The U.S. Justice Department's antitrust division is dropping its investigation of Philadelphia-based Independence Blue Cross's "prudent buyer" clause.
In a letter to Pennsylvania's insurance commissioner, Justice Department attorney Steven Kramer said the investigation is being closed because a court likely would rule that the clause is exempt from federal antitrust scrutiny. The department didn't rule on whether the policy reduces or raises healthcare costs in southeastern Pennsylvania and said it lacks sufficient information to do so.
Mr. Kramer said it's now up to the state Insurance Department to decide whether the prudent buyer policy reduces consumer healthcare costs. He said the Justice Department is willing to provide limited assistance in analyzing the effects of the policy.
"We will continue to monitor the effectiveness of this clause," said Leslie Osborn, an Insurance Department spokeswoman. She said the department's approval of the clause continues through June 30, 1995.
The 2.25 million-enrollee Blue Cross plan began including the prudent buyer clause in hospital contracts last year after the state Insurance Department approved it. Under the clause, if Independence Blue Cross is the largest private purchaser of care at a hospital, the hospital must offer the plan its best price.
Since the investigation began last December, plan executives have maintained that the clause is a legal cost-containment initiative that will save subscribers millions through lower hospital rates (Jan. 3, p. 18). According to the plan's latest estimates, the prudent buyer policy will save $507 million over five years.