Blue Cross is in a soup in Michigan. The US Justice Department and Michigan’s attorney general have filed an antitrust lawsuit against the state’s largest insurance company that has on roll about 4.1 million Michigan residents. The government has alleged that the insurance company negotiated contracts with hospitals that prohibited them from giving more discounts to other insurers. According to other allegations, the contracts’ also required hospitals to charge other insurers significantly more than they charged Blue Cross. In other cases, Blue Cross agreed to increase the prices it pays hospitals - boosting costs for its own customers - in return for commitments that other insurers would be charged no less, the federal lawsuit said.
These contracts have forced the residents in Michigan to pay more for their healthcare services, no matter who their insurance carrier is.
The U.S. Justice Department and Michigan Attorney General Mike Cox allege Blue Cross has been wielding its influence with more than half of the state's hospitals since 2007, when it started offering most-favored nation clauses, which gives preferential treatment to certain hospitals. They are seeking an injunction.
The hospitals include Beaumont Hospitals, St. John Providence Health System and Botsford Hospital. Nearly 70 Michigan hospitals have cooperated in the investigation.
Blue Cross has countered the allegations saying that the lawsuit was without merit. Andrew Hetzel, Blue Cross vice president for corporate communications, in response to the lawsuit has said, “At a time when the focus on health insurance affordability has never been more intense, it seems strange and ironic that the federal government would be suing a health plan that has worked very hard to negotiate the lowest prices for its customers with hospitals.”
The US justice department has already won five such cases since 1994 in Ohio, Rhode Island, Oregon, Washington, D.C., and Arizona.
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