Big health insurers are working with a little-known data company to boost their profits, often at the expense of patients and doctors, a New York Times investigation has found. A private-equity-backed firm called MultiPlan helped drive down payments to medical providers and increase patients’ bills, while raking in billions of dollars in fees for itself and the insurers.
To investigate this largely hidden part of the health care 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 records made public by two federal judges after petitions from The Times.
Here are five takeaways.
The smaller the payout to doctors, the higher the fees 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 fees increase as payments decrease.
Here’s how it works.
The most common way Americans get health coverage is through an employer that pays for workers’ medical care themselves and uses an insurance company to administer the plan. Providers in the plan’s network have negotiated rates, but out-of-network providers often must negotiate payments.
By using MultiPlan’s cost-effective recommendations, insurers say they are saving employers money. But insurers and MultiPlan also benefit because their fees are typically based on the size of the declared “savings” or “discount” — the difference between the original bill and the amount actually paid.
In some cases, insurers and MultiPlan have collected more for processing a claim than the provider received for treating the patient.
UnitedHealthcare, the largest US insurer by revenue, has reaped about $1 billion in fees annually in recent years from out-of-network savings programs, including its work with MultiPlan, according to legal testimony.
Patients may 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 unpaid balances.
Some patients say they abstain or stop long-term treatment as a result. The problem can be particularly punishing for people who rely on out-of-network specialists, including for mental health or substance abuse treatment.
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 stand to collect a relatively small amount.
Self-funded plans are largely exempt from state regulation, and the responsible federal agency says it has only one investigator for every 8,800 health plans.
Some medical providers face significant pay cuts
MultiPlan and insurers say they are fighting chronic overbilling by some doctors and hospitals, a chronic problem that research has linked to rising health care costs and regulators are scrutinizing. But low payments also squeeze 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 did not charge the parents of those children, but said he will not accept new patients with similar insurance.
Other providers said they started asking patients to pay upfront because appealing for higher insurance payments can be time-consuming, annoying and futile.
Former MultiPlan employees say they had an incentive to lock in unreasonably low rates: Their bonuses were tied to the size of the cuts.
Employers are charged a hefty fee
Insurance companies tout MultiPlan as a way to cut costs, but some employers have complained about large and unexpected bills.
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 $50,650 processing fee.
In the Phoenix area, administrators who run the electricians’ union health plan were shocked to learn that Cigna’s charges had risen from about $550,000 in 2016 to $2.6 million in 2019, according to a lawsuit filed by administrators.
Employers trying to verify the accuracy of insurers’ bills sometimes face challenges in getting access to their own employees’ data.
Private equity plays both sides
For years, insurance companies have blamed private equity-backed hospitals and physician groups for hiking bills and making health care more expensive. But MultiPlan is also backed by private equity.
MultiPlan’s annual revenues have climbed to about $1 billion thanks to its embrace of a more aggressive approach to cutting costs. Its main offering is an algorithm-driven tool called Data iSight, which consistently recommends the lowest payments to doctors – typically resulting in the highest processing fees.
MultiPlan went public in 2020, and its largest shareholders include private equity firm Hellman & Friedman and the sovereign wealth fund of the Saudi Arabian government, regulatory filings show.
