AMA, ISMS antitrust lawsuit seeks to break MultiPlan price fixing cartel
- The AMA and ISMS have filed an antitrust lawsuit against MultiPlan and major insurers, alleging a horizontal price-fixing conspiracy that violates federal antitrust laws by suppressing out-of-network payment rates for healthcare services.
- The alleged conspiracy has financially harmed physicians and medical practices, forcing many to close or reduce services, and has not provided savings for patients, benefiting only insurers and investors according to the AMA.
- The lawsuit draws attention to the broader issue of low competition in the healthcare industry, particularly in the pharmaceutical benefits management market, which results in higher patient costs and decreased transparency in payment structures.
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Lawsuit Claims MultiPlan and Insurers Operate a Horizontal Price-Fixing Conspiracy
In a significant move aimed at reshaping the healthcare industry, the American Medical Association (AMA) and the Illinois State Medical Society (ISMS) have filed an antitrust lawsuit against data analytics firm MultiPlan and several major health insurers. The lawsuit alleges that MultiPlan and these insurers have engaged in a horizontal price-fixing conspiracy, violating federal antitrust laws.
The Allegations
The lawsuit, filed in the Northern District of Illinois, asserts that MultiPlan, at the center of a price-fixing cartel, has used its data analytics tools to suppress out-of-network payment rates for healthcare services. This alleged conspiracy has resulted in physicians being paid significantly lower amounts for their services, often below their operating costs. The lack of transparency in how these fees are calculated has further exacerbated the issue, leading to financial hardships for many medical practices.
Impact on Healthcare Providers
Physicians and medical practices have been severely impacted by this alleged price-fixing scheme. Many have been forced to either shut down their operations or significantly curtail the services they offer. This has led to a reduction in the number of medical practices available to patients, particularly smaller ones that cannot afford to operate under the artificially low reimbursement rates.
AMA and ISMS Take Action
The AMA and ISMS are taking a strong stance against this alleged cartel. They argue that MultiPlan's pricing scheme does not generate any savings for patients but instead benefits the payors and their investors. The AMA's president, Bruce A. Scott, M.D., emphasized that patients are increasingly frustrated with the dysfunctional healthcare system, characterized by lengthy waits and network inadequacies. He highlighted that the lawsuit aims to hold MultiPlan accountable for its role in this unlawful scheme, which is contrary to fair payment practices.
Financial Implications
The financial implications of this alleged conspiracy are substantial. According to an April 2020 study by the Office of the New York State Comptroller, payments based on MultiPlan’s repricing methodology were 1.5 to 49 times lower than payments for the same services based on traditional methods of calculating out-of-network payment rates for physicians. This disparity has resulted in tens of billions of dollars in underpayment annually, affecting not only individual physicians but also the broader healthcare system.
Lawyers Weigh In
Antitrust attorneys are closely monitoring the case, as it could set a significant precedent in the healthcare industry. Kenneth Racowski, an antitrust attorney, noted that the California court's recent dismissal of a price-fixing case against MultiPlan could bolster the company's defense in federal cases. However, he also emphasized that this ruling is not binding authority and could still be appealed.
Broader Industry Implications
The AMA and ISMS are not alone in their concerns about MultiPlan's practices. The healthcare industry as a whole is under scrutiny, with regulators and lawmakers focusing on anticompetitive behavior. The lawsuit highlights a broader issue: the concentration of power in the pharmaceutical benefits management (PBM) market, which is characterized by low competition. This lack of competition has led to higher costs for patients and decreased transparency in payment structures.
Future Prospects
The outcome of this lawsuit will be closely watched by both healthcare providers and industry observers. If successful, it could lead to significant changes in how out-of-network payment rates are determined and could potentially break the alleged price-fixing cartel. However, it also underscores the complexity of antitrust laws in highly regulated industries like healthcare.
Conclusion
The AMA and ISMS’s lawsuit against MultiPlan is a critical step in addressing what they believe is a major injustice in the healthcare system. By challenging the alleged price-fixing cartel, they aim to ensure fair payment practices for physicians and to protect patients from the adverse effects of a dysfunctional healthcare system. As the case moves forward, it will be crucial to monitor its progress and any subsequent developments that may arise from it.
References
- https://news.bloomberglaw.com/antitrust/multiplan-defense-amid-price-fixing-scrutiny-gets-boost-in-court
- https://www.ama-assn.org/press-center/press-releases/ama-isms-antitrust-lawsuit-seeks-break-multiplan-price-fixing-cartel
- https://www.hklaw.com/en/news/intheheadlines/2024/08/multiplan-defense-amid-price-fixing-scrutiny-gets-boost-in-court
- https://www.ama-assn.org/topics/health-care-coverage
