Health Insurance Price-Fixing Cartel Alleged Against Multiplan and Insurers

Seth Goldberg
Seth Goldberg

Providers in a putative class action filed on May 7, 2024, claim that Multiplan and certain named insurers in its network are a “cartel” that has agreed to underprice out-of-network reimbursement paid to providers in the Multiplan network in violation of federal antitrust laws.  The Complaint, filed in the District of Illinois as Live Well Chiropractic PLLC, et al. v. Multiplan, Inc., et al., (D. IL Civ. No. 1:24-cv–3680), alleges that Multiplan uses an algorithm that Multiplan clams “reprices” OON services based on historical reimbursements to providers providing the same services, and then “overrides” that amount to pay lower rates agreed upon by Multiplan and the insurers.   According to the Complaint the insurers, who are allegedly horizontal competitors, provide competitively sensitive information about their reimbursement that they would not provide in a competitive market, and many serve on a Multiplan advisory board that meets in furtherance of the conspiracy to fix prices.  A key component of the alleged price-fixing is Multiplan’s requirement that providers in its network agree not to balance bill patients for payments not made by the insurers.  The Complaint alleges that Multiplan and the insurers have made billions off the alleged anticompetitive conduct, and seeks damages and injunctive relief.  

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.

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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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