Senator Amy Klobuchar Calls for Investigation into Health Insurers’ Use of Algorithm Pricing Tools
Senator Amy Klobuchar Calls for Investigation into Health Insurers’ Use of Algorithm Pricing Tools
Senator Amy Klobuchar, D-Minn., has taken action by sending a letter to the Attorney General’s office and the Federal Trade Commission, urging them to investigate the use of algorithm pricing tools by health insurers. Recent reports have suggested that these tools may be used to undermine competition and shift additional costs onto patients receiving healthcare outside of their insurance network.
In her letter, Klobuchar specifically mentioned MultiPlan, a Massachusetts-based company that specializes in claim-cost management. The firm provides data to insurance companies to determine payment amounts for out-of-network medical care, potentially leading to increased costs for patients. Klobuchar expressed concern that instead of competing for business by reducing costs for employees, insurance companies may be using algorithmic tools to manipulate data and avoid competition.
According to Klobuchar, MultiPlan acts as a central hub for out-of-network payment data and uses algorithms to recommend artificially low payments to physicians, potentially at the expense of patients. The company reportedly profits more when patients are forced to pay higher costs for out-of-network care.
Insurers have defended the use of MultiPlan’s tools as a way to combat excessive billing by certain providers. However, Klobuchar likened the use of algorithmic pricing tools in the insurance industry to antitrust violations seen in other markets, such as rental and hotel industries.
The Senator’s call for investigation comes in the wake of a class action complaint filed by Allegiance Health Management against several major healthcare insurance providers, including MultiPlan. The complaint alleges that these companies conspired to manipulate reimbursement rates for out-of-network healthcare services, violating antitrust laws.
Klobuchar has introduced legislation known as the Preventing Algorithmic Collusion Act of 2024 to address anticompetitive behavior facilitated by pricing algorithms. Her efforts highlight the importance of ensuring fair competition and protecting patients from hidden costs in the healthcare industry.
For more information on this developing story, stay tuned for updates.