The Arizona Attorney General’s Office is suing nine health insurance providers, accusing them of colluding with an AI-driven technology platform to drive down payments to healthcare providers while inflating out-of-pocket costs for some patients.
In a lawsuit filed in Maricopa County Superior Court, the Attorney General’s Office alleged that MultiPlan, a third-party billing and data analytics company, helped insurance companies significantly reduce the amounts they pay for out-of-market medical care.
According to the lawsuit, MultiPlan accomplished that goal by using information provided by the insurance companies to determine the lowest possible payment a medical provider would accept.
Attorney General Kris Mayes said the insurance companies would then follow MultiPlan’s guidance rather than calculating their own reimbursement rates for specific procedures and care.
Over time, MultiPlan would consistently recommend below-market payments that insurers would then offer to medical providers. And then those payment amounts were then fed back into the algorithm to further justify low rates in the future, Mayes claimed.
“Insurers would point to MultiPlan. MultiPlan would point to insurers. And in a coordinated effort, they would pressure providers, doctors, nurses, and hospitals into accepting that low offer,” Mayes said.
Put another way, Mayes alleged, the insurance companies chose to share data and resources in order to drive down payments rather than competing against each other in the free market.
That violates the Arizona Uniform State Antitrust Act, which bars companies in the same business from coordinating with each other to suppress competition.
MultiPlan denied the allegations.
“We are aware of the complaint filed by the Arizona attorney general against MultiPlan and strongly disagree with it,” said Jen O’Connor, a spokesperson for Claritev, MultiPlan’s parent company. “The allegations are without merit, and the company stands by its position that it complies with state and federal antitrust laws.”
O’Connor said the company will defend itself through the legal process.
Aetna, one of the insurers named in the suit, took a similar position.
“We deny the allegations and will defend ourselves vigorously,” Aetna spokesman Phillip Blando said.
Another insurer, Health Care Service Corporation, declined to comment on pending litigation.
Cigna, UnitedHealth, Humana, The Blue Cross Blue Shield Association, Elevance Health, Centene and Molina Healthcare did not respond to requests for comment.
Who is affected?
Mayes said the alleged scheme primarily affected individuals with PPO, or preferred provider organization, health insurance plans.
She said those customers could be left on the hook for higher-than-expected out of pocket costs after insurers paid lower reimbursements to medical providers.
Mayes compared the current situation to a now-settled case against Ingenix, a UnitedHealth Group subsidiary that was accused of helping insurance companies artificially deflate reimbursements for out-of-network care in the 2000s.
The new lawsuit claims MultiPlan and the insurers violated Arizona’s Consumer Fraud Act, which bars companies from engaging in deceptive business practices. That’s because, prosecutors allege, the insurers told customers that PPO plans, which typically carry higher premiums, offer greater flexibility and savings opportunities for patients who want to choose their own providers.
“Many patients who pay up front or are balance billed for out-of-networks services are left with unreasonable amounts owed for purportedly covered out-of-network services, making the purported flexibility and choice of access to out-of-network providers illusory and the savings effectively de minimis if not non-existent,” according to the suit.
Dr. Andrew Carroll, a family medicine doctor from Chandler, said avoiding those costs isn’t as simple as using in-network providers.
For instance, he said there are only around 10 oncologic orthopedists, or surgeons who deal with bone cancers, in the state. And he said those doctors likely aren’t going to accept these insurance plans.
"If I find a patient who has a bone tumor, like a sarcoma, and I have to send them to one of these doctors, I have to pray to God that that doctor is going to accept that insurance at whatever rate they're going to want to set,” Carroll said.
He added, “And they're going to want to lowball it, and while that's happening, that patient with that bone cancer, osteosarcoma, needs that amputation done or he's going to die, and yet here we are dragging it out because of an algorithm. That's the problem.”
Mayes said the alleged scheme also hurt medical providers, especially those who run their own private practices or operate in underserved communities like rural areas. That’s because they run on tight margins and can’t absorb lower payments like large health networks.
Carroll, the family physician, backed up that claim.
“I don't have the staff to fight an insurance company on what these bills end up doing to me, because that takes my staff time,” he said. “Now I have to hire a billing person, and I have to hire a second billing person. I just don't have the capability to do that.”
Dollars and cents
According to the lawsuit, MultiPlan earns a percentage of the “underpayment” resulting from the use of its algorithm, which saved partner insurers $6.4 billion in reductions in the third quarter of 2024.
In other words, Mayes said, “The more they squeeze our doctors and hospitals, the more MultiPlan makes profits.”
Mayes said it is still unclear exactly how many Arizonans were affected.
“But we think that billions of dollars were stolen from patients, doctors, and hospitals throughout the state of Arizona, ultimately resulting in economic harm to our state and harm to the quality of care for all patients,” Mayes said.
The Attorney General’s Office wants a judge to force MultiPlan and the insurers to give up profits they earned through the alleged scheme, pay back patients and doctors and stop coordinating on reimbursement rates.
-
Prescribing abortion medications via telehealth was previously banned by a state law. But a court ruling in February voided that, and several other abortion regulations in Arizona. -
The annual Kids Count Data Book ranks states in categories of health, family and community, education, and economic well-being. Arizona ranked 40th out of 50 states for overall child wellbeing. -
A new initiative aimed at providing gynecologic and reproductive health care to queer individuals is launching later this year. -
A hantavirus case in Mohave County was from a different strain than the Andes strain that caused deaths on a cruise ship. The strain in the Arizona case is not known for person-to-person transmission. -
A bill that would allow caregivers to place cameras in the bedroom of a loved one’s long term care facilities is on life support. Now, advocates have organized a last ditch effort to get the bill a hearing on the Arizona Senate floor.
