DOJ targets Blue Cross Blue Shield of Michigan in anti-trust violation

The Wall Street Journal/Dow Jones Newswires: "The U.S. Justice Department on Monday filed an antitrust lawsuit against Blue Cross Blue Shield of Michigan, alleging that provisions of its agreements with hospitals are anticompetitive." The action, filed in a Michigan federal court, challenges the "insurer's use of provisions known as 'most favored nation clauses'" (Kendall, 10/18).

Reuters: The lawsuit accuses Blue Cross Blue Shield of Michigan "of violating antitrust law by negotiating contracts with hospitals that bar the hospitals from giving Blue Cross' rivals a better deal.  In papers filed in U.S. District Court for the Eastern District of Michigan, the Justice Department and Michigan's attorney general's office asked the court to stop Blue Cross Blue Shield of Michigan, which is a nonprofit, from including "most favored discount" or similar clauses in contracts with hospitals." A company spokesman said the suit is without merit and that the insurer will "vigorously defend our ability to negotiate the deepest possible discounts for our members and customers with Michigan hospitals"' (Bartz, 10/18).

Detroit Free Press: The Justice Department suit says that "Blue Cross contracts with at least 70 of the acute care hospitals in the state force them to raise prices and prevent other insurers from competing with them. Antitrust officials say the provisions likely resulted in Michigan consumers paying higher prices" (Ashenfelter and Spangler, 10/18).   

The Detroit News: The lawsuit is seeking an injunction to block the most favored nation clauses, but is not trying to "recoup what it alleges are [overcharges] to customers." A company spokesman said "its contracts do require hospitals to provide the 'most deepest possible discount' available and that helps to ensure the insurer can deliver the 'best possible price' to its more than 4 million members while providing the hospital with a 'reasonable reimbursement'" (Shepardson and Burden, 10/18).