Ignition by RocketTools

Nobody In The MultiPlan Lawsuit Is The Good Guy

• Dan McCoy, MD • Season 1 • Episode 17

Share episode

Use Left/Right to seek, Home/End to jump to start or end. Hold shift to jump forward or backward.

0:00 | 11:46

Last week the Texas Medical Association joined a federal antitrust lawsuit against MultiPlan — recently rebranded as Claritev. The story being told is doctors versus insurers, an unlawful cartel, $19B in alleged underpayments. It's a clean story. The moment you look at the actual fee math from the complaint, it falls apart.

In this episode I walk through MDL 3121, the $1,000 → $200 cascade, the DOJ's March 27 Statement of Interest backing the plaintiffs' antitrust theory, and what self-funded employers should be asking their TPA on Monday morning. The bellwether trial isn't until December 7, 2027 — three years of fees away.

About 42% of what the algorithm calls "savings" never makes it to the plan. That's not a doctors-vs-insurers story. It's a third-character story.

▶ Watch the video version: https://youtu.be/H3TQUxJt2Xo 📝 Read the written deep dive (full fee math, sources, 3-question employer checklist): https://danmccoymd.substack.com/p/nobody-in-the-multiplan-lawsuit-is

SOURCES MENTIONED

LEGAL DISCLAIMER This episode covers public reporting and pending litigation. All allegations are unproven and may ultimately be rejected in court. MultiPlan, Claritev, and the named insurers deny wrongdoing. Nothing here is legal, financial, or medical advice.

Full sources and the deep dive: danmccoymd.substack.com

SPEAKER_00

Last week, the Texas Medical Association joined a federal antitrust lawsuit against a company most patients have never heard of. The company is called Multiplan, and it recently rebranded itself as Claritive, which is kind of the name you pick when you really like people searching for you to land on something new instead of the old headlines. The story you're going to read this week is that a heroic group of doctors is finally fighting back against insurance algorithms that have allegedly underpaid them something like $19 billion. Doctors versus the machines, underdogs versus a cartel. That's a lovely story, but it's also missing the part you should actually be upset about. Because whether you're a physician or a patient, and this is the part nobody's really writing about, a self-funded employer, there is a third character in this lawsuit that both sides would prefer you not to look at very carefully. And that character is sitting in the middle of taking 42 cents on every dollar. To understand what's actually happening, you have to go back to a sleepy concept from 1990, and it's called UCR, usual, customary, and reasonable. UCR was the old way insurance companies paid out of network claims. If you saw a doctor your plan didn't have a contract with, the insurer looked up the median local price for that service, paid that amount, and moved on. Boring, but predictable, but defensible. Then something interesting happened. A New York-based data company called Multiplan figured out that if you replaced median local price with whatever our proprietary algorithm spits out, you could pay much less. And if you charged a percentage of the gap between the original bill and the new lower payment, you can make a lot of money doing it. By 2020, according to company and investor disclosure cited in the complaint, Multiplan was processing more than 370,000 claims per day. Today the lawsuit alleges it touches about 80% of all commercial out-of-network claims in the United States. This is the pattern that keeps repeating in healthcare. When nobody can agree what something should be cost, a middleman sets up shop in the middle of the disagreement and starts charging tolls. Sometimes the toll is bigger than the original bill. So here's the mainstream version of what's happening, and I want to give it a fair shake before I pick it apart. In 2024, the American Medical Association sued Multiplan and its insurance company partners, United Health, Aetna, Cigna, Elevants, and Humana, in federal court in Illinois. The suit was consolidated into a multidistrict litigation called an RE Multiplan Health Insurance Provider Litigation, MDL 3121, a long name. Last week on April 6th, the Texas Medical Association joined. Their argument is what antitrust lawyers call a hub and spoke conspiracy. Multiplan is the hub, the insurers are the spokes. Plaintiffs allege that all of the insurers feed their pricing data into the same algorithm, and the algorithm spits out coordinated lowball recommendations that the insurers then accept. The AMA has called multiplan a quote, unlawful cartel. This theory got a major boost on March 27 of this year when the U.S. Department of Justice filed what's called a statement of interest, supporting key aspects of the plaintiff's legal framework. The DOG said that using a pricing algorithm to set benchmark prices can qualify as concerted action under Section 1 of the Sherman Act. Even if competitors don't always use the algorithm in exactly the same way, that is a big deal because it's the same theory the DOJ is using against real page in the rental housing market. The court has already denied multiplants motion to dismiss the federal antitrust counts. The first bellwether trial is scheduled for December 7, 2027, and the plaintiffs are claiming damages going back to at least 2015. The framing in physician trade press is exactly what you would expect. Doctors getting underpaid, insurers getting rich, an algorithm enabling all of it. Sympathetic plaintiffs, cartoonlessly evil defendants, a federal judge who isn't buying the defense's arguments. It's a clean story. The problem is the moment you start looking at the actual fee math, the clean story starts to fall apart. Here is how the system allegedly works in practice, and I'm pulling these numbers from court filings and from the New York Times investigation that Reed Abelson and Chris Hamby published in April of 2024. Both are public, both are which are linked in the Substack post for this episode. A doctor sends in an out-of-network bill for let's say $1,000. The insurer roots it to multiplan. Multiplan's algorithm, most often called data eyesight, runs the calculation and recommends paying the doctor $200. You'd think the math would stop there, but it really doesn't. Of the $800 difference between the original bill and the new lower payment, what the industry calls savings, multiplan allegedly takes about 7%. That's $56. Then the insurer charges the employer a fee of around 35% of the savings. That's $280, if you're keeping track. The employer keeps the remaining $464 and the doctor gets the $200. And the patient frequently gets a balance bill for some chunk of the difference, which they did not see coming, and which most of them have never heard of the words out of network in their life. Add it up. Of every $800 in alleged savings, about 42 cents on the dollar gets eaten by middlemen. 42%. The thing being sold to the employer as a cost control program is, by the math in the complaint, primarily a fee generation program for the people running it. United Healthcare alone reportedly pulls in about a billion dollars a year from these arrangements. Multiplans repricing revenue allegedly went from $23 million in 2012 to over $700 million by 2021. Investors at the time loved this. The people whose premiums were paying for it had no idea it was even happening. I'm going to pause here for a fun detail and then keep going. There's a dossier of internal documents from Multiplant's own marketing materials reported by the Capital Forum that walks providers through how its pricing supposedly works. I'm going to skip the deep dive on that. It's a rabbit hole. I went down it, but I've put the full breakdown on the Substack post for this episode if you want to read it for yourself. The point I want you to hold on to is this the smaller the doctor's payment, the larger the algorithm's fee, the larger the insurer's fee. Everyone in the middle is paid more when the doctor is paid less. That is not a bug in the system. According to the complaint, that is allegedly the system. Now here's where I have to push back on the doctor's side because I don't actually buy the poor underpaid physicians' framing. And if you're a benefits buyer or a CFO listening to this, you shouldn't either. U.S. doctors are the highest paid in the world by a lot. That doesn't make individual physicians villains. It just means the word underpaid has to be evaluated in context. According to the Medscape Physician Compensation Report, the average American physician made $374,000 in 2024. Specialist average $404,000. Procedural specialists, we're talking neurosurgery, orthopedics, cardiology, clear $600,000 enough. We pay our doctors roughly twice what Canada and the UK pay theirs. Reasonable people can argue about whether that's deserved or insane, but the data is the data. So when you hear doctors are getting underpaid for out-of-network care, your first reaction should not be sympathy. Your first reaction should be compared to what. But and this is where I land after looking at all of it. The question is actually a distraction from what the lawsuit is about. Because the lawsuit isn't really about whether doctors deserve more money. It's about who captured the savings when an algorithm cut the bill. Here's the part nobody is really talking about. The 2026 numbers are in. Small group health insurance premiums are going up about 11%. ACA marketplace premiums are going up around 18%. Some markets are seeing 21% increases. The Kaiser Family Foundation analysis of the 2026 small group filings is crystal clear. The main drivers are specialty, biologics, gene therapies, GLP ones, hospital prices, administrative costs, and the expiration of the enhanced ACCA subsidies, not physician office fees. The multiplan algorithm has been suppressing out-of-network payments for over a decade. It did not prevent a single dollar of those premium increases. It just generated about a billion dollars a year in fees for United Health alone. Which means if the plaintiffs win this lawsuit and multiplan's repricing model collapses tomorrow, your premiums are not going to spike. The savings the algorithm was generating were mostly being captured as fees by the insurer and the algorithm itself. Removing the suppression also removes the fee. The net impact on what employers pay is much smaller than the gross savings number makes it sound. I'm about 75% confident in that read. Reasonable people will disagree, but the burden of proof is on whoever wants to argue that a system where 42% of savings disappears in a middleman fees is the thing actually holding premiums down. So if you're the one actually writing the check, the self-funded employer, the CFO, the benefits buyer, here's what all this should change on Monday morning. First, ask your TPA or insurance carrier, whoever is administering your plan, exactly how out-of-network claims get repriced. Specifically, ask whether they use multiplan, Clarity, Data Eyesight, Viant, Propricer, NCN, or Mars names. If the answer is yes to any of those, ask what percentage of savings your plan is being charged as a fee. Get it in writing. The answer will tell you whether you have an issue. Second, look at your plan's medical loss ratio for out-of-network claims separately from in-network claims. If a meaningful percentage of your healthcare spend is being rooted into algorithm fees rather than actual care, that can be an aris of fiduciary problem, not just an accounting one. Your plan administrator has a legal duty to act in the interest of plan participants. The lawsuit alleges that some of these arrangements may not have really cleared that bar. Third, if you're renewing your plan in the next 12 months, the percentage of savings clause in your administrative service agreement, ASO agreement, is the single most important paragraph nobody on your benefits team is reading. Read it, negotiate it, cap it. The clause exists because the carriers were betting you'd never look. This is not a wait for the lawsuit to settle situation. The bellwether trial isn't until December 2027. You have three years of fees to pay between now and then. The framing of the multiplan case as doctors versus insurers is doing exactly what it's supposed to do. It's getting you to pick a team. Both teams would prefer you to not notice the third character standing in the middle, calmly collecting a percentage of every dollar that doesn't get paid. Healthcare costs in this country aren't really rising the way the headlines describe. They're being redistributed out of doctors into algorithms, out of patients into fees, out of employers into the gap between a bill and a payment that an algorithm has decided was the right number. The December 2027 trial isn't going to be about whether doctors are overpaid or underpaid. It's going to be about whether an algorithmic middleman sitting between a buyer and a seller in a market it doesn't actually participate in can keep extracting tolls forever just because nobody can agree on the right price. That question doesn't just matter for healthcare. It's the same question every industry is about to ask about every AI pricing tool that's been quietly installed over the last five years. Healthcare is just where it's getting answered first. If you found this useful, hit subscribe so you don't miss the next episode. The full source list, the AMA filings, the DOJ statement of interest, the New York Times investigation, the Kaiser Date on 2026 premiums, and the fee math breakdown. It's all on my Substack, links in the description. And until next time, I'll see you then.