Feds drop bomb on Multiplan in legal war over healthcare 'price-fixing' algorithms

DoJ suggests it sure looks like collusion when several big players use the same cost-saving software

The US Justice Department on Thursday weighed into an antitrust legal war that alleges algorithmic price fixing by healthcare services by MultiPlan and its health insurance clients.

MultiPlan, recently renamed Claritev, is a tech company that helps health insurance companies reduce costs. One of its services uses an algorithm to recommend how much insurers should pay out to cover the cost of people's individual out-of-network treatments.

For those not au fait with the American healthcare system: When you're in-network, you're using a medical service that has an agreement with your healthcare insurer on the price you pay. When you're out of network, you're getting treatment from a provider that doesn't have that kind of deal in place, so you end up paying more.

And you end up paying more because your insurer isn't usually willing to cover out-of-network costs as much as its favored in-network ones. Multiple insurers use MultiPlan to calculate how much of each patient's out-of-network bill they should pick up, and it's alleged the software therefore effectively fixes and inflates prices for patients across the board, pushing more costs onto individuals than if insurers separately calculated the balance.

More specifically, lawsuits in three states – New York (2023), Illinois (2024), and California (2024) – were consolidated last August and claim MultiPlan operated a cartel that suppresses insurance payment rates using non-public data shared by the competing health insurance firms that are its customers.

MultiPlan has rejected the allegation, arguing the complaint is without merit. In an effort to convince a court of that argument, the company and its health insurance co-defendants (Aetna, Cigna, and United Healthcare, to name a few) have filed two motions [PDF] to dismiss the case. Those motions are yet to be decided.

The Justice Department's Thursday intervention in the battle came in the form of a Statement of Interest [PDF] in which it advises the judge that the defendants – MultiPlan et al – have made two errors about the law in their arguments to have the case tossed.

The first is an incorrect assertion that no conspiracy is possible because there's been no claim that the health insurance payers use MultiPlan to determine reimbursements in the same way.

Second, the Feds say, the absence of allegations that the non-public information shared with MultiPlan by health insurers is competitively sensitive does not immunize the defendants from antitrust law.

"Courts have recognized that sharing information through an algorithm provider can create the same anticompetitive effects as a direct exchange between competitors because the algorithm provider 'has confidential price strategy information from multiple competitors, [and] it can program its algorithm to maximize industry-wide pricing' even if 'the firms themselves don’t directly share their pricing strategies,'" the federal prosecutors argue.

The purpose of the federal intervention is to ensure Judge Matthew F. Kennelly is aware of the Justice Department's interpretation of the law when he rules on the two motions to dismiss the case filed by MultiPlan.

The DoJ has made similar Statements of Interest in other algorithmic price fixing claims, including matters involving RealPage [PDF] and Yardi [PDF] for alleged rental price fixing. The Feds also shared their views in a case involving alleged hotel room price fixing by Caesars Entertainment and others [PDF], and another matter in which ArgiStats [PDF] was alleged to have fixed prices for meat processing services.

The common theme in those cases is that the companies involved are said to have delegated price fixing to a central third party instead of conspiring among themselves.

"The Department of Justice's Statement of Interest validates our case against MultiPlan and major health insurers including Aetna, Cigna, Elevance, and United, affirming that competitors' coordinating pricing through any methods and sharing information through third-party intermediaries constitute antitrust violations," said Christopher Seeger of Seeger Weiss, the court-appointed counsel who is coordinating the MultiPlan multi-district litigation, in a statement to The Register.

We'll continue to defend ourselves through the legal process

"The practical impact of this healthcare pricing cartel is devastating to the providers our communities rely on. Nearly 30 percent of rural hospitals are at risk of closure, and thousands of doctors whose practices depend on out-of-network payments are teetering on the edge of financial collapse. We look forward to holding the defendants accountable, ensuring that medical providers receive fair compensation and every American has access to the quality healthcare they deserve."

MultiPlan/Claritev declined to comment on the government's Statement of Interest but a spokesperson said the biz's prior remarks about the litigation still stands: "We’ve been clear that these lawsuits are without merit and would ultimately increase prices for patients and employers. We'll continue to defend ourselves through the legal process. In the meantime, we’re focused on continuing to deliver for our customers and patients." ®