Health Insurance Pricing: AMA and ISMS Fight Back

The American Medical Association (AMA) and the Illinois State Medical Society (ISMS) have taken legal action against data analytics firm MultiPlan. They claim that MultiPlan is at the heart of a price-fixing scheme with health insurance companies, which harms medical practices and patients. The lawsuit argues that many health insurance companies have handed over to MultiPlan the task of determining reimbursement rates for out-of-network doctors and providers. Normally, insurance companies negotiate discounted rates with in-network providers. But they also reimburse out-of-network doctors, whom they don’t have contracts with, based on the patients' plans. The AMA and ISMS allege that this outsourcing has removed competition among insurers for out-of-network services, leading to unfairly low reimbursement rates for these providers. Doctors often can't cover their costs with these low payments.

This situation can also lower in-network reimbursement rates. Doctors receiving low out-of-network payments have less power to negotiate better in-network rates. As a result, many medical practices, especially smaller ones, are shutting down, stopping certain services, or joining large hospital groups. This leaves patients with fewer healthcare options. MultiPlan says on its website that it aims to make healthcare more affordable. However, the AMA and ISMS are seeking legal action to stop this alleged price-fixing and protect healthcare providers and patients. MultiPlan faces similar lawsuits from other parties. A New York Times investigation earlier this year revealed a hidden financial incentive for MultiPlan and insurance companies to reduce reimbursements, which can lead to high patient bills and low pay for providers.

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