the actual cost of the medical care provided.
The lawmakers pointed out that the opaque fee structures and potential conflicts of interest within MultiPlan’s operations could be driving up healthcare costs. Their letter urged the Labor Department to clarify how it enforces rules intended to ensure transparency and prevent self-dealing within the industry.
MultiPlan’s business is primarily focused on working with employers who self-fund their employees’ health coverage. These employers use insurance companies to process claims, and firms like Aetna, Cigna, and UnitedHealthcare promote MultiPlan’s services as a cost-saving measure for out-of-network medical services. MultiPlan often uses algorithms to determine recommended payments, with employers typically paying a percentage of the so-called “savings” as a fee to both the insurer and MultiPlan. This model, however, has led to surprise fees for some employers, as seen in one case where a $152,594 hospital bill was reduced to $7,879, yet the employer was charged a $50,650 fee.
In response to these allegations, MultiPlan issued a statement accusing The New York Times of misrepresenting its operations, claiming that their services reduce overall healthcare costs and help minimize or eliminate balance bills for millions of patients.
The growing concern over potential profiteering by insurance firms and service providers was further highlighted by lawsuits filed by companies like Kraft Heinz against Aetna, and union health plans against Blue Cross Blue Shield of Massachusetts. These cases allege improper payment handling and excessive fees, adding to the scrutiny of the health insurance industry.
Employers are legally obligated to monitor the service providers managing their health plans, ensuring that fees are reasonable. However, obtaining clear data on these fees has proven challenging, making it difficult for employers to understand the true costs associated with their health plans.
While Congress mandated in 2020 that service providers disclose potential financial conflicts of interest, the application of these rules to companies like MultiPlan remains unclear. Representatives Scott and DeSaulnier are now pressing the Labor Department to clarify and enforce these requirements more aggressively.
The Labor Department has acknowledged ongoing investigations into pricing services like those provided by MultiPlan but has not disclosed specific companies under scrutiny. Meanwhile, the Senate has also shown interest in MultiPlan’s practices, with Senator Ron Wyden of Oregon leading inquiries into potential conflicts of interest in the firm’s business model. Additionally, Senator Amy Klobuchar of Minnesota has requested a federal antitrust investigation to determine whether MultiPlan has been colluding with insurers to fix prices.
Beyond the congressional investigations, MultiPlan is facing over two dozen lawsuits from medical providers accusing the firm of conspiring with insurers to suppress payments. These cases have been consolidated into a larger legal proceeding, akin to those involving companies in the opioid crisis and housing market controversies. A recent dismissal of a related lawsuit in California has not alleviated the pressure on MultiPlan, whose stock price has suffered amid ongoing legal and media scrutiny.
Travis Dalton, MultiPlan’s CEO, acknowledged the challenges during a recent investor call, describing the company’s quarterly revenues as “disappointing and unacceptable.” Despite the setbacks, Dalton emphasized that MultiPlan has established a robust public relations and lobbying team to address the mounting criticisms.
As the investigations continue, the spotlight remains on MultiPlan and its role in the broader health insurance landscape, raising critical questions about the impact of such practices on the cost of healthcare in the United States.
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