Multiplan Probe — Who Hired Them Anyway?
The knives are out following an article in The New York Times that analyzes the business of out-of-network pricing by Multiplan and its fee structure. Within hours of the story, the American Hospital Association submitted a request for a federal probe to the Department of Labor, apparently aghast by the notion that a company would create a business model that profits from its own pricing structure and saddles patients with bills — bills that the hospitals send, of course. While Multiplan is the current target of the attack, employers are on edge determining if they will be liable by joining the millions who willingly paid Multiplan’s fees to price out-of-network claims. With this latest Multiplan probe and a wave a of employee-led lawsuits alleging fiduciary failures by large employers, could accountability finally be on the way for this industry where bad actors have continuously been profiting at the expense of American workers?
The message is both clear and unclear — be a good fiduciary, but how? In Johnson & Johnson, the employer’s selected vendor paid too much for prescriptions and services; but in the case of Multiplan, the vendor fees the employer pays to keep the reimbursements low are irresponsible and wasteful. Consultants are scrambling to ensure that their employer clients don’t fall prey to the next lawsuit, all the while hoping their own commissions and revenue streams are not scrutinized next. Consultants can no longer rely on the idea that simply following the status quo is enough.
First, any party that is calling for Multiplan to walk the plank at the moment needs to take a step back. Multiplan’s profit margin is directly linked to the price-gouging practices of the bad actors within the AHA — and let’s not forget that Multiplan actually pays taxes on those profits). And the AHA members’ arbitrary pricing is linked to the pressures of a system ruled by the major networks. Round and round we go, where this stops, nobody knows.
At the end of the day, this story isn’t about Multiplan. Multiplan should not be faulted for utilizing a performance-based fee structure. We receive requests from brokers regularly demanding a percentage of savings fee structure believing this is the equitable way to do things. The egregious fees really are a function of the unreasonable billed charges and the lack of scrutiny on the details of the fee structure. A reasonable and prudent party could have stepped in and demanded something as simple as a fee cap. So, the issue isn’t just the fees themselves, it is the lack of value in the services received for that price and the apparent ignorance or willful ignorance of the fee methodology.
As fiduciary to a self-funded health plan, employers must ensure they are prudently managing the plan assets. For employer-plan sponsors, this means not just looking at claims costs but vetting its vendors (including its consultants), their capabilities and how they are paid. The challenge is that health insurance often comes with layers that are not properly scrutinized at the time of sale — was the out-of-network pricer selected by the group or was it a subcontractor of the administrator? Did the employer have a choice on that selection? Does the administrator receive a cut of those fees in its selection of the vendor?
The Times story did not tell the broker community anything they didn’t already know, unfortunately. And if it did, this perhaps highlights the very problem. Employers have no choice but to rely on their consultant to ensure that they scrutinize not just the claims or pharmacy costs, but the vendors and subcontractors that are servicing the plan. Are the subcontractors selected due to quality or are there revenue shares in place? If you have vendors such as a ‘program manager’ are they actually providing a service? Are you getting a better rate by using that program? Spoiler alert: there’s a good chance you are actually paying more for those services.
The story of the month may be Multiplan, but that same target could have landed on a number of other large companies or business models that are currently servicing employer health plans. ClaimDOC has always prided itself on the principle that if we make a recommendation to a client, it is based solely off of quality. We refuse to accept any money from a vendor for recommending another company’s business. And our fees come with a measurable, significant value, combining member experience, plan and member protection, and fiduciary protection all in one comprehensive fee structure. We continue to add services and value to that fee structure without nickel-and-diming our clients in the process.
Isn’t it strange that the company with a stock price tanking (down 61% year-to-date) is taking heat for overcharging for services. Clearly, there were other hands in the cookie jar taking a cut. When our industry finally cleans up all the pay-to-play and monetary incentives for the layers of middlemen, maybe then we’ll have an environment plan sponsors get presented real best-in-class options.