Insurers Reap Hidden Fees by Slashing Payments. You May Get the Bill. (2024)

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A little-known data firm helps health insurers make more when less of an out-of-network claim gets paid. Patients can be on the hook for the difference.

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Insurers Reap Hidden Fees by Slashing Payments. You May Get the Bill. (1)

By Chris Hamby

Chris Hamby reviewed more than 50,000 pages of documents and interviewed more than 100 people for this article. The New York Times also petitioned two federal courts for materials under seal.

Weeks after undergoing heart surgery, Gail Lawson found herself back in an operating room. Her incision wasn’t healing, and an infection was spreading.

At a hospital in Ridgewood, N.J., Dr. Sidney Rabinowitz performed a complex, hourslong procedure to repair tissue and close the wound. While recuperating, Ms. Lawson phoned the doctor’s office in a panic. He returned the call himself and squeezed her in for an appointment the next day.

“He was just so good with me, so patient, so kind,” she said.

But the doctor was not in her insurance plan’s network of providers, leaving his bill open to negotiation by her insurer. Once back on her feet, Ms. Lawson received a letter from the insurer, UnitedHealthcare, advising that Dr. Rabinowitz would be paid $5,449.27 — a small fraction of what he had billed the insurance company. That left Ms. Lawson with a bill of more than $100,000.

“I’m thinking to myself, ‘But this is why I had insurance,’” said Ms. Lawson, who is fighting UnitedHealthcare over the balance. “They take out, what, $300 or $400 a month? Well, why aren’t you people paying these bills?”

Image

How MultiPlan and Insurers Make Money on Fees

MultiPlan and health insurers typically receive a percentage of the “savings” on each claim, creating an incentive to recommend lower payments.

Insurers Reap Hidden Fees by Slashing Payments. You May Get the Bill. (3)

EXAMPLE 2:

EXAMPLE 1:

MULTIPLAN ADVISES A 20% PAYMENT

MULTIPLAN ADVISES A 50% PAYMENT

A lower payment

means bigger fees for

the insurer and MultiPlan, but also a bigger potential bill for the patient.

Doctor

bills

Employer

pays

Doctor

bills

$200

$1,000

$500

$1,000

DIFFERENCE

$800

The patient is potentially on the hook for this amount.

DIFFERENCE

$500

The patient is potentially on the hook for this amount.

$35

To MultiPlan

7%

FEES

$56

To MultiPlan

7%

Based on a

share of the

difference

(paid by insurer)

$175

To Insurer

35%

(paid by employer)

$280

To Insurer

35%

Insurers Reap Hidden Fees by Slashing Payments. You May Get the Bill. (4)

For a doctor’s bill of $1,000:

EXAMPLE 2:

EXAMPLE 1:

MULTIPLAN

ADVISES A

20% PAYMENT

MULTIPLAN

ADVISES A

50% PAYMENT

A lower payment means bigger fees for the insurer and MultiPlan, but also a bigger potentialbill for the patient.

Employer

pays

Employer

pays

$200

$500

DIFFERENCE

$800

The patient is potentially on the hook for this amount.

DIFFERENCE

$500

The patient is potentially on the hook for this amount.

Based on a share of the difference

FEES

$35

$56

To MultiPlan

7%

7%

(paid by insurer)

$175

$280

To Insurer

35%

35%

(paid by employer)

Fee percentages vary based on negotiated contracts.

By The New York Times

Confidential Pricing and Fee Data

Itemized payments and fees for thousands of claims were made public in a lawsuit against Cigna after The Times petitioned the court. The insurer and MultiPlan opposed the release, calling the data “highly confidential.”

Insurers Reap Hidden Fees by Slashing Payments. You May Get the Bill. (5)

Payment amount

For providing outpatient

substance abuse treatment,

the facility received $134.13.

Fee for Cigna

For processing the claim,

Cigna received $658.75,

nearly five times as much

as the treatment center.

Fee for MultiPlan

For recommending a payment

amount, MultiPlan received

$167.48, slightly more than

the treatment center.

Insurers Reap Hidden Fees by Slashing Payments. You May Get the Bill. (6)

Payment amount

For providing outpatient substance abuse

treatment, the facility received $134.13.

Fee for Cigna

For processing the claim, Cigna received

$658.75, nearly five times as much as the

treatment center.

Fee for MultiPlan

For recommending a payment amount,

MultiPlan received $167.48, slightly more

than the treatment center.

View the PDF.

By The New York Times

Fact Check: An Explanation of Benefits

Insurance statements often identify savings or discounts. But sometimes patients can still be billed for that amount, as in this case involving the UnitedHealth subsidiary UMR.

Insurers Reap Hidden Fees by Slashing Payments. You May Get the Bill. (7)

Your discount: $871.78

Your plan negotiates discounts with providers and facilities to help save you money.

You saved: $1,293.74

82% of your service was covered by your

plan discounts, your employer-sponsored benefits plan, or other amounts for which you arenot responsible.

Insurers Reap Hidden Fees by Slashing Payments. You May Get the Bill. (8)

Your discount: $871.78

Your plan negotiates discounts with providers and facilities to help save you money.

You saved: $1,293.74

82% of your service was

covered by your plan discounts, your employer-sponsored

benefits plan, or other amounts for which you are not responsible.

View the PDF.

By The New York Times

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Insurers Reap Hidden Fees by Slashing Payments. You May Get the Bill. (2024)

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