CHS Sues MultiPlan For Allegedly Colluding To Lower Provider Reimbursement

Dive Brief:

• Community Health Systems, one of the largest hospital chains in the U.S., is suing cost management firm MultiPlan for allegedly conspiring with health insurers to lower payments to its providers.
• The lawsuit filed Wednesday in a New York district court hinges on MultiPlan’s alleged use of repricing algorithms to calculate reimbursement far below what an insurer would otherwise pay, bilking CHS out of hundreds of millions of dollars and health systems out of billions of dollars annually.
• It’s the third lawsuit filed against MultiPlan by a health system over the allegations, which MultiPlan denies, in under a year.

Dive Insight:

Payers and providers are perennially at odds over reimbursement, but such debates have more frequently burst into the public sphere in the form of spats over contract renewals and lawsuits like the one CHS filed against MultiPlan last week.

MultiPlan is not an insurer itself. Instead, the company serves as an intermediary between insurers and providers in determining reimbursement for out-of-network claims, through repricing tools and other measures. CHS, however, is accusing MultiPlan of colluding with some of the biggest health insurance companies in the U.S. — including UnitedHealth, CVS, Cigna, Elevance, Humana, Centene and Health Care Service Corporation, which are named as co-conspirators — to unfairly lower provider pay.

MultiPlan allegedly did so by using insurers’ claims data to power its repricing algorithm, therefore recommending insurers pay lower rates to providers than they would otherwise for out-of-network care. MultiPlan attempts to leverage its large preferred provider organization to force providers to accept the lower rates, according to the suit.

“MultiPlan knows that, by bombarding healthcare providers with a constant stream of ‘repriced’ reimbursement demands, it is practically impossible for healthcare providers to meaningfully negotiate or pursue dispute resolution with respect to individual claims,” CHS argues in the complaint. “Accordingly, any ‘negotiation’ with MultiPlan starts from the position of MultiPlan’s collusive offer to radically underpay healthcare providers for their services, and invariably ends with MultiPlan forcing the healthcare provider to capitulate to an extreme underpayment.”

By 2020, MultiPlan was using its repricing tools to underpay 370,000 out-of-network claims per day for more than 700 health insurers, according to the complaint. That resulted in an underpayment of roughly $19 billion a year to providers.

More recently, MultiPlan has tried to extend its payment scheme to in-network reimbursement as well, according to the lawsuit.

The company is incentivized to lower reimbursement because it retains a portion of the difference between a provider’s bill and how much insurers pay, per CHS. That allegation was the subject of a New York Times investigation published last month that found insurers raked in millions of dollars from using MultiPlan to pay less than providers bill, occasionally leaving patients on the hook for the balance.

Following the investigation, powerful hospital lobby the American Hospital Association and Sen. Amy Klobuchar, D-Minn., called on antitrust regulators to investigate MultiPlan.

MultiPlan is also being sued by Florida-based system AdventHealth and Louisiana-based system Allegiance Health Management over similar allegations.

The lawsuit “has no merit,” a MultiPlan spokesperson said. “We look forward to disproving these baseless allegations.”

MultiPlan CFO Jim Head said the lawsuits are having no effect on MultiPlan’s business strategy during a first-quarter call with investors last Wednesday.

“I believe that there’s a mutual interest out there that providers want fair payments, and they also want to reduce friction. And I think payers want to manage risk and do the same thing. And we play an important function inside of that,” Head said.