Large health insurers are partnering with a little-known data company to boost their profits, often at the expense of patients and doctors, according to a New York Times investigation. A private equity-backed company called MultiPlan has helped reduce payments to health care providers and increase patient bills, earning billions of dollars in commissions for itself and insurers.
To investigate this largely hidden aspect of the healthcare industry, the Times interviewed more than 100 patients, doctors, billing specialists, health plan consultants and former MultiPlan employees and reviewed more than 50,000 pages of documents, including confidential documents made public by two federal agencies. judges after the Times petitions.
Here are five takeaways.
The lower the compensation for doctors, the higher the compensation for insurers and MultiPlan
When patients see medical providers outside their plans' networks, UnitedHealthcare, Cigna, Aetna and other insurers often send bills to MultiPlan to recommend a payment amount.
MultiPlan and insurers have a strong incentive to keep payments low because their commissions increase as payments decrease.
Here's how it works.
The most common way Americans obtain health coverage is through an employer who personally pays for workers' medical care and uses an insurance company to administer the plan. Plan network providers have agreed-upon rates, but out-of-network providers often must negotiate payments.
By using MultiPlan's frugal recommendations, insurers say they save employers money. But insurers and MultiPlan also benefit because their commissions are generally based on the size of the declared “savings” or “discount” – the difference between the original invoice and the amount actually paid.
In some cases, insurers and MultiPlan collected more for processing a claim than the provider received for treating the patient.
UnitedHealthcare, the largest U.S. insurer by revenue, has collected about $1 billion in commissions a year in recent years from out-of-network savings programs, including its work with MultiPlan, according to legal testimony.
Patients may be in trouble due to unpaid bills
Patients have seen their bills increase after their insurers began directing claims to MultiPlan, as providers bill them for the unpaid balance.
As a result, some patients said they reduced or stopped long-term treatment. The situation can be especially punishing for people who depend on out-of-network specialists, including for mental health or substance abuse treatments.
Patients have limited recourse. If they want to sue, they usually have to complete an administrative appeals process first, and even if the case goes forward, they could collect relatively modest sums.
Self-funded plans are mostly exempt from state regulation, and the federal agency responsible says it has only one investigator for every 8,800 health plans.
Some healthcare providers face steep pay cuts
MultiPlan and insurers say they are combating rampant overbilling by some doctors and hospitals, a chronic problem that research has linked to rising health care costs and that regulators are examining. But low payments also squeeze small medical practices.
Kelsey Toney, who provides behavioral therapy for children with autism in rural Virginia, saw her pay cut in half for two patients. She did not bill the parents of those children, but she said she would not accept new patients with similar insurance.
Other providers said they have started requiring patients to pay upfront because requesting higher insurance payments can be time-consuming, infuriating and unnecessary.
Former MultiPlan employees said they had an incentive to lock in unreasonably low amounts: Their bonuses were tied to the size of the reductions.
Employers are charged hefty commissions
Insurance companies tout MultiPlan as a way to keep costs down, but some employers have complained of high and unexpected fees.
For a New Jersey trucking company called New England Motor Freight, UnitedHealthcare used MultiPlan to reduce a hospital bill from $152,594 to $7,879, then charged the company a processing fee of $50,650.
In the Phoenix area, administrators managing the health plan of an electricians union were surprised to learn that the rates charged by Cigna had increased from about $550,000 in 2016 to $2.6 million in 2019, according to a lawsuit subsequently brought by the directors.
Employers seeking to verify the accuracy of insurers' rates have sometimes faced difficulties accessing their employees' data.
Private equity plays both sides
For years, insurance companies have blamed privately funded hospitals and physician groups for raising costs and making health care more expensive. But MultiPlan is also backed by private equity.
MultiPlan's annual revenues have risen to about $1 billion as it takes more aggressive approaches to cutting costs. Its main offering is an algorithm-based tool called Data iSight, which consistently recommends the lowest payments to doctors, which typically result in the highest processing fees.
MultiPlan went public in 2020 and its largest shareholders include private equity firm Hellman & Friedman and the Saudi Arabian government's sovereign wealth fund, regulatory filings show.