Blue Cross and Blue Shield of Michigan and 22 hospitals have successfully fought off an antitrust lawsuit from the city of Pontiac, Mich., in one of several pending cases that allege a pattern of anticompetitive activity that mirrors allegations in an ongoing federal lawsuit against the state's dominant insurer.
At issue are two types of (PDF) “most-favored nation” pricing contracts used by Blue Cross that require competing insurance companies to pay at least as much, and sometimes more, than the prices Blue Cross receives in exchange for bringing its volume of business to the healthcare providers.
“The law is clear that antitrust laws may not be used to sue an insurer because it fairly negotiates discounts with hospitals to hold down healthcare costs for its members,” Jeffrey Rumley, Blue Cross and Blue Shield of Michigan vice president and general counsel, said in a written statement. “This is exactly what the city of Pontiac tried to do.”
Court filings say the not-for-profit Blue Cross company covers more than 3 million people in Michigan, or about 60% of the insured market.
In an ongoing lawsuit, the U.S. Justice Department and the Michigan attorney general's office both say that Blue Cross' most-favored nation contracts raise healthcare prices in the state by forcing smaller insurers to pay at least as much, and sometimes more, for the same service. The critics in the October 2010 lawsuit note that Blue Cross often grants higher rates in its contracts in exchange for the most-favored nation clauses.