Recent revelations about a data analytics firm’s role in setting medical payments have heightened concerns about potential price-fixing in health care and led to calls for a federal investigation.
In a letter This week, Sen. Amy Klobuchar asked federal regulators to look into whether algorithms used by the company MultiPlan have helped major insurance companies conspire to reduce payments to doctors and leave patients with large bills. He cited a New York Times investigation last month about MultiPlan’s dominance of the lucrative business of billing out-of-network medical claims.
“Algorithms should be used to make decisions more accurate, appropriate and efficient, to prevent competitors from conspiring to make health care more expensive for patients,” Ms. Klobuchar wrote to antitrust chiefs. of the Department of Justice and the Federal Trade Commission.
When patients see a medical provider outside their plan’s network, insurers often send their claims to MultiPlan, which uses proprietary algorithms to recommend how much they’ll pay. By directing the advances to providers, MultiPlan and insurers can collect higher fees for themselves, the Times reported, but that can lead to higher bills for patients, who may be charged the unpaid balance.
UnitedHealthcare, Cigna, Aetna and other major insurers use MultiPlan’s pricing recommendations, and the company has boasted to investors that it is “deeply integrated” into its customers’ claims processing systems.
In interviews, Ms. Klobuchar, Democrat of Minnesota, and antitrust law experts said such a deal could amount to price-fixing: Instead of competing to offer better coverage, insurers could use the low prices that suggest MultiPlan’s algorithms, knowing that their competitors would likely do the same.
“This should prompt an agency investigation,” said Barak Orbach, a law professor at the University of Arizona. “There seems to be a very strong case.”
The FTC and the Justice Department declined to comment, but both agencies have raised concerns in the past about similar regulations in other industries.
In a statement, MultiPlan did not address the price-fixing allegations, but emphasized its commitment “to help make health care transparent, fair and affordable for all.” In legal filings, the company has denied allegations of collusion and said insurers are free to reject its pricing recommendations or negotiate higher payments with providers.
Insurers said MultiPlan’s tools help combat outrageous billing by some providers, including consolidating hospital systems and private equity-backed staffing firms.
Documents reviewed by the Times show that MultiPlan has sometimes told insurers how its unnamed competitors were using the company’s pricing tools. In a 2017 presentation at UnitedHealthcare, MultiPlan shared its “Recent Client Strategies to Improve Outcomes,” which included techniques that could reduce payments to providers.
After a meeting in 2019, a UnitedHealthcare senior vice president told colleagues that a MultiPlan executive “didn’t specifically name the competitors, but from what he said we were able to learn who was who.” He then described how Cigna, Aetna and some Blue Cross Blue Shield plans apparently used the company’s billing tools.
Three hospital systems have sued MultiPlan, accusing it of colluding with major insurance companies to set unreasonably low payments for medical care, and patients and providers have complained to the FTC about MultiPlan, records obtained through a public records request show.
One provider reported cuts in payments from UnitedHealthcare, Cigna and an Aetna affiliate after insurers filed claims under MultiPlan’s more aggressive pricing tool. Another said the tool has “decimated my life” and caused “my business to close”, which “left patients having to travel 2.5 hours for surgery”.
Patients complained to the agency that they received large bills after insurers used rates recommended by MultiPlan. “This is now affecting my credit score,” one patient wrote, describing a bill that had been sent to a debt collector. Another reported being billed thousands of dollars “because they refuse to pay my providers the correct amount.”
Pricing algorithms have driven MultiPlan’s development over the past 15 years. The company previously focused on controlling costs through negotiations with medical providers, but after being sold to private investors, it embraced automated algorithm-based tools, which typically yield lower payment recommendations.
Access to data from hundreds of customers has helped cement the company’s dominance, executives told investors. “We’re building our algorithms on a much larger pool of data,” an executive said in a 2020 presentation.
The focus on MultiPlan’s automated pricing tools underscores growing concern among regulators and some in Congress that algorithms are burdening rate-setting systems and raising costs for consumers.
During the Biden administration, companies’ growing embrace of technological advances collided with aggressive enforcement efforts by regulators. The results have been mixed as agencies try to apply laws enacted to combat 19th-century oil and railroad robber barons to 21st-century tech companies.
“Algorithms are the new frontier,” the Justice Department wrote in a case brief. “And, given the amount of information an algorithm can access and digest, this new frontier poses an even greater anti-competitive threat than the previous one.”
Regulators and some antitrust scholars worry that algorithms can enable complex collusion that is difficult to police. Competitors no longer need to meet in secret to form a conspiracy and communicate with each other to perpetuate it. They can simply agree to use a common pricing algorithm.
Weighing private lawsuits involving apartment rentals and hotel room ratesthe agencies have argued that such an arrangement is illegal, even if competitors agree with a wink and a nod rather than a formal agreement.
But in one case, a judge dissented in a December ruling, allowing the lawsuit to go forward but requiring tenants to offer clearer evidence that landlords had conspired to raise prices using an algorithm.
Ms. Klobuchar has introduced legislation which would effectively make the organizations position a default. Courts would find it illegal for competitors to share non-public data with an intermediary and use the pricing recommendations generated by the company’s algorithms.
“It is unclear whether existing antitrust laws are sufficient to stop this practice,” Ms. Klobuchar said in an interview. “It’s much better to just clarify it and close the gap.”
The bill would also require companies to tell consumers if they buy something priced using an algorithm and give regulators more power to demand details about how an algorithm works.