American Medical Association, Illinois State Medical Society file lawsuit alleging price-fixing conspiracy

The Chicago-based American Medical Association and the Illinois State Medical Society are suing data analytics firm MultiPlan, alleging that it’s at the center of a price-fixing conspiracy with health insurance companies that has hurt medical practices and, in turn, patients.

The AMA and state medical society allege in their lawsuit that most of the nation’s health insurance companies have outsourced to MultiPlan the task of deciding how much they should reimburse doctors and other providers who provide services to patients while out-of-network.

Typically, health insurance plans have groups of doctors and other providers who are considered “in-network” with whom they have negotiated discounted reimbursement rates, in exchange for encouraging their patients to see them. But insurance companies also often reimburse doctors who are “out-of-network,” with whom they don’t have negotiated contracts, when they see the insurance companies’ members, depending on those members’ plans.

The AMA and state medical society allege that this outsourcing has eliminated competition between insurers for out-of-network provider services, resulting in artificially low reimbursement rates for out-of-network providers.

“Physicians are forced to accept these increasingly low payment amounts for out-of-network services, which often do not even cover their operating costs,” the organizations allege in the lawsuit, which was filed in U.S. District Court for the Northern District of Illinois on Thursday.

The situation can also indirectly suppress in-network reimbursement rates, because doctors receiving low out-of-network rates have less leverage to negotiate in-network reimbursement rates with health insurers, the lawsuit alleges.

“These dynamics have forced many practices, particularly smaller ones, to shut their doors, cease offering certain services, or join massive hospital conglomerates, leaving patients with fewer and fewer healthcare options,” the AMA and state medical society allege in the lawsuit.

Attempts to reach MultiPlan for comment were not immediately successful Thursday afternoon. On its website, while describing its services, MulitPlan says, “We identify and negotiate fair out-of-network provider reimbursements and help to eliminate balance bills.”

“Our role reaches far beyond just saving dollars and cents — everything we do supports the long-term goal of enabling affordable care for all,” MulitPlan says on its website.

A New York Times investigation earlier this year found that MultiPlan and insurance companies have “a large and mostly hidden financial incentive to cut those reimbursements as much as possible” leading to sometimes large bills for patients and low pay for providers.

The AMA and state medical society are seeking  “injunctive and other appropriate relief to put an end to the Cartel and the injuries it is inflicting on members of the AMA and ISMS and on health care throughout the United States,” according to the lawsuit.