Recent revelations about the role of data analytics companies in determining health care costs have heightened concerns about the potential for price fixing in health care and led to calls for a federal investigation.
in letter Sen. Amy Klobuchar told federal regulators this week whether algorithms used by MultiPlan helped large health insurance companies collude to cut payments to doctors and leave patients with large bills. They requested an investigation. He cited a New York Times investigation last month into MultiPlan’s dominance in the lucrative business of pricing out-of-network health insurance claims.
In a letter to the heads of the Justice Department’s antitrust division and the Federal Trade Commission, Klobuchar wrote, “Algorithms should be used to make decisions more accurately, better and more efficiently, and competitors should not collude.” “We should not allow patients to have high medical costs due to this.”
When a patient sees a provider outside of the plan’s network, the insurance company often sends the claim to MultiPlan, which uses a proprietary algorithm to recommend the amount to pay. By reducing payments to providers, multiplans and insurance companies are able to collect higher rates for themselves, the Times reported, which results in higher bills for patients and charges for unpaid balances. there is a possibility.
UnitedHealthcare, Cigna, Aetna and other major insurance companies use MultiPlan’s Pricing Pricing, and the company boasts to investors that MultiPlan is “deeply integrated” into its customers’ claims processing systems. .
Minnesota Democratic Rep. Klobuchar and antitrust experts said in interviews that the deal could amount to price fixing. Rather than competing to offer better coverage, insurers can take advantage of the lower prices MultiPlan’s algorithms recommend, knowing that their competitors are likely to do so. do the same.
“This should trigger an investigation by authorities,” said Barak Orbach, a law professor at the University of Arizona. “There seems to be a pretty strong case.”
The FTC and Justice Department declined to comment, but both agencies have raised concerns about similar arrangements in other industries in the past.
In a statement, MultiPlan did not address the price-fixing allegations, instead emphasizing its commitment to “helping make health care transparent, fair, and affordable for all.” . In court documents, the company denies the allegations of collusion and says insurers are free to refuse pricing recommendations or negotiate higher payments with insurers.
Insurers say MultiPlan’s tools will help combat exorbitant billing by some health care providers, including integrated hospital systems and private equity-backed staffing firms.
MultiPlan sometimes told insurers how unnamed competitors were using its pricing tools, according to documents reviewed by the Times. In his 2017 presentation to UnitedHealthcare, MultiPlan shared “recent client strategies to improve outcomes.” This included techniques that could reduce payments to providers.
After the 2019 meeting, United Healthcare’s senior vice president said the MultiPlan executive “didn’t specifically name the competitors, but we could glean who they were from his statements.” ” he told his colleagues. She then explained how Cigna, Aetna, and some of her Blue Cross Blue Shield plans apparently use the company’s pricing tools.
Three hospital systems are suing MultiPlan, accusing them of colluding with major insurance companies to set unfairly low medical costs, and patients and health care providers are complaining about MultiPlan, according to records obtained through public records requests. I have filed a complaint with the FTC.
One insurer reported reduced payments from UnitedHealthcare, Cigna, and Aetna subsidiaries after the insurer transferred claims to MultiPlan’s most aggressive pricing tool. Another said the tool had “ruined my life”, put me “out of business” and “forced patients to travel 2.5 hours for surgery”.
Patients complained to authorities that they received high bills after their insurance companies used MultiPlan’s recommended prices. “This is affecting my credit score,” one patient wrote about a bill sent to a debt collector. Another person reported being charged thousands of dollars “for refusing to pay the correct amount to the provider.”
Pricing algorithms have driven MultiPlan’s growth over the past 15 years. The company previously focused on controlling costs by negotiating with health care providers, but after being sold to private equity investors, the company focused on automated algorithms that typically result in lower-than-low payment recommendations. Based tools were used.
Executives told investors that access to data from hundreds of customers helped establish the company’s advantage. “We are building algorithms on a much larger data lake,” one executive said in a 2020 presentation.
The attention to MultiPlan’s automated pricing tools highlights growing concerns among regulators and some in Congress that algorithms are overestimating pricing schemes and driving up costs for consumers. ing.
Under the Biden administration, companies are increasingly embracing technological advancements, which is colliding with aggressive enforcement efforts by regulators. The results are mixed as government agencies try to apply laws enacted to combat 19th-century oil and railroad heists to 21st-century technology companies.
“Algorithms are the new frontier,” the Justice Department said in a brief in one case. “And given the amount of information that algorithms can access and digest, this new frontier poses an even greater anticompetitive threat than the last.”
Regulators and some antitrust scholars worry that algorithms could enable sophisticated collusion that is difficult to police. Competitors no longer need to gather secretly to plot or communicate with each other to perpetuate a conspiracy. They just need to agree to use a common pricing algorithm.
Considering private lawsuit apartment rent and hotel room priceThe agency argues that such arrangements are illegal, even if competitors agree with a look or nod rather than a formal agreement.
But in one case, a judge disagreed with the December ruling, allowing the case to proceed but requiring the tenant to provide more concrete evidence that the landlord had ownership of the property. . colluded to raise prices using an algorithm.
Klobuchar is Law introduced That would effectively default to the agency’s position. Courts would rule it illegal for competitors to share private data with intermediaries and use price recommendations generated by the company’s algorithms.
“It’s unclear whether existing antitrust laws are sufficient to prevent this behavior,” Klobuchar said in an interview. “It is much better to clarify this point and close the loophole.”
The bill would also require companies to notify consumers when they buy products priced using algorithms, and give regulators the power to request details about how the algorithms work.
