Medical Mutual of Ohio last week signed a consent decree with the U.S. Justice Department to formally end the government's antitrust investigation of the state's largest insurer.
The consent decree was in response to an antitrust lawsuit filed Sept. 23 by the Justice Department in U.S. District Court in Cleveland against Medical Mutual, challenging the insurer's use of "most-favorable-rate" provisions in its contracts with hospitals.
The government alleged that the provisions violated antitrust law because they contractually bound hospitals to charge other health plans 15% to 30% more than Medical Mutual or pay money to the insurer. Such a clause limited price competition and led to higher healthcare costs, the Justice Department claimed.
In June, the company said it was abandoning the use and enforcement of most-favorable rates in all its contracts.
Cleveland-based Medical Mutual had been using the rates since 1986. It is unclear what moved the Justice Department to begin its investigation.
Medical Mutual filed the consent decree Sept. 24, one day after the lawsuit was filed. Formerly known as Blue Cross and Blue Shield of Ohio, Medical Mutual did not admit wrongdoing or liability.
The insurer changed its name in April 1997 to Medical Mutual. The Blue Cross and Blue Shield Association stripped the insurer of its affiliation after the Ohio Blues' $300 million joint venture deal with Columbia/HCA Healthcare Corp. fell apart (March 24, 1997, p. 2).