Congress Asks Regulators About ‘Troubling’ Health Insurance Tactics

Lawmakers on Tuesday called on health insurance regulators to detail their efforts against “troubling practices” that have raised costs for patients and employers.

In a letter to a top Labor Department official, two congressmen cited a New York Times investigation of MultiPlan, a data firm that works with insurance companies to recommend payments for medical care.

The firm and the insurers can collect higher fees when payments to medical providers are lower, but patients can be stuck with large bills, the investigation found. At the same time, employers can be charged high fees — in some cases paying insurers and MultiPlan more for processing a claim than the doctor gets for treating the patient.

The lawmakers, Representatives Bobby Scott of Virginia and Mark DeSaulnier of California, both Democrats in leadership positions on a House committee overseeing employer-based insurance, highlighted MultiPlan as an example of “opaque fee structures and alleged self-dealing” that drive up health care costs. In their letter, they pressed the department for details on its efforts to enforce rules meant to promote transparency and expose conflicts of interest.

MultiPlan’s business model focuses on the most common way Americans get health coverage: through an employer that “self-funds,” meaning it pays medical claims with its own money and uses an insurance company to process claims. Insurers such as Aetna, Cigna and UnitedHealthcare have pitched MultiPlan’s services as a way to save money when an employee sees a provider out of network.

In many cases, MultiPlan uses an algorithm-based tool to generate a recommended payment. Employers typically pay insurers and MultiPlan a percentage of what they call the “savings” — the difference between the recommendation and the original bill.

While this arrangement is usually disclosed in contracts, the fees have surprised some employers. In one case, UnitedHealthcare used MultiPlan to cut a $152,594 hospital bill to $7,879 and then charged the employer a $50,650 fee for doing so.

In a statement, MultiPlan said: “The New York Times has repeatedly misinformed the public about how MultiPlan works. MultiPlan’s services do not raise patients’ overall health care costs, they lower them — including by minimizing or eliminating balance bills for tens of millions of patients — and to state or imply the contrary is false and misleading.”

In their letter, Mr. Scott and Mr. DeSaulnier noted growing concerns that some firms are profiting at the expense of employers and patients. For example, Kraft Heinz last year sued Aetna, claiming the insurer had paid claims improperly and kept millions in undisclosed fees. Trustees for a union health plan sued Blue Cross Blue Shield of Massachusetts in 2021, accusing it of repeatedly overpaying claims and then charging a fee to correct the errors. (Aetna declined to comment on the case, and the Massachusetts lawsuit was dismissed.)

Companies that operate health plans for their employees are legally required to monitor service providers and ensure their fees are reasonable. But employers sometimes have trouble obtaining and understanding the data showing what they’ve been charged and why.

In 2020, Congress required service providers to disclose potential financial conflicts of interest, but it is unclear whether the rules apply to companies like MultiPlan.

The lawmakers’ letter asked how the Labor Department was enforcing disclosure requirements and whether it would issue rules clarifying them. Mr. Scott and Mr. DeSaulnier have previously pushed the department to more aggressively police health plans, while acknowledging its limited resources. It said it has one investigator for every 8,800 plans.

The department previously told The Times that it had “a number of open investigations” into the type of pricing services MultiPlan provides, but declined to name specific companies. It did not respond to requests for comment about the representatives’ letter.

Members of two Senate committees overseeing health policy have also expressed concern that MultiPlan’s business model could “result in an improper conflict of interest.” In a May letter, they demanded information from the firm, and a spokesman for the chairman of one of the committees, Senator Ron Wyden, Democrat of Oregon, said last week that he “is committed to identifying and addressing the root cause of these tactics.”

Separately, Senator Amy Klobuchar, Democrat of Minnesota, in April asked the top federal antitrust regulators to investigate whether MultiPlan had colluded with insurers to fix prices.

In addition to the scrutiny from Congress, MultiPlan has faced more than two dozen lawsuits from medical providers accusing it of conspiring with insurers to suppress payments. A federal panel recently consolidated the cases into a single large proceeding, similar to those against companies accused of driving up rents and fueling the opioid crisis. A judge in California this month dismissed a similar case against MultiPlan filed in state court by a health system.

MultiPlan’s stock price has been battered, and it disclosed quarterly revenues this month that its chief executive, Travis Dalton, called “disappointing and unacceptable.” Mr. Dalton acknowledged during a call with investors that “media scrutiny has been an ongoing challenge,” but said that the firm had “established a corporate and government affairs team, inclusive of world-class public relations and lobbying representation.”