Major health insurance companies 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 boost upfront payments to medical providers and increase patient bills while earning billions of dollars in fees for itself and insurers.
To investigate this hidden aspect of the health care industry, The Times interviewed more than 100 patients, doctors, billing experts, health plan consultants and former MultiPlan employees and reviewed more than 50,000 pages of documents, including confidential files released by two federal judges after the Times reports.
Here are five foods.
The lower the payment to the doctors, the higher the fees for the insurers and MultiPlan
When patients see medical providers outside their plans’ networks, UnitedHealthcare, Cigna, Aetna and other insurance companies often send the bills to MultiPlan to recommend a payment amount.
MultiPlan and insurers have a strong incentive to keep payments low because their fees grow as payments decrease.
That’s how it works.
The most common way Americans get health coverage is through an employer that pays for employees’ medical care themselves and uses an insurance company to administer the plan. Providers in the plan’s network have agreed-upon prices, 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 fees are typically based on the size of the claimed “savings” or “discount” — the difference between the original bill and the amount actually paid.
In some cases, insurers and MultiPlan have charged more to process a claim than the provider did to treat the patient.
UnitedHealthcare, the largest U.S. insurer by revenue, has collected about $1 billion in fees annually in recent years from out-of-network savings plans, including its partnership with MultiPlan, according to legal filings.
Patients could be on the hook for unpaid bills
Patients saw their bills rise after their insurers began routing claims to MultiPlan, as providers billed them for the unpaid balance.
Some patients said they reduced or discontinued long-term treatment as a result. The predicament can be especially punishing for people who depend on out-of-network specialists, including mental health or substance abuse treatment.
Patients have limited recourse. If they want to file a lawsuit, they usually have to go through an administrative appeals process first, and even if the case goes forward, they stand to collect relatively modest amounts.
Self-funded plans are mostly exempt from state regulations, and the federal agency says it has only one researcher for every 8,800 health plans.
Some medical providers are facing big pay cuts
MultiPlan and insurers say they are cracking down on rampant overcharging by some doctors and hospitals, a chronic problem that research has linked to rising health care costs and regulators are scrutinizing. But low payments are also putting pressure on small medical practices.
Kelsey Toney, who provides behavioral therapy for children with autism in rural Virginia, saw her salary cut in half for two patients. He has not charged the parents of those children, but said he would not accept new patients with similar insurance.
Other providers said they started requiring patients to pay up front because appealing for higher insurance payments can be time-consuming, infuriating and futile.
Former MultiPlan employees said they had an incentive to lock in unreasonably low amounts: Their bonuses were tied to the size of the cuts.
Employers are charged hefty fees
Insurance companies tout MultiPlan as a way to cut costs, but some employers have complained about large and unpredictable charges.
For a trucking company in New Jersey called New England Motor Freight, UnitedHealthcare used MultiPlan to reduce the hospital’s bill from $152,594 to $7,879, then charged the company a processing fee of $50,650.
In the Phoenix area, trustees running an electricians union health plan were surprised to learn that fees charged by Cigna rose from about $550,000 in 2016 to $2.6 million in 2019, according to a lawsuit the trustees later filed.
Employers trying to verify the accuracy of insurers’ billings have sometimes faced challenges in accessing their employee data.
Private equity plays both sides
For years, insurance companies have blamed private equity-backed hospitals and physician groups for skyrocketing bills and more expensive health care. But MultiPlan is also backed by private equity.
MultiPlan’s annual revenue has grown to about $1 billion thanks to more aggressive cost-cutting approaches. Its top offering is an algorithm-based tool called Data iSight, which consistently recommends the lowest payouts to doctors — usually resulting 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, according to regulatory filings.
