Houston Methodist has joined a growing national push to challenge how health insurance companies decide what hospitals and providers get paid-a legal battle that could ultimately change what Texans pay for care.
The Houston-based hospital system is one of hundreds of health care providers suing the nation’s largest insurers. Claritev, formerly known as MultiPlan, is accused of colluding with insurers to artificially suppress reimbursement rates for out-of-network care.
The issue strikes at a complex but critical corner of the health system-how insurers decide what to pay when a patient receives care outside their network. The lawsuits, per the Houston Business Journal, accuse insurers and Claritev, a Virginia-based software and analytics company, of using proprietary algorithms to fix those prices, shortchanging hospitals and doctors while padding insurer profits.
Houston Methodist’s involvement signals the lawsuit’s rising stakes: if the hospitals win, it could dismantle a multibillion-dollar pricing system that helps determine the cost of private health care nationwide.
Due to the pending litigation, Houston Methodist was unable to comment but told Chron in an emailed statement it “remains committed to the highest quality of patient care.”
If Houston Methodist and other hospital systems prevail, the ripple effects could reach every corner of Texas’ health care market-from what employers pay for insurance to how much patients owe after a hospital stay.
At the center of the dispute is how insurers price “out-of-network” care-the charges that arise when a patient visits a hospital or specialist not covered by their insurance plan. Today, those prices aren’t negotiated directly between hospitals and insurers; instead, the Houston Business Journal reports that insurers outsource the task to Claritev, which uses proprietary algorithms to determine how much to reimburse hospitals.
Hospitals like Houston Methodist claim those algorithms are being used to suppress payments across the industry, creating a kind of secret cartel that keeps insurer costs low while shortchanging care providers. Methodist and hundreds of co-plaintiffs argue that if Claritev and its insurance partners lose, it could force insurers to pay more realistic rates for out-of-network services-potentially easing the financial strain on hospitals and reducing the need to shift costs onto patients.
Insurance companies, however, argue the opposite. In court filings and statements cited by the Houston Business Journal, Claritev and its clients contend that their system saves employers and patients money by eliminating waste and standardizing payments. A ruling against them, they warn, could raise premiums for millions of people covered by private insurance and disrupt a system that processes hundreds of billions in medical claims each year.
The case is not expected to go to trial until 2027, but either way, the stakes for Texans are enormous.
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This article originally published at Houston Methodist takes on Big Insurance in high-stakes pricing fight.