Insurers have long accused private equity-owned hospitals and physician organizations of exorbitant billing that drives up medical costs. But private equity-backed tools are helping insurance companies make billions of dollars and pass those costs on to patients.
The tool, Data iSight, is the flagship product of a cost-containment company called MultiPlan, which has attracted a flurry of private equity investments since establishing itself as a key player in the lucrative healthcare payment space. Ta. Currently, California-based private equity giant Hellman & Friedman and the Saudi government's sovereign wealth fund are among the company's largest investors.
The evolution of Data iSight, which recommends how much to pay for each medical bill, is an untold chapter in the story of private equity's influence on American health care.
A New York Times investigation into the relationship between insurance companies and MultiPlan found that fighting against predatory claims is just one aspect of the partnership. Low payments leave patients with large unexpected bills, reduced salaries for doctors and other health care professionals, and often high unexpected fees for employers who fund health plans. However, the country's largest health insurance company is making huge profits.
In many cases, when someone gets insurance through their employer and visits a doctor outside of their plan's network, the insurance company sends the bill to MultiPlan and recommends how much to pay. Both MultiPlan and the insurance company typically receive a processing fee from the employer based on the final payment amount. The less you pay, the higher the fees.
This business model has made Data iSight a cash cow. Of the few tools that MultiPlan provides to insurers, Data iSight consistently makes the most frugal recommendations and typically commands the highest fees.
Multiplan, which has been listed since 2020, did not respond to detailed questions about Data iSight. A statement released by an outside public relations firm said MultiPlan's payment recommendations were fair and “widely accepted.” The company said it is “committed to reducing out-of-network costs,” including using “data-driven tools to determine fair reimbursement.”
Concerns about private equity investment in medical practices have grown in recent years, with studies reporting rising medical costs. Insurers and multiplans say Data iSight is a necessary countermeasure.
Caught in the middle of these money-making efforts are patients, most of whom remain in the dark. When you see the Data iSight name, it's usually in the fine print of a thick document. Those who filed complaints said they received little more than assurances that the calculations were rigorous and fair.
For Mary Lavigne, who suffers from chronic pain, seeing a chiropractor near Irvine, Calif., nearly doubled the cost. Nadia Salim's therapy appointments in the Boston area have also nearly doubled in cost. And Andrew Fehnle had to pay more than two-thirds of the ambulance bill after his 14-year-old son was rushed to the emergency room in Anaheim, California. In each case, Data iSight was cited on the insurance statements.
“I thought, 'Who are these people?'” Fehnle said. “I started Googling, 'What is Data iSight?'”
“It seems the time has come.”
MultiPlan's business model is based on simple calculations. When he subtracts the MultiPlan-recommended payment amount from the amount the doctor charges, you get an amount that the company recognizes as a savings or discount. Typically, MultiPlan and the insurance company each collect a percentage of the declared savings as a processing fee.
This arrangement allows insurance companies to benefit from the most common way Americans buy health insurance: through an employer who uses the insurance company only as an administrator and pays for health benefits with their own money. can do. With MultiPlan, your insurance company will reduce your medical costs and bill your employer for those costs.
For decades, multiplans determined payments primarily through negotiation. Although the discount was modest, it came with an agreement from the patient that no further discounts would be given.
After MultiPlan founder Donald Rubin sold the company in 2006, the company's new private equity owners began a move toward automated pricing that executives later dubbed “MultiPlan 2.0.” .
In 2010, the company acquired Viant, an Illinois-based company that used algorithms to recommend redemptions. But for some types of care, Viant's calculations used a database of charges. Therefore, if your provider increases your billing over time, your recommended payment amount may also increase.
A small business in Grapevine, Texas, has developed a different strategy. Tom Glass, a former insurance executive, wanted to calculate and negotiate the cost of treatment instead of first creating a bill and then negotiating it down.
Glass acquired an analytics company called Data Advantage in 2005 and assigned a team to his company, National Care Network, to execute his vision. The result is Data iSight.
It used data submitted by medical facilities to the federal government and technology developed by Medicare to estimate the cost of treatment. We then put in additional funds to get a fair return. The goal was to save insurance companies and employers money by not paying so low that providers had to sue or pursue patients for balances.
In 2011, Mr. Glass was sold to Multiplan.
“The industry was condensing,” he said. “It seems the time has come.”
He said he thought Data iSight was revolutionary, but he had no idea what it would become.
“Multiplan is magic”
In 2019, executives from the nation's largest insurance companies gathered in Laguna Beach, California, to hear from Dale White, executive vice president of MultiPlan.
He presented a slide showing the cover of a self-help book, “Life Is Magic,” with White's face digitally altered to read “MultiPlan Is Magic.” The slide added: “We have a few things in store as well.”
The company had annual revenues of about $1 billion and had three private equity investors raising money. After acquiring MultiPlan from Carlyle Group in 2010 for just over $3 billion, BC Partners and Silver Lake reportedly sold it for $4.4 billion. It was sold to Starr Investment Holdings and Partners Group in 2014, and two years later to Hellman & Friedman for a reported $7.5 billion.
Hellman & Friedman, which owned the company when it went public in 2020, declined to comment.
Growth was driven by Data iSight. The company's annual revenue for MultiPlan increased from $23 million in 2012 to more than $323 million in 2019, according to a 2020 investor presentation. The following year, CEO Mark Tabak told investors that Data iSight was MultiPlan's biggest moneymaker. Largest insurance customer.
Although the company continued to offer other tools, it touted Data iSight as “industry-leading,” “state-of-the-art,” and a way to “maximize savings.”
For insurers, this tool came with tradeoffs. Payments would be lower, but patient complaints could have increased. They rolled it out gradually. UnitedHealthcare, the nation's largest insurance company by revenue, began using the service for certain plans and treatments in 2016, according to documents.
As Data iSight becomes more popular, patients, physicians, and healthcare facilities are in for an unwelcome surprise. Some healthcare providers that had negotiated contracts with multiplans found that they were no longer receiving the agreed-upon rates and patients were no longer protected from high bills.
Brett Lockhart underwent spinal surgery at a facility near Cocoa, Florida. This facility had multi-plan and rate negotiation. When his insurance company used his Data iSight, he ended up paying nearly $300,000 in damages. The bill is the subject of litigation and remains unpaid.
'Very low' payment
MultiPlan's rise in fortunes involved more than just an increase in claims. Executives told investors that the average fee from each claim also increased.
In a presentation shortly before becoming a public company in 2020, MultiPlan touted its tools as “scalable,” with the potential to generate an additional $10 million in profits by reducing payments by just 0.5 percent. The company said there is.
White, who took over as chief executive after MultiPlan missed its 2022 revenue targets, told investors that the company is “developing new business opportunities with customers to help them address the accelerating health care landscape.” He asserted that he has an “action plan'' that includes “actively implementing initiatives.'' It costs money. ”
Changing Data iSight's methodology should generate an additional $6 million in revenue, he said.
Multiplan told investors it plans further “enhancements” to its tools, including the use of artificial intelligence.
As patients and providers demand an explanation for the denial of payments, MultiPlan has sought to keep details about Data iSight confidential, arguing in the lawsuit that the information is proprietary.
Interviews and documents obtained by The Times after it filed its complaint in federal court offer some insight.
Data iSight begins by using Medicare pricing methodology. But the calculations after that are not so transparent. MultiPlan says it applies a multiplier that allows for a fair return for hospitals and near fair market rates for physicians. According to the document, multiplan would allow insurers to cap prices and set profit margins for medical facilities that they consider fair.
Multiplans are touting Data iSight as an alternative to simply paying marked-up Medicare rates, an option offered by some insurance companies. MultiPlan documents say that paying about 120 percent of government-set rates “sounds fair, perhaps even generous,” but that “the average consumer doesn't realize how low Medicare rates are.” This is said to be “inherently misleading” because the
But Data iSight's recommended price can be about 160 to 260 percent of Medicare rates, according to interviews and documents, an amount that a former MultiPlan employee described as “ridiculously low” and “insanely low.” ” was expressed.
Even fees that seem reasonable can place a burden on medical practices. For example, UnitedHealthcare, citing information from Data Eyesight, says it provided Dr. Darius Cohan approximately 350 percent of Medicare fees for surgery to repair a patient's eardrum. The amount amounted to him $3,855.36.
Dr. Cohan, who runs a small practice in Manhattan, said the payments are so low that he is being forced to consider joining larger hospital systems or private equity-backed groups.
“I’m a dinosaur, but my patients love it,” he said. “I might not be able to sustain it.”