Lawsuit Claims UnitedHealth Overcharged Employee Benefit Plans Through ‘Shared Savings’ Scheme

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A proposed class action claims UnitedHealth Group, Inc. and United Healthcare Services, Inc. have bilked millions of dollars from self-funded employee benefit plans through a so-called “Shared Savings” program.

According to the suit, the defendants, who serve as claims administrators and fiduciaries for employee benefit plans, have presented the Shared Savings program as a purported “solution” to the high cost of out-of-network claims. The case alleges, however, that the program, which allows UHC to charge plans a 35-percent fee on purported savings it obtains when it pays out-of-network providers less than the amount they bill, is essentially a “left pocket to right pocket” scheme disguised as a solution to a problem that is, in reality, engineered by the defendants themselves.

Per the case, the defendants first “create a series of problems” by forcing healthcare providers out of their network or preventing them from joining, and thereby increase out-of-network claims. Since out-of-network claims typically cost benefit plans more than in-network claims, UHC offers a so-called solution by reducing out-of-network reimbursements and charging plans a percentage of their purported savings as a reward, the suit says.

In reality, the case claims, the defendants have inflated the costs paid to them through the Shared Savings program in several ways, including by:

• Deliberately excluding healthcare providers from the network by canceling or refusing to renew their agreements or by not allowing them to initially join;
• Misleading employee benefit plans and their beneficiaries into believing certain services are handled in-network when they are not; and
• Secretly reimbursing certain claims from in-network health systems at out-of-network rates.

The lawsuit alleges this “slight-of-hand trickery” has allowed UHC to earn billions of dollars in revenue through its Shared Savings program while breaching its fiduciary duties to benefit plans.

“If UHC were operating in the best interest of the Plan, UHC would not play these games,” the complaint scathes. “UHC would fairly contract with providers and have a transparent, predictable system of reimbursement.”

The plaintiff in the case is the sponsor and administrator of a self-funded employee benefit plan, which the suit explains is different from a typical insurance arrangement in that the premium contributions from the plan’s participants and employer are pooled together into a fund from which insurance claims are paid. Like other self-funded plans, the plan administered by the plaintiff relies on “stop loss” or “excess loss” insurance to cover any claims that exceed the amounts contributed by its participants.

Per the suit, the plaintiff in January 2016 entered into an administrative services agreement with UHC to, in exchange for a fee, handle claims administration and essentially “all aspects of managing health benefits” for the plan. One service offered under the agreement is access to UHC’s provider network, which is made up of healthcare providers who have contracted with UHC to charge pre-determined rates for their services, the case says.

The lawsuit alleges, however, that it is “widely known” that UHC employs a “terminate to negotiate” strategy in order to lower reimbursement rates paid to providers. In other words, the suit claims UHC frequently kicks providers out of its network in order to pressure them into accepting lower reimbursement rates. Per the case, UHC’s method for calculating out-of-network reimbursement rates is “non-transparent” and frequently results in UHC manipulating rates downward.

According to the suit, UHC’s Shared Savings program, through which the defendants are paid a 35-percent fee for purportedly saving benefit plans money, is “a way for UHC to pay itself for a problem it created.” The case explains by way of example that an employee benefit plan would pay more under the Shared Savings program than it would if a particular provider were part of UHC’s network, regardless of whether UHC pays more or less than the would-be network rate for a particular claim:

According to the case, the Shared Savings program allows UHC to “always win[] to the ultimate detriment of the Plan and its beneficiaries.”

The lawsuit more particularly claims UHC has used the Shared Savings program in three ways for its own financial benefit and at the expense of employee benefit plans.

First, the case alleges that while UHC represents that it will charge in-network rates for ambulance services, the insurer “does not follow its own reimbursement policy” and has instead assessed Shared Savings fees from benefit plans for such services.

Second, the lawsuit claims UHC refuses to enter into network agreements with certain providers who attempt to become part of its network, or cancels or refuses to renew their network agreements, and then charges Shared Savings fees on services rendered by those providers. But for UHC’s exclusion of certain providers, patients who received their services would have paid less for such, and the benefit plan would not have been charged Shared Savings fees, the suit says.

Third, the case says certain claims submitted by large in-network health systems are reimbursed by UHC at out-of-network rates. Per the case, this “ad hoc contracting” is not disclosed to the public and harms both patients and their employee benefit plan, who is charged Shared Savings fees for those services.

The case looks to represent certain self-funded plans and plan administrators who, at any time since January 1, 2017, paid Shared Savings fees to UHC for claims that fall under the aforementioned categories.

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