Does Multiplan Contract Leave Providers Exposed?

Seth Goldberg
Seth Goldberg

In the matter styled The Plastic Surgery Center, P.A., v. Cigna Health and Life Insurance, et al., (3d Cir. No. 23-1096), the Third Circuit Court of Appeals affirmed the District of New Jersey’s decision that the plaintiff provider, TPSC, could not recover against Multiplan for Cigna’s underpayment for breast reconstruction surgery under the commercial contract between TPSC and Multiplan.

Under that contract, TPSC agreed to become a member of Multiplan’s network of healthcare providers, and Multiplan agreed to use reasonable efforts to market to TPSC to payors who, like Cigna, contract with Multiplan to pay for services provided to Cigna’s insured’s by providers in Multiplan’s network. Under the TPSC/Multiplan contract, Multiplan agrees that provider will be paid 85% of charges, less deductibles, co-payments, and co-insurance. Cigna reimbursed TPSC approximately $2000 for a procedure for which TPSC charged approximately $158,000, and TPSC sued Cigna and Multiplan for the difference claiming Multiplan promised TPSC would be paid 85% of charges. In affirming the dismissal of that claim under basic principles of contract law, the Third Circuit determined that nothing in the TPSC/Multiplan contract guaranteed TPSC would be paid 85% of charges. The claims against Cigna had been dismissed by the trial court without appeal on the basis that the denial of any additional reimbursement was not arbitrary or capricious.

This may be an important to decision for the thousands of providers who have similar contracts with Multiplan, as payors may use it as a backstop for underpaying.  This decision may be used to argue that a contract between the provider and Multiplan does not give a provider recourse to the payor for any underpayments or obligate Multiplan for them.  However, the Third Circuit noted that TPSC did not claim the Multiplan contract was illusory.

SCOTUS Limits Claims Brought by Healthcare Providers’ for Denied Medicaid Reimbursement

In a recent 5-4 decision by the U.S. Supreme Court, Armstrong v. Exceptional Child Center, Inc., Slip. Op., 575 U.S. ____ (March 31, 2015), Justice Scalia, writing for the majority, took aim at health care providers seeking to enforce Medicaid rate-setting provisions against a state that refused to incorporate those provisions in the state’s Medicaid plan, and instead reimbursed providers for Medicaid services at lower rates.

In Armstrong, the plaintiffs, providers of habilitation services under Idaho’s Medicaid plan sought an injunction to prevent Idaho’s State Department of Health from violating Section 30(A) of Medicaid, 42 U.S.C. § 1396(a)(30)(A), which requires a state to “assure that payments are consistent with efficiency, economy, and quality of care,” while “safeguard[ing] against unnecessary utilization of. . . care and services.”  The Court reversed the Ninth Circuit’s decision that the Supremacy Clause gave the providers an implied right of action to seek an injunction requiring Idaho to comply with Section 30(a). Continue reading “SCOTUS Limits Claims Brought by Healthcare Providers’ for Denied Medicaid Reimbursement”

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The opinions expressed on this blog are those of the author and are not to be construed as legal advice.

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