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MultiPlan CEO talks strategy, recent criticism

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Illustration: Sarah Grillo/Axios

The data analytics firm MultiPlan (NYSE: MPLN) has been thrust into the national spotlight over out-of-network fees.

Zoom in: A recent New York Times article spotlighted financial incentives used by MultiPlan and commercial insurers to cut reimbursement rates, leaving providers and patients with large bills.

What they're saying: CEO Travis Dalton — who came aboard in January — denies the NYT's characterization of the company's negotiation approach, telling Axios, "MultiPlan never pressures providers to accept a rate."

How it works: MultiPlan's algorithms evaluate factors (like public CMS data on hospital costs) to help insurers detect health claim overcharges.

  • MultiPlan negotiates with providers to determine how much they should pay for out-of-network claims, recommending what it terms "fair" reimbursement.
  • MultiPlan, which works with 700 payers and 100,000 employers and plan sponsors, then collects a fee based on the amount of savings it's identified on behalf of clients.

Catch up quick: "The formula for MultiPlan and the insurance companies is simple: The smaller the reimbursement, the larger their fee," says NYT, whose investigation was based on interviews and confidential documents.

  • NYT says MultiPlan's supposedly negotiable recommendations were accompanied by tactics meant to pressure medical practices to accept low payments.
  • And insurers can influence MultiPlan's supposedly independent payment recommendations, per MultiPlan documents viewed by NYT.

Dalton says MultiPlan offers myriad pricing models, including a flat per-member, per-month fee structure.

  • "A percentage of savings model better aligns MultiPlan's incentives with our clients, as well as self-funded employer plan sponsors," Dalton tells Axios.
  • Regarding negotiation timelines, Dalton cites state laws that require prompt payment and call for reimbursement within a certain timeframe.
  • "Put simply, as it is with the new [independent dispute resolution] process enacted with [No Surprises Act] regulations, time is in short supply when processing claims," he says.
  • In 2023, MultiPlan estimates 98% acceptance (defined as contractually accepted or not appealed) of the claims it priced, per Dalton.

The other side: Marshall Allen, author of "Never Pay the First Bill," calls the out-of-network fees that MultiPlan collects "unethical ways of wringing money [out of] employer-sponsored health care claims."

The intrigue: "These are not hidden fees," Allen says. "It's all right there in the contracts. ... Employers need to wake up and read them. Instead they are asleep at the wheel and not protecting the money or the patients."

Zoom in: Insurers are also under the microscope. Last year alone, MultiPlan says it identified more than $22 billion in bills from various insurers that it recommended not be paid.

  • UnitedHealth reaped $1 billion in fees from out-of-network savings programs, including MultiPlan, NYT reports.
  • UnitedHealth's spokesperson pointed Axios toward private equity-backed providers like Blackstone-backed TeamHealth that "choose to remain outside of insurance networks so they can bill egregious amounts for their services, driving up health care costs for everyone."
  • In a statement, TeamHealth said in part that it "has always had a strategy to be in-network with insurers and protect patients from out-of-network bills. Consistent with those goals, TeamHealth prefers to be in-network with UnitedHealthcare at reasonable and fair reimbursement rates." It added that United terminated TeamHealth's in-network contracts nationally.

Flashback: MultiPlan went public via SPAC in 2020 at an $11 billion valuation. Hellman & Friedman remains a majority investor, holding 32.9% of the outstanding shares of common equity in the company.

  • Over the past year, its stock has sunk nearly 34% with a 52-week high of $2.29 and a low of $0.61.
  • MultiPlan was trading at $0.74 a share at time of publish.

By the numbers: MultiPlan is contending with a $4.5 billion long-term debt load.

  • "Our focus is on debt, our debt refinance and debt pay-down," says Dalton.
  • Over the five-quarter period ending Dec. 31, 2023, MultiPlan repurchased or repaid $362 million.

The latest: The American Hospital Association called for the Department of Labor to investigate MultiPlan.

  • Dalton declined to comment on whether MultiPlan has received inbound inquiries from DOL.

The bottom line: Health care watchdogs are on high alert right now.

Editor's note: This story has been updated with a statement from TeamHealth Thursday evening.

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