U.S. Sues Michigan Blue Cross Over Pricing

The Justice Department sued Blue Cross Blue Shield of Michigan on Monday, asserting that the company, the state’s dominant health insurer, had violated antitrust laws and secured a huge competitive advantage by forcing hospitals to charge higher prices to Blue Cross’s rivals. The civil case appears to have broad implications because many local insurance markets, like those in Michigan, are highly concentrated, and Blue Cross and Blue Shield plans often have the largest shares of those markets. In the Michigan case, the Obama administration said that Blue Cross and Blue Shield had contracts with many hospitals that stifled competition, resulting in higher health insurance premiums for consumers and employers. Blue Cross and Blue Shield, like most insurers, contracts with hospitals, doctors, labs and other providers for services. The lawsuit took direct aim at contract clauses stipulating that no insurance companies could obtain better rates from the providers than Blue Cross. Some of these contract provisions, known as “most favored nation” clauses, require hospitals to charge other insurers a specified percentage more than they charge Blue Cross in some cases, 30 to 40 percent more, the lawsuit said.