The healthcare industry grapples with a pervasive issue of providers overcharging insurers for medical procedures performed on their patients. To combat this, insurers have turned to MultiPlan—a data analytics firm that dramatically reduces insurers’ payments to out-of-network providers. However, this seemingly beneficial solution has the consequence of shifting the financial burden onto patients, who are then billed for the difference. Patients across the country often need out-of-network care for emergencies or specialized treatment that is unavailable in-network.

While MultiPlan markets itself as a data-driven solution to optimize benefit plan design, its proprietary algorithms primarily focus on minimizing out-of-network costs for insurance companies, thereby neglecting the needs of patients and providers and undermining the goal of creating a truly “optimal” healthcare system.

In essence, Multiplan’s business model revolves around saving insurers money in excess charges from providers and then charging insurers a percentage of the savings it achieves—a model that enables MultiPlan to earn more when insurers pay less. However, because insurers end up only paying a small fraction of the provider’s bill, providers then resort to charging patients for the difference. This practice results in patients—even those who are insured—paying exorbitant out-of-pocket medical expenses, which can hinder those patients’ recovery and overall health outcomes. A patient may decide to delay or forgo additional treatments or may reduce essential medical care.

The power dynamic between patients, providers, and insurers further exacerbates this issue, as patients are often ill-equipped to challenge these unexpected bills. Patients are generally at a disadvantage when disputing bills with health insurers, who have in-house attorneys and the leverage of massive volume, as well as with providers, who have access to all the tools of medical bill collections. This imbalance leaves patients, the most vulnerable party, bearing the brunt of the financial burden.

Due to these concerns, MultiPlan has attracted increasing legal challenges and regulatory scrutiny. Health systems, hospitals and patients of providers are suing MultiPlan over their out-of-network claim repricing business. Addiction treatment providers are also suing MultiPlan, alleging that its algorithms setting out-of-network reimbursement rates dramatically suppress payouts for substance use disorder (SUD) treatment claims, which amounts to price-fixing, threatening the viability of SUD providers and reducing patient access to essential services. Moreover, regulators and Congressional leaders, too, are noticing MultiPlan’s algorithms’ potential for price-fixing when applied across multiple insurers as well, prompting regulators to open an investigation.

The addiction treatment providers have also sued a group of healthcare insurance companies that used MultiPlan’s services in a conspiracy to fix prices and eliminate market competition. The access to sensitive pricing data allowed these insurance companies to coordinate and suppress industry-wide reimbursement rates, creating an artificial market depression.

While long-term solutions to this complex issue may be on the horizon, the current reality remains unchanged: providers set rates, insurers minimize payments, and patients shoulder the financial burden.

Additional editorial contributions by summer associate Dylan Shusterman.