By Doug Aldeen
In August of 2023, Advent Health fled a lawsuit alleging that MultiPlan’s business model of contracting with fellow payers and aggressively repricing out-of-network service payments is anticompetitive under Section 1 of the Sherman Act.
As an aside, it is fairly evident how this is working out for Multiplan- it’s stock price today (January 19, 2024) is trading at $1.05 AND there is still 5.13% of the market that has shorted the current price and think it will go lower. I am not kidding. See link in paragraph E. I digress. More to the point, the American Hospital Association recently filed an amicus brief in the matter expressing its outrage with the Multiplan business strategy.
General Thoughts and Observations:
A) Hospital’s do NOT lose money on Medicare. Medicare pays in the aggregate over a calendar year and not on a claim by claim basis. It is true that facilities can and do lose money on a claim to claim basis but over the course of the year the facility can typically make between a 5-7% profit margin based upon their cost reports. No “turbocharging” allowed to access outlier payments. The government is watching and only modest increases in chargemaster rates, if any, are warranted. It is not an arm’s length transaction i.e. the government tells the facility what it will pay. However, there is still a profit. You just have to be efficient. HCA certainly has figured it out;
B) COVID-19 was a financial treasure trove for many hospitals. Died in a car crash with COVID-19? COVID pays much better….;
C) Multiplan, in many instances, makes more through a “cost of savings” model than the facility actually performing the services. If the facility simply charged a reasonable price (such as “AGB” defined as “ all claims allowed by Medicare fee for service and private health insurers over a 12-month period, divided by the associated gross charges for those claims”), the repricing insanity would dissipate almost overnight.
D) Hospitals need to wean themselves from the fee for service model. I would reinstitute “lifetime max’s” in health insurance policies/plan documents. That would move the needle on pricing. Gotta be careful with those dollars before they run out…
