Michigan Blue Cross seeks dismissal of antitrust suit

By David N. Goodman Associated Press DETROIT (AP) -- Blue Cross Blue Shield of Michigan asked a federal judge last Friday to dismiss the U.S. Justice Department's antitrust lawsuit accusing the state's leading health insurer of discouraging competition by engaging in practices that result in higher hospital prices for other insurers and patients. The Justice Department filed the suit Oct. 18, saying the non-profit's "most favored nation" clauses with health care providers essentially guarantee that competing health care plans can't obtain better rates. Michigan Blue Cross Blue Shield has most favored nation clauses or similar language in contracts with at least 70 of 131 general acute care hospitals in the state, the government said. It charges those who don't sign such agreements by reimbursing them at a lower rate. Blue Cross covers about 4 million of Michigan's 10 million residents and had revenues of $21.6 billion in 2009. The company could not immediately say how much it paid hospitals, but the lawsuit said the amount was about $4 billion a year. Blue Cross said last Friday its antitrust exemption serves the public goal of providing health coverage at reasonable cost and is supported by previous U.S. Supreme Court decisions. "The government's lawsuit is deficient and should be dismissed as a matter of law," Michigan Blue Cross vice president and chief lawyer Jeffrey Rumley said. "It fails to recognize that the Michigan Blue Cross plan was enabled by state law and recognized by our Legislature as a primary vehicle to achieve critical public policy goals of the state -- namely statewide access to health care at reasonable cost for all of Michigan's citizens." The Justice Department said it will file a response. The deadline to do so is Jan. 20. "We continue to maintain that Blue Cross Blue Shield of Michigan has substantially reduced competition in the sale of health insurance to Michigan employers and consumers resulting in higher prices for health care services and health insurance," department spokeswoman Gina Talamona said. "We will file our opposition to the motion to dismiss with the court." The state of Michigan joined the Justice Department in the case filed in federal court in Detroit. The lawsuit challenges contracts that require hospitals to provide services to Blue Cross competitors either at the same or higher prices than Blue Cross pays. Community hospitals that fail to sign most favored nation agreements are paid about 16 percent less than those signing them, it said. Blue Cross said that negotiated discounts are a tool it uses to keep hospital care and health insurance affordable for millions of Michigan residents. "The government has failed to allege any specific facts that support their conclusion that anticompetitive effects of most favored nation clauses outweigh the benefits to payers and consumers," Rumley said. "This litigation makes no sense. The U.S. government is attacking the very model for a post-reform health insurance company." The Michigan Health & Hospital Association, which represents the state's 143 community hospitals, is "following the issue with interest but will not be commenting on it publicly, as it involves ongoing litigation in a matter to which we are not a party," spokesman Kevin Downey said last Friday. Published: Tue, Dec 21, 2010

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