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The U.S. Department of Justice and Michigan Attorney General Mike Cox are suing Michigan’s largest insurer, Blue Cross Blue Shield of Michigan, for forming anti-competitive contracts with hospitals, including St. Mary’s of Michigan and Covenant HealthCare in Saginaw.
Both St. Mary’s and Covenant have cooperated with the investigation, the attorney general’s office said.According to the lawsuit filed Monday, the insurance provider’s contracts includes clauses that require hospitals to charge other insurers more than they charge Blue Cross, giving Blue Cross an unlawful advantage. These clauses give Blue Cross the equivalent of “Most Favored Nation” status, according to the office of the attorney general, and result in “driving up prices for consumers and damaging competition in the health care market place — all to benefit Blue Cross’s market share.”
In all, 23 large and 45 rural Michigan hospitals were found to have entered into anti-competitive contracts with Blue Cross.
At Covenant, the Blue Cross contract requires the hospital to charge most of Blue Cross’s competitors at least 39 percent more than the hospital charges Blue Cross.
“When making business decisions, Covenant HealthCare keeps the best interest of our patients and our community at heart and is committed to providing the best possible care to any and all patients that seek medical attention 24 hours per day, 365 days per year,” said Kristin Knoll, a spokeswoman for Covenant.
Knoll said she could not discuss specifics of the lawsuit or contracts.
“However, a number of our patients are covered through contracts that are not subject to the Blue Cross Blue Shield of Michigan clause restrictions,” Knoll said.
“Covenant is complying with the Department of Justice to assist in any way possible with the investigation.”
A spokeswoman for St. Mary’s of Michigan said the hospital is aware of the lawsuit but is declining to comment at this time.
Blue Cross, a nonprofit insurance provider, defended its practices, saying the suit seeks to restrict the insurer’s ability to provide the most deeply discounted rates from Michigan hospitals.
Andrew Hetzel, a spokesman for Blue Cross, said the insurer’s contracts have saved customers billions of dollars.
“Negotiated hospital discounts are a tool that Blue Cross uses to protect the affordability of health insurance for millions of Michiganders,” Hetzel said.
“Through this lawsuit, the federal government seeks to deny millions of Michigan residents the lowest cost possible when they visit the hospital.”
He said the lawsuit will only hurt customers — of which it has about 4 million. Hetzel also said hospitals willingly enter into contracts with Blue Cross, which he said has 50 percent or less of the market share in most of the counties in the state.
“If this lawsuit succeeds and our ability to stipulate that Blue Cross will receive the deepest discounts is taken away from us, it will negatively change how our contracts work to benefit our members and customers,” Hetzel said.
“It will likely increase the cost of care that our customers receive in the hospital setting.”
Both St. Mary’s and Covenant have cooperated with the investigation, the attorney general’s office said.According to the lawsuit filed Monday, the insurance provider’s contracts includes clauses that require hospitals to charge other insurers more than they charge Blue Cross, giving Blue Cross an unlawful advantage. These clauses give Blue Cross the equivalent of “Most Favored Nation” status, according to the office of the attorney general, and result in “driving up prices for consumers and damaging competition in the health care market place — all to benefit Blue Cross’s market share.”
In all, 23 large and 45 rural Michigan hospitals were found to have entered into anti-competitive contracts with Blue Cross.
At Covenant, the Blue Cross contract requires the hospital to charge most of Blue Cross’s competitors at least 39 percent more than the hospital charges Blue Cross.
“When making business decisions, Covenant HealthCare keeps the best interest of our patients and our community at heart and is committed to providing the best possible care to any and all patients that seek medical attention 24 hours per day, 365 days per year,” said Kristin Knoll, a spokeswoman for Covenant.
Knoll said she could not discuss specifics of the lawsuit or contracts.
“However, a number of our patients are covered through contracts that are not subject to the Blue Cross Blue Shield of Michigan clause restrictions,” Knoll said.
“Covenant is complying with the Department of Justice to assist in any way possible with the investigation.”
A spokeswoman for St. Mary’s of Michigan said the hospital is aware of the lawsuit but is declining to comment at this time.
Blue Cross, a nonprofit insurance provider, defended its practices, saying the suit seeks to restrict the insurer’s ability to provide the most deeply discounted rates from Michigan hospitals.
Andrew Hetzel, a spokesman for Blue Cross, said the insurer’s contracts have saved customers billions of dollars.
“Negotiated hospital discounts are a tool that Blue Cross uses to protect the affordability of health insurance for millions of Michiganders,” Hetzel said.
“Through this lawsuit, the federal government seeks to deny millions of Michigan residents the lowest cost possible when they visit the hospital.”
He said the lawsuit will only hurt customers — of which it has about 4 million. Hetzel also said hospitals willingly enter into contracts with Blue Cross, which he said has 50 percent or less of the market share in most of the counties in the state.
“If this lawsuit succeeds and our ability to stipulate that Blue Cross will receive the deepest discounts is taken away from us, it will negatively change how our contracts work to benefit our members and customers,” Hetzel said.
“It will likely increase the cost of care that our customers receive in the hospital setting.”
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