- Home
- Advocacy
- Latest News and Practice Data
- AMA, Illinois Physicians Sue Insurance Contractor for Price Fixing
The American Medical Association (AMA) and the Illinois State Medical Society (ISMS) filed a lawsuit on October 24 against MultiPlan accusing the third-party insurance contractor of price-fixing and undercutting fair payment for out-of-network health care services. The CAP has raised concerns over the use of such third-party contractors by insurers to interfere with the physician-patient relationship.
The lawsuit filed in the Northern District of Illinois, seeks to hold MultiPlan accountable for its role in an unlawful multilateral price-fixing scheme that has operated roughly since 2015 and has forced physicians to accept increasingly low payment amounts for out-of-network services, which often do not cover their operating costs. This practice has forced many medical practices, particularly smaller ones, to shut their doors, cease offering certain services, or seek other employment arrangements, leaving patients with fewer and fewer medical practice options, the AMA said.
According to an April 2020 study published by the Office of the New York State Comptroller, depending on the service provided, payments based on MultiPlan’s repricing methodology were 1.5 to 49 times lower than payments for the same services based on the traditional method of calculating out-of-network payment rates for physicians.
MultiPlan has a direct economic stake in suppressing out-of-network payment rates below fair levels. For each claim it reprices, MultiPlan receives a fee from the insurer based on a percentage of the difference between the initial claim amount and what the insurer pays. In other words, MultiPlan gets paid more as physicians get paid less. The revenues generated by MultiPlan from its repricing services have increased from $23 million in 2012, to $564 million in 2020 and $709 million in 2021.