In a front-page investigative report headlined “Patients Hit with Big Bills While Insurers Reap Fees,” the New York Times shows how health insurers use MultiPlan to reduce payments to medical providers, which increases the fees employers pay the insurers and MultiPlan, but which frequently results in higher medical bills for patients.

Here’s how it works:  Most Americans receive their health insurance benefits from their employers.  Employers typically contract with health insurers to administer these benefits, but the employers self-insure claims payments. In other words, self-insured employers pay the medical claims out of their own funds.

Many employees choose – and pay higher premiums for – health plans with out-of-network benefits, allowing them to seek treatment from the physician or facility of their choice. The insurers often use MultiPlan to calculate the fee paid to out-of-network providers, which is typically much lower than the fee charged by the provider.  But, based on interviews and a review of confidential documents, the NYT investigation found that:

MultiPlan and the insurance companies have a large and mostly hidden financial incentive to cut those reimbursements as much as possible, even if it means saddling patients with large bills. The formula for MultiPlan and the insurance companies is simple: The smaller the reimbursement, the larger the fee.

At the same time, the employee is responsible for the difference between the provider’s charges and the amount paid for the medical care.

The article gave specific examples. For instance, it described the case of a patient who needed a multi-hour complex procedure to repair a wound after heart surgery, which was performed by an out-of-network physician. UnitedHealthcare administers the patient’s insurance plan. The plan paid the physician only $5,449.27, leaving her with a bill of over $100,000. The patient is quoted as saying: “I’m thinking to myself, ‘But this is why I had insurance. They take out, what, $300 or  $400 a month.  Well, why aren’t you people paying these bills?” According to the article, UnitedHealthcare “has reaped a windfall of about $1 billion in fees from out-of-network savings programs, including its work with MultiPlan.”

In another example, Cigna paid eight addiction treatment centers $2.56 million for care provided to patients needing addiction treatment, but it charged those patients’ employers $4.47 million for processing those claims.  In yet another example, a patient with Crohn’s disease whose health plan was administered by Aetna had sought treatment first with two in-network physicians who were unable to resolve his persistent abdominal pain. The patient was successfully treated by an out-of-network physician, but after MultiPlan calculated a low reimbursement rate, the patient was left with thousands of dollars in bills.  The patient felt that he was “being ripped off. It’s not right.”

It can be difficult for patients to find in-network providers, particularly for patients with chronic or complex conditions and patients seeking mental health or substance abuse care, meaning that the burden of health insurers’ arrangements with MultiPlan often fall on these patients.

Whatley Kallas, LLP’s provider clients frequently report health insurers using various strategies, including arrangements with MultiPlan, inappropriately denying medically necessary care and/or requiring that care be provided in an outpatient setting rather than on an inpatient basis as recommended by their treating physician.

The NYT article is linked here.

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