Health Care Costs
2:52 pm
Mon October 18, 2010

More on the Blue Cross Blue Shield of Michigan lawsuit

The U.S. Department of Justice along with the Michigan Attorney General's office filed a lawsuit against Blue Cross Blue Shield of Michigan.

U.S. Department of Jusitice Assistant Attorney General Christine Varney Holds said:

This morning, we filed a civil antitrust lawsuit in U.S. District Court in Michigan against Blue Cross Blue Shield of Michigan alleging that provisions in their agreements with hospitals stifle competition, resulting in higher health insurance prices for consumers in Michigan.

The lawsuit challenges contracts that BCBSM enters into with the major hospitals in the state. BCBSM sets up "Most Favored Nation" clauses which gives the insurer dibs on the cheapest rate for services in the state.

The Associated Press says "the lawsuit outlines two types of most-favored-nation clauses requiring a hospital to provide services to Blue Cross competitors either at higher prices than Blue Cross pays or at prices no less than Blue Cross pays."

Most Favored Nation clauses are used in other states as well, and it appears the U.S. Department of Justice might bring similar suits in those states. Assistant Attorney General Christine Varney Holds said:

And, let me be clear, we will challenge similar anticompetitive behavior anywhere else in the United States.

BCBSM issued a statement responding to the lawsuit, saying Most Favored Nation clauses are an important tool for them:

This lawsuit is without merit, and we will vigorously defend our ability to negotiate the deepest possible discounts for our members and customers with Michigan hospitals. Our hospital discounts are a vital part of our statutory mission to provide Michigan residents with statewide access to health care at a reasonable cost.